Publication: Environmental Fiscal Reform in Morocco: Options and Pathways
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Date
2019-04-25
ISSN
Published
2019-04-25
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Abstract
In response to the request from the
Ministry of Environment and in close collaboration of the
Ministry of Economy and Finance, the World Bank Group, with
support from the Partnership for Market Readiness (PMR) and
the NDC Support Facility, provided technical support to
Morocco aimed at exploring the opportunities offered by
environmental fiscal reform (EFR), such as that
incorporating carbon pricing, to strengthen green growth. As
part of this support, the WBG has assessed carbon pricing
options that could be appropriate for Morocco and simulated
their selected economic impacts with macroeconomic model in
collaboration with the Research and Forecast Department of
the Ministry of Economy and Finance (MoEF) of Morocco. This
report outlines the key considerations for policy-makers in
Morocco and presents a preliminary finding from modelling
conducted by the MoEF in collaboration with the WBG, as well
as identifies the needs for the secondary analysis. As part
of its national development strategy, Morocco is
implementing and planning further reforms of its fiscal
systems, energy sector, industrial structure, as well as an
ambitious climate change action as per the objectives of the
Nationally Determined Contribution. This note explores
whether and how these reforms might be supported by aligning
fiscal incentives with sectoral policy objectives to
accelerate the rate of future growth while reducing its
carbon emission intensity. Environmental fiscal reforms
(EFRs) are a collection of changes to tax, expenditure, and
other policies which collectively seek to raise national
development and welfare. This report explores potential
options for implementing an environmental fiscal reform
(EFR) as part of Morocco’s broader economic strategy and
tests the impacts of these options with the Morocco’s CGE
model. It is structured as follows. The second section
discusses Morocco’s national development challenges and the
strategic policy goals, where EFR can play a role. The third
section provides an overview of options for EFR in Morocco,
as identified by the World Bank Group team and national
experts, including (i) modifications of fuel tax structure
(TICs) to better reflect social costs of fuel use, (ii)
butane subsidy reform, or (iii) more direct environmental
pricing through taxes or emissions trading. The fourth
section introduces the CGE model for Morocco, used by the
DEPF, and simulates impacts of several potential EFR design
options identified in the previous section. It also
discusses the limitations of the existing CGE model to
reflect the impacts of the EFR, and in this context analyzes
the results of scenario analysis conducted with the CGE
model. The fifth and final section concludes.
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Citation
“Peszko, Grzegorz; Black, Simon; Platonova-Oquab, Alexandrina; Heine, Dirk; Timilsina, Govinda. 2019. Environmental Fiscal Reform in Morocco: Options and Pathways. © World Bank, Washington, DC. http://hdl.handle.net/10986/34030 License: CC BY 3.0 IGO.”