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CO2 Emission Reduction Strategies and Economic Development of India

Author

Listed:
  • N. Satyanarayana Murthy

    (N. Satyanarayana Murthy is with the Operation Planning Department, PSA Corporation Ltd, Singapore, e-mail: n.satya.murthy@gmail.com)

  • Manoj Panda

    (Manoj Panda is Professor at the Indira Gandhi Institute of Development Research, Mumbai, e-mail: manoj@igidr.ac.in)

  • Kirit Parikh

    (Kirit Parikh is a Member of the Planning Commission, Government of India, e-mail: kirit.parikh@nic.in)

Abstract

This article examines the consequences of alternative CO 2 emission reduction strategies on economic development and, in particular, the implications for the poor by empirically implementing an economy-wide model for India over a 35-year time horizon. A multi-sectoral, inter-temporal model in the activity analysis framework is used for this purpose. The model with specific technological alternatives, endogenous income distribution and truly dynamic behaviour and that covers the whole economy is an integrated top-down–bottom-up model. The results show that CO 2 emission reduction imposes costs in terms of lower GDP and higher poverty. Cumulative emission reduction targets are, however, preferable to annual reduction targets and that a dynamically optimum strategy can help reduce the burden of emission reductions. The scenarios involving compensation for the loss in welfare are not very encouraging as they require large capital inflows. Contrasted with these, scenarios involving tradable emission quota give India an incentive to be carbon efficient. It becomes a net seller for the first 25 years, and because of reduction in carbon intensity it would demand less in later years when it becomes a net buyer. The results suggest that for India and other developing countries, the window of opportunity to sell carbon quotas is the next two decades or so.

Suggested Citation

  • N. Satyanarayana Murthy & Manoj Panda & Kirit Parikh, 2007. "CO2 Emission Reduction Strategies and Economic Development of India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 1(1), pages 85-118, March.
  • Handle: RePEc:sae:mareco:v:1:y:2007:i:1:p:85-118
    DOI: 10.1177/097380100600100104
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    References listed on IDEAS

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    Cited by:

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    3. Incaltarau, Cristian, 2010. "Will India become a world economy power?," MPRA Paper 28658, University Library of Munich, Germany.

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    More about this item

    Keywords

    Carbon Dioxide; Emission Quota; Emission Trading; Economic Development; Activity Analysis; JEL Classification: O21; JEL Classification: Q52; JEL Classification: Q56; JEL Classification: Q58;
    All these keywords.

    JEL classification:

    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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