The economic and environmental effects of a carbon tax in South Africa: A dynamic CGE modelling approach

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dc.contributor.authorVan Heerden, Jan
dc.contributor.authorBlignaut, James
dc.contributor.authorBohlmann, Heinrich
dc.contributor.authorCartwright, Anton
dc.contributor.authorDiederichs, Nicci
dc.contributor.authorMander, Myles
dc.date.accessioned2021-10-08T07:16:01Z
dc.date.available2021-10-08T07:16:01Z
dc.date.issued2016
dc.description.abstractThe economic and environmental effects of a carbon tax in South Africa: A dynamic cge modelling approachSouth Africa’s National Treasury released its Carbon Tax Policy Paper in May 2013. The paper proposed a R120/tCO2-equiv. levy on coal, gas and petroleum fuels. Here, we model the possible impacts of such a tax on the South African economy using the computable general equilibrium (CGE) 53-sector model of the University of Pretoria’s Department of Economics. The model shows that the carbon tax has the capacity to decrease South Africa’s greenhouse gas (GHG) emissions by between 1 900MtCO2-equiv. and 2 300MtCO2-equiv. between 2016 and 2035. The extent of emissions reductions is most sensitive to the rate at which tax exemptions are removed. Recycling of carbon tax revenue reduces the extent of emissions reductions due to the fact that economic growth is supported. The manner in which carbon tax revenue is recycled back into the economy is therefore important in terms of the extent of emissions reductions achieved, but not as significant as the influence of different exemption schedules. The model shows the carbon tax to have a net negative impact on South Africa’s gross domestic product (GDP) relative to the baseline under all exemption regimes and all revenue recycling options assessed. The negative impact of the carbon tax on GDP is, however, greatly reduced by the manner in which the tax revenue is recycled. Recycling in the form of a production subsidy for all industries results in the lowest negative impact on GDP.
dc.identifier.apacitationVan Heerden, J., Blignaut, J., Bohlmann, H., Cartwright, A., Diederichs, N., & Mander, M. (2016). The economic and environmental effects of a carbon tax in South Africa: A dynamic CGE modelling approach. <i>South African Journal of Surgery</i>, 19(5), 714 - 732. http://hdl.handle.net/11427/34749en_ZA
dc.identifier.chicagocitationVan Heerden, Jan, James Blignaut, Heinrich Bohlmann, Anton Cartwright, Nicci Diederichs, and Myles Mander "The economic and environmental effects of a carbon tax in South Africa: A dynamic CGE modelling approach." <i>South African Journal of Surgery</i> 19, 5. (2016): 714 - 732. http://hdl.handle.net/11427/34749en_ZA
dc.identifier.citationVan Heerden, J., Blignaut, J., Bohlmann, H., Cartwright, A., Diederichs, N. & Mander, M. 2016. The economic and environmental effects of a carbon tax in South Africa: A dynamic CGE modelling approach. <i>South African Journal of Surgery.</i> 19(5):714 - 732. http://hdl.handle.net/11427/34749en_ZA
dc.identifier.issn1015-8812
dc.identifier.issn2222-3436
dc.identifier.ris TY - Journal Article AU - Van Heerden, Jan AU - Blignaut, James AU - Bohlmann, Heinrich AU - Cartwright, Anton AU - Diederichs, Nicci AU - Mander, Myles AB - The economic and environmental effects of a carbon tax in South Africa: A dynamic cge modelling approachSouth Africa’s National Treasury released its Carbon Tax Policy Paper in May 2013. The paper proposed a R120/tCO2-equiv. levy on coal, gas and petroleum fuels. Here, we model the possible impacts of such a tax on the South African economy using the computable general equilibrium (CGE) 53-sector model of the University of Pretoria’s Department of Economics. The model shows that the carbon tax has the capacity to decrease South Africa’s greenhouse gas (GHG) emissions by between 1 900MtCO2-equiv. and 2 300MtCO2-equiv. between 2016 and 2035. The extent of emissions reductions is most sensitive to the rate at which tax exemptions are removed. Recycling of carbon tax revenue reduces the extent of emissions reductions due to the fact that economic growth is supported. The manner in which carbon tax revenue is recycled back into the economy is therefore important in terms of the extent of emissions reductions achieved, but not as significant as the influence of different exemption schedules. The model shows the carbon tax to have a net negative impact on South Africa’s gross domestic product (GDP) relative to the baseline under all exemption regimes and all revenue recycling options assessed. The negative impact of the carbon tax on GDP is, however, greatly reduced by the manner in which the tax revenue is recycled. Recycling in the form of a production subsidy for all industries results in the lowest negative impact on GDP. DA - 2016 DB - OpenUCT DP - University of Cape Town IS - 5 J1 - South African Journal of Surgery LK - https://open.uct.ac.za PY - 2016 SM - 1015-8812 SM - 2222-3436 T1 - The economic and environmental effects of a carbon tax in South Africa: A dynamic CGE modelling approach TI - The economic and environmental effects of a carbon tax in South Africa: A dynamic CGE modelling approach UR - http://hdl.handle.net/11427/34749 ER - en_ZA
dc.identifier.urihttp://hdl.handle.net/11427/34749
dc.identifier.vancouvercitationVan Heerden J, Blignaut J, Bohlmann H, Cartwright A, Diederichs N, Mander M. The economic and environmental effects of a carbon tax in South Africa: A dynamic CGE modelling approach. South African Journal of Surgery. 2016;19(5):714 - 732. http://hdl.handle.net/11427/34749.en_ZA
dc.language.isoeng
dc.publisher.departmentDepartment of Environmental and Geographical Science
dc.publisher.facultyFaculty of Science
dc.sourceSouth African Journal of Surgery
dc.source.journalissue5
dc.source.journalvolume19
dc.source.pagination714 - 732
dc.source.urihttps://dx.doi.org/10.4102/sajems.v19i5.1586
dc.subject.othercomputable general equilibrium
dc.subject.otherUPGEM
dc.subject.othercarbon tax
dc.titleThe economic and environmental effects of a carbon tax in South Africa: A dynamic CGE modelling approach
dc.typeJournal Article
uct.type.publicationResearch
uct.type.resourceJournal Article
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