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M. P. Ramos and O. O. Chisari
Keywords Climate change · Carbon tax · Environmentally oriented trade
policies · Dividends · CGE model · Argentina
Introduction
International coordination is important for the reduction of greenhouse gas (GHG)
emissions. Left alone, most countries would not have incentives to fight climate
change (CC) and would rather allocate resources to adaptation taxes (Chisari et al.
2016). That is rational at an individual level, but inefficient from a social (world)
perspective.
Thus, international agreements and their effective enforcement seem to be
unavoidable. More than 200 multilateral environmental agreements ratified by, at
least, more than two countries have been signed in the last 20 years. However, only a
few of them have been oriented to seek coordinated actions facing the CC problem.
Among them, we can mention: the Montréal Protocol (1985); the Kyoto Protocol
(1997); and the recent Paris Agreement (2015). For instance, the Paris Agreement
seeks to achieve a global and common commitment by all countries but differentiated
based on both their responsibility in the context of global emissions and their financial
possibilities and development constraints. Nevertheless, none of these agreements
explicitly states the obligatory nature of the means to achieve the emission reduction
targets or global temperature targets (maximum increase of 2 °C according to the
Paris Agreement). For that reason, each country should design its own environmental
instrument which best suits the state of its economy.
Argentina, like other Latin American countries, is a small country in terms of its
GHG emissions—less than 1% of the global carbon dioxide (CO 2 ) emissions are
due to this economy—particularly compared to the USA, China and the European
Union, which account for more than half of the global CO 2 emissions (CAIT Climate
Data Explorer 2015). Even though the comparative responsibility of Argentina for
the global GHG emissions is minor, efforts are not costless for the economy (e.g.
lower consumption, changes in resource allocation, need for technological reconversion in some sectors and change in consumption behaviours and preferences).
Moreover, the costs of reducing GHG emissions are greater for the economies under
macroeconomic stress, as is the case of Latin American countries. Thus, it might not
be wise to constrain the discussion of CC policies to the normative dimension that
designs optimal economic policies under ideal conditions of full employment, wellbehaved markets and abundance of capital. Instead, the recommended CC policies
for developing countries must be reconsidered through the lens of their structural
problems.
Consequently, setting the current challenge for researchers and policymakers,
the choice of a CC policy instrument (i.e. the carbon tax, cap-and-trade measures
and other second best tax packages) has to take into account the functioning of the
factors market (unemployment, wage rigidities, capital flight), the external restrictions (low diversification of exports, recurrent balance of payment crises), structural
M. P. Ramos and O. O. Chisari
Keywords Climate change · Carbon tax · Environmentally oriented trade
policies · Dividends · CGE model · Argentina
Introduction
International coordination is important for the reduction of greenhouse gas (GHG)
emissions. Left alone, most countries would not have incentives to fight climate
change (CC) and would rather allocate resources to adaptation taxes (Chisari et al.
2016). That is rational at an individual level, but inefficient from a social (world)
perspective.
Thus, international agreements and their effective enforcement seem to be
unavoidable. More than 200 multilateral environmental agreements ratified by, at
least, more than two countries have been signed in the last 20 years. However, only a
few of them have been oriented to seek coordinated actions facing the CC problem.
Among them, we can mention: the Montréal Protocol (1985); the Kyoto Protocol
(1997); and the recent Paris Agreement (2015). For instance, the Paris Agreement
seeks to achieve a global and common commitment by all countries but differentiated
based on both their responsibility in the context of global emissions and their financial
possibilities and development constraints. Nevertheless, none of these agreements
explicitly states the obligatory nature of the means to achieve the emission reduction
targets or global temperature targets (maximum increase of 2 °C according to the
Paris Agreement). For that reason, each country should design its own environmental
instrument which best suits the state of its economy.
Argentina, like other Latin American countries, is a small country in terms of its
GHG emissions—less than 1% of the global carbon dioxide (CO 2 ) emissions are
due to this economy—particularly compared to the USA, China and the European
Union, which account for more than half of the global CO 2 emissions (CAIT Climate
Data Explorer 2015). Even though the comparative responsibility of Argentina for
the global GHG emissions is minor, efforts are not costless for the economy (e.g.
lower consumption, changes in resource allocation, need for technological reconversion in some sectors and change in consumption behaviours and preferences).
Moreover, the costs of reducing GHG emissions are greater for the economies under
macroeconomic stress, as is the case of Latin American countries. Thus, it might not
be wise to constrain the discussion of CC policies to the normative dimension that
designs optimal economic policies under ideal conditions of full employment, wellbehaved markets and abundance of capital. Instead, the recommended CC policies
for developing countries must be reconsidered through the lens of their structural
problems.
Consequently, setting the current challenge for researchers and policymakers,
the choice of a CC policy instrument (i.e. the carbon tax, cap-and-trade measures
and other second best tax packages) has to take into account the functioning of the
factors market (unemployment, wage rigidities, capital flight), the external restrictions (low diversification of exports, recurrent balance of payment crises), structural