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GTAP Resources: Resource Display

GTAP Resource #7017

"An economy-wide analysis of the circular economy potential in Germany – Enhancing product longevity and domestic recycling"
by Luckmann, Jonas and Gero Elshof


Abstract
Since the industrial revolution, our economic system has relied on resource exploitation and unsustainable treatment of waste. The circular economy provides an alternative method of producing and consuming commodities, which unites natural boundaries and economic goals. This study explores the potential of the German economy to advance towards a circular economy via the promotion of domestic recycling and repair services using a computable general equilibrium model calibrated to a 2018 social accounting matrix. In the first scenario, domestic recycling is promoted through a tariff of 80% levied on waste exports, using the additional revenue to subsidize the domestic recycling sector. In a second scenario, repair services are subsidized such that the consumer price falls by 50%. The subsidy is financed through an additional tax on the sale of machinery and equipment. The third scenario analyses the effects of regulations promoting the longevity and repairability of electronic products, machinery, and vehicles in industries, exogenously increasing intermediate demand for repair services by 50% and decreasing intermediate demand for electronic products, machinery, and vehicles accordingly. Preliminary findings indicate that a tariff on waste exports leads to a higher recycling rate, but also higher waste disposal costs. Decoupled economic growth is achieved as GDP grows slightly, while greenhouse gas emissions are reduced. The promotion of repair services and the reduced consumption of technical equipment and machinery leads to a shift in the domestic production structure. Capital-intensive industrial sectors shrink, while labor-intensive repair services expand, resulting in higher labour wages relative to capital prices and a reduced demand for energy and resources, which also results in a reduction of greenhouse-gas emissions. All scenarios result in higher self-sufficiency and a decreased reliance on imported resources, which can be seen as an additional advantage.


Resource Details (Export Citation) GTAP Keywords
Category: 2023 Conference Paper
Status: Not published
By/In: Presented during the 26th Annual Conference on Global Economic Analysis (Bordeaux, France)
Date: 2023
Version: preliminary draft
Created: Luckmann, J. (4/15/2023)
Updated: Luckmann, J. (4/15/2023)
Visits: 542
- Environmental policies
- Resources and circular economy
- Europe (Western)


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