Funded by: Alliance for Market Solutions (AMS)
September 2019 / December 2019

Consumption vs. Production based Environmental Policies: i.e. effects of Carbon Taxation at World level – Carbon Tax

This project consists in an empirical assessment related to the effects and the effectiveness of the application of a novel CO2 taxation scheme applied to different world regions. Specifically, this aims at contrasting the carbon leakage phenomenon caused by the application of traditional (i.e. territorial) carbon taxation mechanisms: even if developed countries regulations keep emissions low by limiting or pricing, their economy may react importing more from growing and unregulated regions, which usually rely on a more carbon intensive production system. On the other hand, a carbon taxation mechanism based on the supply chain emissions embedded in final consumptions may be helpful in avoiding carbon leakage phenomenon, and it may represent an interesting and comprehensive advance in the field of carbon taxation policies.

Main Results and Outputs

The project is based on the application of the World Trade Model with Bilateral Trades (WTMBT), which will be developed and elaborated to enable the simulation of carbon taxation policies. The model will be applied to the global context, and traditional and innovative carbon taxations schemes comparatively applied to different aggregated regions. Expected results are related to the consequences of the introduction of the carbon taxation schemes in terms of international trades arrangements, and the related quantitative economic and environmental impact indicators (e.g. change in total economic production, value-added generation, carbon emissions, resources consumption, others). Results will provide useful insight for better addressing how global economy is likely to react based on different carbon taxation schemes.

Project team


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