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GTAP Resource #4117

"The costs of a global climate agreement in China A tale of carbon price, “when flexibility” and quota allocation "
by Hamdi-Cherif, Meriem and Henri-David Waisman


Abstract
**Motivation**
The failures of recent Conference of Parties illustrate that a lot of uncertainties still remain about a future international agreement on climate and, in particular, about the role of global measures. This paper considers the economic consequences of such a purely global agreement based on carbon pricing, which is the more natural policy instrument to trigger decarbonization processes but raises concerns about its effects in emerging, carbon-intensive economies. We focus the analysis on China, a key player in climate negotiations as the first CO2 world emitter and a very carbon-intensive, fast growth economy.
We revisit the question of Chinese mitigation costs by considering different policy architectures based on a uniform carbon price, that vary according to the temporal profile of carbon emissions reductions and quota allocation adopted to organize monetary transfers among regions. This is done in a second-best modeling framework that captures the inertias limiting the flexibility of adjustments, a crucial dimension for emerging economies characterized by important market imperfections especially when envisaging large structural change over the century. This allows us to assess the macroeconomic effects of temporal and regional flexibilities in China when a global carbon price is introduced.

**Methodology**
The analysis of economic interactions is conducted using IMACLIM-R, a hybrid multi-region, multi-sector CGE model which embarks sectoral expertise into a macroeconomic framework to assess CO2 emissions scenarios and policies. Imaclim-R adopts a hybrid matrix ensuring consistency between money flows and physical quantities. At the calibration date, 2001, the matrix is built by modifying I-O tables from the GTAP-6 dataset to make them fully compatible with 2001 energy balances from IEA (in Mtoe) and passenger mobility (in pkm). Dynamic trajectories are described in yearly steps through the recursive succession of static equilibria rep...


Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Version:
Created: Hamdi-Cherif, M. (4/12/2013)
Updated: Hamdi-Cherif, M. (4/12/2013)
Visits: 535
- Dynamic modeling
- Climate change policy
- Economic development
- Asia (East)
- Asia (Southeast)


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