Which Climate Change Mitigation Policy-mix to Argentina? A General Computable Equilibrium Approach

MARIA PRISCILA RAMOS; CARLOS ADRIAN ROMERO; MARTÍN JACQUET; JUAN IGNACIO MERCATANTE; MARÍA LAURA OJEDA; OMAR OSVALDO CHISARI

Conferencia; 24th ICABR Conference "ACCELERATING THE BIOECONOMY"; 2020

In the last couple of years, there has been widespread concern in connection to air quality and global warming. Hence, governments have begun to adopt a more proactive role aiming to reduce the universally known Green House Gases (GHG). The Republic of Argentina is no exception to such phenomena. Consequently, the purpose of this paper is to evaluate which measures result better fitted so as to generate significant change whilst reducing any possible detrimental effects over the economy and society. Similarly, this work also intends to shed some light over the latent dispute in the literature between the establishment of a carbon tax and the reduction of subsidies to fossil fuels. Therefore, a multi-sector dynamic recursive Computable General Equilibrium Model for Argentina was developed with especial treatment for energy, agriculture and (de)forestry modelling, mainly concerned by GHG emissions. GDP, welfare and GHG emissions results suggest that a policy-mix that combines the elimination of fossil fuels subsidies and a carbon tax on sectors linked to an intensive land use would be both, environmentally and socio-economic preferable than a generalized carbon tax which may be extremely damaging to the industrial sectors. Conclusions of this work lead to climate change policy recommendations for countries with similar characteristics to Argentina.