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Toward a low carbon growth in Mexico : is a double dividend possible ? A dynamic general equilibrium assessment

Author

Listed:
  • Gissela Landa
  • Frédéric Reynés
  • Ivan Islas

    (INECC - Instituto Nacional de Ecología y Cambio Climático)

  • François-Xavier Bellock

    (AFD - Agence française de développement)

  • Fabio Grazi

    (AFD - Agence française de développement)

Abstract

This paper simulates the medium- and long-term impact of proposed and expected energy policy on the environment and on the Mexican economy. The analysis has been conducted with a Multi-sector Macroeconomic Model for the Evaluation of Environmental and Energy policy (Three-ME). This model is well suited for policy assessment purposes in the context of developing economies as it indicates the transitional effects of policy intervention. Three-ME estimates the carbon tax required to meet emissions reduction targets within the Mexican "Climate Change Law", and assesses alternative policy scenarios, each reflecting a different strategy for the recycling of tax revenues. With no compensation, the taxation policy if successful will succeed in in reducing CO2 emissions by more than 75% by 2050 with respect to Business as Usual (BAU), but at high economic costs. Under full redistribution of carbon tax revenues, a double dividend arises and the policy is beneficial both in terms of GDP and CO2 emissions reduction.

Suggested Citation

  • Gissela Landa & Frédéric Reynés & Ivan Islas & François-Xavier Bellock & Fabio Grazi, 2015. "Toward a low carbon growth in Mexico : is a double dividend possible ? A dynamic general equilibrium assessment," Working Papers hal-03459685, HAL.
    • Handle: RePEc:hal:wpaper:hal-03459685
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03459685
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    References listed on IDEAS

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