The economic implications of introducing carbon taxes in South Africa

Arbeitspapier

South Africa is considering introducing carbon taxes to reduce greenhouse gas emissions. We evaluate potential impacts using a dynamic economy-wide model linked to an energy sector model. Simulation results indicate that a phased-in carbon tax that reaches US$30 per ton of CO2 by 2022 achieves the ambitious national emissions reductions targets set for 2025. Relative to a baseline with free disposal of CO2, constant world prices and no change in trading partner behaviour, the preferred tax scenario reduces national absorption and employment by 1.2 and 0.6 per cent, respectively, by 2025. However, if South Africa's trading partners unilaterally impose a carbon consumption tax then welfare and employment losses exceed those of a domestic carbon tax. Border tax adjustments improve welfare and employment while maintaining the same emissions reductions. The mode for recycling carbon tax revenues strongly influences distributional outcomes, with tradeoffs between growth and equity.

Object Details

• ISBN: 978-92-9230-509-3
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WIDER Working Paper ; No. 2012/46

Classification and Topics

• Classification: Wirtschaft ; Computable and Other Applied General Equilibrium Models ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products ; Environment and Growth
• Subject: carbon tax ; growth ; employment ; income distribution ; South Africa ; Ökosteuer ; Wirtschaftswachstum ; Beschäftigungseffekt ; Einkommensverteilung ; Südafrika

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Alton, Theresa ; Arndt, Channing ; Davies, Rob ; Hartley, Faaiqa ; Makrelov, Konstantin ; Thurlow, James ; Ubogu, Dumebi
• Event: Veröffentlichung
• (who): The United Nations University World Institute for Development Economics Research (UNU-WIDER)
• (where): Helsinki
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/81008
• Last update: 10.03.2025, 11:42 AM CET