Are Carbon Taxes Good for South Asia?

doi:10.1596/1813-9450-10462

Publication:
Are Carbon Taxes Good for South Asia?

dc.contributor.author	Mercer-Blackman, Valerie
dc.contributor.author	Milivojevic, Lazar
dc.contributor.author	Mylonas, Victor
dc.date.accessioned	2023-06-15T18:27:24Z
dc.date.available	2023-06-15T18:27:24Z
dc.date.issued	2023-06-15
dc.description.abstract	This paper estimates the effects of gradually introducing a US$25/ton CO2-equivalent carbon tax in South Asian economies using the Climate Policy Assessment Tool (CPAT). The results for South Asia suggest that monetized welfare co-benefits net of efficiency costs from such a tax—regardless of what other economies or regions do—are resoundingly positive, at 1.4 percent of GDP in 2030. Revenues from the carbon tax are estimated at 1.3 percent of GDP in 2030, which is substantial for a region with a low tax-to-GDP ratio. Once these revenues are recycled, the Keynesian multiplier effect through increased public investment and transfers to households is associated with slightly positive net economic growth rate effects. Household incidence analysis shows that the carbon tax can be designed as an equity-enhancing policy, given net reductions in the Gini coefficient for consumption from revenue recycling. The carbon tax is also associated with a 2 percent weighted average input cost increase across economic sectors in 2030. Finally, the paper discusses selected results on and the political economy of a comprehensive energy price reform package (fossil fuel subsidy phaseout and carbon tax), with broad guidance on its implementation. Overall, the paper provides supportive evidence for the green transition, showing that there need not be a trade-off between inclusive growth and going green in South Asia.	en
dc.identifier	http://documents.worldbank.org/curated/en/099753405302343078/IDU0502ccf8e0286b046b90920302a451b6e0b6e
dc.identifier.doi	10.1596/1813-9450-10462
dc.identifier.uri	https://openknowledge.worldbank.org/handle/10986/39881
dc.language	English
dc.language.iso	en
dc.publisher	World Bank, Washington, DC
dc.relation.ispartofseries	Policy Research Working Papers; 10462
dc.rights	CC BY 3.0 IGO
dc.rights	CC BY 3.0 IGO
dc.rights.holder	World Bank
dc.rights.uri	https://creativecommons.org/licenses/by/3.0/igo/
dc.subject	CARBON TAX
dc.subject	CLIMATE CHANGE
dc.subject	DECARBONIZATION
dc.subject	ENERGY TRANSITION
dc.subject	FISCAL INCIDENCE
dc.subject	REVENUE RECYCLING
dc.subject	FOSSIL FUEL SUBSIDY REFORM
dc.title	Are Carbon Taxes Good for South Asia?	en
dc.type	Working Paper
dspace.entity.type	Publication
okr.crossref.title	Are Carbon Taxes Good for South Asia?
okr.date.disclosure	2023-05-30
okr.date.doiregistration	2025-04-25T02:23:47.954679Z
okr.date.lastmodified	2023-05-30T00:00:00Z	en
okr.doctype	Policy Research Working Paper
okr.doctype	Publications & Research
okr.docurl	http://documents.worldbank.org/curated/en/099753405302343078/IDU0502ccf8e0286b046b90920302a451b6e0b6e
okr.guid	099753405302343078
okr.identifier.docmid	IDU-502ccf8e-286b-46b9-9203-2a451b6e0b6e
okr.identifier.doi	10.1596/1813-9450-10462
okr.identifier.doi	http://dx.doi.org/10.1596/1813-9450-10462
okr.identifier.externaldocumentum	34071869
okr.identifier.internaldocumentum	34071869
okr.identifier.report	WPS10462
okr.import.id	844
okr.imported	true	en
okr.language.supported	en
okr.pdfurl	http://documents.worldbank.org/curated/en/099753405302343078/pdf/IDU0502ccf8e0286b046b90920302a451b6e0b6e.pdf	en
okr.region.administrative	South Asia
okr.region.geographical	South Asia
okr.topic	Environment::Carbon Policy and Trading
okr.topic	Environment::Adaptation to Climate Change
okr.topic	Energy::Renewable Energy
okr.topic	Energy::Energy Policies & Economics
okr.topic	Environment::Environmental Strategy
okr.unit	EFI-MTI-Global Macro and Debt (EMFMD)