Carbon Pricing and International Competitiveness for Thailand and ASEAN
DOI:
https://doi.org/10.14456/tresp.v6i2.249124Keywords:
Carbon market, emission trading system, carbon tax, carbon pricing, international competitiveness, NRCA, economic impacts, Thailand, ASEANAbstract
The main purpose of this paper is to provide an economic analysis such that policy makers may decide which carbon pricing measures, between carbon markets or Emission Trading System (ETS) and carbon taxes, would be more appropriate for Thailand based on their impacts on production, consumption, exports, imports, social welfare and international competitiveness. We find that a carbon tax measure that is jointly implemented by five ASEAN countries would be the most suitable for Thailand. This is because it can mitigate carbon dioxide emission to the target level while generating fewer negative impacts on production, consumption, exports, imports, social welfare for Thailand. It also causes less unfavorable economic effects as compared to the case of Thailand’s unilateral carbon tax implementation or the case of carbon market, either unilaterally or jointly. Both carbon taxes and ETS, for the same mitigation target, does not significantly affect Thailand’s international competitiveness. However, a joint carbon tax measure has fewer negative impacts on competitiveness as compared to unilateral implementation and even improves Thailand competitiveness in some sectors.
References
Balassa, B. (1965). Trade liberalisation and "revealed comparative advantage. The Manchester school of economic and social studies, 33, 99-123.
Bartik, Timothy J. (1985). Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States. Journal of Business Economics and Statistics, 3(1), 14-22.
Baranzini, A., van den Bergh, J., Carattini, S., Howarth, R., Padilla, E., & Roca, J. (2017). Carbon Pricing in Climate Policy: Seven Reasons, Complementary Instruments, and Political Economy Considerations. Wiley Interdisciplinary Reviews: Climate Change 8.4
Benedictis, L., & Tamberi, M. (2002). A Note on the Balassa Index of Revealed Comparative Advantage. Universita' Politecnica delle Marche (I), Dipartimento di Economia, Working Papers. Borenstein, S.,
Bushnell, J., Wolak, F., & Zaragoza-Watkins, M. (2018). Expecting the Unexpected: Emissions Uncertainty and Environmental Market Design. Energy Institute at Haas Working Paper 274R. June.
Bowen, A. (2011). The Case for Carbon Pricing: Policy Brief. The Grantham Research Institute on Climate Change and the Environment and The Centre for Climate Change Economics and Policy.
Burniaux, J., & Truong, T. (2002). GTAP-E: An EnergyEnvironment Version of the GTAP Model. GTAP Technical Paper No 16, Center for Global Trade Analysis, Purdue University, West Lafayette, IN. https://EconPapers.repec.org/RePEc:gta:techpp:923.
Calel, R., & Dechezleprêtre, A. (2016). Environmental Policy and Directed Technological Change: Evidence from the European Carbon Market. The Review of Economics and Statistics, 98(1), 173-191.
Carbon Pricing Leadership Coalition (2016). “What is the Impact of Carbon Pricing on Competitiveness,” June, 2016. Retrieved from http://pubdocs.worldbank.org/en/759561467228928508/CPLC-Competitiveness-print2.pdf
Climate Action Tracker (2015). INDCs lower projected warming to 2.7OC: significant progress but still above 2OC, 1st October, 2015. Retrieved from http://climateactiontracker.org/assets/publications/CAT_global_temperature_update_October_2015.pdf
Climate Action Tracker (2019). Governments still showing little sign of acting on climate crisis, 10 December 2019. Retrieved from https://climateactiontracker.org/documents/698/CAT_2019-12-10_BriefingCOP25_WarmingProjectionsGlobalUpdate_Dec2019.pdf
Corong, E. (2008), Tariff Reductions, Carbon Emissions, and Poverty: An Economy-wide Assessment of the Philippines. ASEAN Economic Bulletin, 25(1), 20–31.
Coxhead, I., Wattanakuljarus, A., & Chan, N. (2013). Are carbon taxes good for the poor? A general equilibrium analysis for Vietnam. World Development, 51(1), 119– 31.
Ellerman, D., Joskow, P., & Harrison, D. (2003). Emissions Trading in the U.S.: Experience, Lessons, and Considerations for Greenhouse Gases, Arlington, Virginia: Pew Center on Global Climate Change.
Fischer, C., Parry, I., & Pizer, W. (2003). Instrument Choice for Environmental Protection when Technological Innovation is Endogenous. Journal of Environmental Economics and Management 45, 523-545.
Friedman, J., Gerlowski, D., & Silberman, J. (1992). What Attracts Foreign Multinational Corporations? Evidence from Branch Plant Location in the United States. Journal of Regional Science, 32(4), 403- 18.
Grossman, G., & Krueger, A. (1993). Environmental Impacts of a North American Free Trade Agreement in The U.S.-Mexico free trade agreement, Peter Garber (eds). Cambridge, MA: MIT Press, 1993, 13-56.
Goulder, L., & Hafstead, M. (2018). Confronting the Climate Challenge: U.S. Policy Options. New York: Columbia University Press.
Goulder, L., & Schein, A. (2013). Carbon Taxes versus Cap and Trade: A Critical Review. Climate Change Economics, 4(3).
Hertel, T. W. (eds). 1997. Global Trade Analysis: Modeling and Applications, Cambridge University Press.
Jaffe, A., Peterson, S., Portney, P., & Stavins, R. (1995). Environmental regulation and the competitiveness of U.S. manufacturing: What does the evidence tell us? Journal of Economic Literature, 33(1), 132-163.
Jung, C., Krutilla, K., & Boyd, R. (1996). Incentives for Advanced Pollution Abatement Technology at the Industry Level: An Evaluation of Policy Instruments. Journal of Environmental Economics and Management, 30, 95-111.
Keohane, N. (2009). Cap and Trade, Rehabilitated: Using Tradable Permits to Control U.S. Greenhouse Gases. Review of Environmental Economics and Policy, 3(1), 42-62.
Kumsup, P., Tantivasadakarn, C., Meepokee, C., Sirisuntorn, P., & Suksai, N., (2014). Study on Energy Policy and Direction (Thai), submitted to The Excise Department, March 2014.
Kalt, J. (1988). The Impact of Domestic Environmental Regulatory Policies on U.S. International Competitiveness, in International competitiveness. Spence, M., & Hazard, H. (eds). Cambridge, MA: Harper and Row, Ballinger, 221-62.
Kaplow, L. (2010). Taxes, Permits, and Climate Change. National Bureau of Economic Research Working Paper No. 16268. Leonard, H. (1988). Pollution and the struggle for the world product. Cambridge, UK: Cambridge U. Press.
Low, P., & Yeats, A. (1992). Do “Dirty” Industries Migrate? In P. Low (ed.), International Trade and the Environment. World Bank Discussion Papers 159. Washington, DC.
Mankiw, G. (2006). "The Pigou Club Manifesto." Greg Mankiw's Blog. https://gregmankiw.blogspot.com/2006/10/pigou-clubmanifesto.html.
McDougall, R., Golub, A. (2007). GTAP-E: A Revised Energy – Environmental Version of the GTAP model. GTAP research memorandum No.15, October 2007.
McGuire, M. (1982). Regulation, Factor Re- wards, and International Trade, Journal of Public Economics, 17(3), 335-54.
Metcalf, G. (2009). Market Based Policy Options to Control U.S. Greenhouse Gas Emissions. Journal of Economic Perspectives, 23(2), 527.
Milliman, S., & Prince, R. (1989). Firm Incentives to Promote Technological Change in Pollution Control. Journal of Environmental Economics and Management 17, 247-265.
Moore, N., Großkurth, P., & Themann, M. (2018). Multinational corporations and the EU Emissions Trading System: The specter of asset erosion and creeping deindustrialization. Journal of Environmental Economics and Management, 94, 1-26.
Newell, R., Jaffe, A., & Stavins, R. (1999). The Induced Innovation Hypothesis and Energy-Saving Technological Change. Quarterly Journal of Economics, 114, 941-975.
Newell, R., & Stavins, R. (2003). Cost Heterogeneity and the Potential Savings from Market-Based Policies. Journal of Regulatory Economics, 23, 43-59. Oxford Martin School, “Carbon pricing can spur economic growth more than we thought, says new research”, 6 February, 2018. Retrieved from https://www.oxfordmartin.ox.ac.uk/news/2018-newscarbonpricing-economy/
Nordhaus, W. (2007). To Tax or Not to Tax: Alternative Approaches to Slowing Global Warming. Review of Environmental Economics and Policy, 1(1), 26-44.
Nurdianto, D., & Resosudarmo, B. (2016). The Economywide Impact of a Uniform Carbon Tax in ASEAN. Journal of Southeast Asian Economies, 33(1), 1-22. Pethig, R. (1975). Pollution, Welfare, and Environmental Policy in the Theory of Comparative Advantage, International Environmental Economic Management, 2, 160-69.
Puttanapong N., Wachirarangsrikul S., Phonpho W., & Raksakulkarn, V. (2014). A Monte-Carlo Dynamic CGE Model for the Impact Analysis of Thailand’s Carbon Tax Policies, The 4th Congress of East Asian Association of Environmental and Resource Economics, February 12th - 14th 2014, Busan, Republic of Korea.
Robinson, D. (1988) Industrial Pollution Abatement: The Impact on Balance of Trade. Canadian Journal of Economics, 21(1), 187-99.
Sanidas, E., & Shin, Y. (2010). Comparison of Revealed Comparative Advantage Indices with Application to Trade Tendencies of East Asian Countries, Paper Presented at the 9th Korea and the World Economy Conference, Incheon, 2010.
Siebert, H. (1977). Environmental Quality and the Gains from Trade. Kyklos, 30(4), 657-73.
Siegmeier, J., Mattauch, L., & Edenhofer, O. (2018). Capital beats coal: how collecting the climate rent increases aggregate investment. Journal of Environmental Economics and Management, 88, 366-378.
Scripps Institution of Oceanography (2013). University of California at San Diego, online information at https://scripps.ucsd.edu/news/7992.
Stavins, R. (1995). Transaction Costs and Tradeable Permits. Journal of Environmental Economics and Management, 29, 133-146.
Stavins, R. (2019). Carbon Taxes vs. Cap and Trade: Theory and Practice.
Sutummakid, N., Tantivasadakarn, C., Kansuntisukmongkol, C., & Aroonruengsawat, A. (2015). A project to study the possibility of developing international carbon market, (Thai) submitted to The Thailand Greenhouse Gas Management Organization, 2015.
Tantivasadakarn, C., Sutummakid, N., & Kansuntisukmongkol, C. (2008). Carbon Surcharge in Thai transportation sector (Thai), a research project supported by The Thailand Research Fund, October, 2008.
Tobey, J. (1990). The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test, Kyklos, 43(2), 191-209.
Wattanakuljarus, A., & Wongsa, K. (2011). The usage of carbon tax to mitigate carbon dioxide and the impacts on Thai economy (Thai), submitted to Thai Health Promotion Foundation, 2011.
Weitzman, M. (1974). Prices vs. Quantities. Review of Economic Studies, 41(4), 477-491.
World Bank (2020) State and Trends of Carbon Pricing 2020. Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/33809 License: CC BY 3.0 IGO.
United Nations Framework Convention on Climate Change (2019). Revenue-Neutral Carbon Tax | Canada, https://unfccc.int/climate-action/momentum-forchange/financing-for-climate-friendly/revenue-neutralcarbon-tax
Yohe, G. (1979). The Backward Incidence of Pollution Control-Some Comparative Statics in General Equilibrium. International Environmental Economic Management, 6(3), 187-98.
Yu, R., Cai, J. & Leung, P. (2009). The normalized revealed comparative advantage index. Annals of Regional Science, 43, 267-282.
Yusuf, A., & Resosudarmo, B. (2015). On the Distributional Effect of Carbon Tax in Developing Countries: The Case of Indonesia. Environmental Economics and Policy Studies, 17,
