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Are Carbon Taxes Good for the Poor? A General Equilibrium Analysis for Vietnam

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  • Coxhead, Ian
  • Wattanakuljarus, Anan
  • Nguyen, Chan V.

Abstract

We evaluate effects of an environmental tax using a general equilibrium model linked to a household database. The burden of the tax, applied mainly to energy, is passed forward by non-tradable industries and backward by tradable industries facing fixed world prices. The tax is thus equivalent to a real exchange rate appreciation, and since export industries are labor-intensive, reduces employment, and increases poverty, especially when labor supply is responsive to wages. The use of revenues to increase transfers to households can offset poverty increases, but does not create jobs; thus the tax will likely conflict with other development policy objectives.

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  • Coxhead, Ian & Wattanakuljarus, Anan & Nguyen, Chan V., 2013. "Are Carbon Taxes Good for the Poor? A General Equilibrium Analysis for Vietnam," World Development, Elsevier, vol. 51(C), pages 119-131.
    • Handle: RePEc:eee:wdevel:v:51:y:2013:i:c:p:119-131
    DOI: 10.1016/j.worlddev.2013.05.013
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    4. van Ruijven, Bas J. & O’Neill, Brian C. & Chateau, Jean, 2015. "Methods for including income distribution in global CGE models for long-term climate change research," Energy Economics, Elsevier, vol. 51(C), pages 530-543.
    5. Nong, Duy, 2018. "General equilibrium economy-wide impacts of the increased energy taxes in Vietnam," Energy Policy, Elsevier, vol. 123(C), pages 471-481.
    6. Nong, Duy & Wang, Can & Al-Amin, Abul Quasem, 2020. "A critical review of energy resources, policies and scientific studies towards a cleaner and more sustainable economy in Vietnam," Renewable and Sustainable Energy Reviews, Elsevier, vol. 134(C).
    7. Ditya A Nurdianto & Budy P Resosudarmo, 2014. "ASEAN Economic community and climate change," Departmental Working Papers 2014-24, The Australian National University, Arndt-Corden Department of Economics.
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    9. Nong, Duy & Nguyen, Duong Binh & Nguyen, Trung H. & Wang, Can & Siriwardana, Mahinda, 2020. "A stronger energy strategy for a new era of economic development in Vietnam: A quantitative assessment," Energy Policy, Elsevier, vol. 144(C).
    10. Anh Quynh Tang & Takeshi Mizunoya, 2024. "Quantitative Approaches for Analyzing the Potential Effectiveness of Vietnam’s Emissions Trading System: A Systematic Review," Sustainability, MDPI, vol. 16(13), pages 1-14, June.
    11. Naomi Tan & John Harrison & Mark Howells, 2024. "Comparing Long-Term Power Sector Pathways in Viet Nam: A Simple Cost-Optimization Approach with OSeMOSYS," Energies, MDPI, vol. 17(23), pages 1-24, December.
    12. Dissanayake, Sumali & Mahadevan, Renuka & Asafu-Adjaye, John, 2018. "How efficient are market-based instruments in mitigating climate change in small emitter South Asian economies?," Economic Modelling, Elsevier, vol. 75(C), pages 169-180.
    13. Nong, Duy & Nguyen, Trung H. & Wang, Can & Van Khuc, Quy, 2020. "The environmental and economic impact of the emissions trading scheme (ETS) in Vietnam," Energy Policy, Elsevier, vol. 140(C).
    14. Lorenza Campagnolo & Fabio Eboli & Marinella Davide, 2016. "Can Paris deal boost SDGs achievement? An assesment of climate-sustainabilty co-benefits or side-effects," EcoMod2016 9635, EcoMod.
    15. Anan Wattanakuljarus, 2021. "Diverse effects of fossil fuel subsidy reform on industrial competitiveness in Thailand," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(3), pages 489-517, September.
    16. Ian Coxhead & Corbett Grainger, 2018. "Fossil Fuel Subsidy Reform in the Developing World: Who Wins, Who Loses, and Why?," Asian Development Review, MIT Press, vol. 35(2), pages 180-203, September.
    17. Tri Purwaningsih, Vitriyani & Widodo, Tri, 2019. "Applying Tax Rate of 33,33% on Primary Energy in Indonesia," MPRA Paper 91315, University Library of Munich, Germany.

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