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General Equilibrium Techniques for Environmental Policy Analysis

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Date

2024

Authors

Supervisor

Winchester, Niven
Jiang, Nan

Item type

Thesis

Degree name

Doctor of Philosophy

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Publisher

Auckland University of Technology

Abstract

Input-output datasets and economy-wide modelling have been widely used to investigate environmental externalities and policies. This thesis uses both to investigate plastic use by sector, the economy-wide impacts of tax on clothing produced from plastics, and the land use and broader economic impacts of including forestry in an emissions trading scheme. To stop plastic pollution, policymakers and consumers should have an understanding of which industries are using a high value of plastic inputs. To estimate this, in the first paper of this thesis, I use an input-output database to calculate the plastic intensity (direct and indirect plastic use per dollar of output) of 415 industries in the USA across 13 types of plastic. I find that clothing and fabric related industries use a relatively high intensity of both aggregate plastics and polluting plastics, especially plastic fibres and filaments. Given the high plastic use in the clothing industry, in the second paper of this thesis, I investigate the potential economic and land use change impacts from a shift to plastic and synthetic chemical free clothing. I do this using a bespoke global computable general equilibrium (CGE) model which represents both conventional clothing and plastic and synthetic chemical free clothing. In the policy scenarios for the model, a tax on conventional clothing sectors is introduced until all clothing production in taxed regions is plastic and synthetic chemical free. The results indicate that an increase in conventional clothing production in untaxed regions could have a negative impact on the effectiveness of a plastic clothing policy. They also indicate that there could be a significant amount of land use change from this policy, with land used for traditional plastic and chemical alternatives such as cotton, flax, natural rubber, and oleaginous fruits increasing at the expense of food-based agriculture. Land use change should be an important consideration for environmental policies. Especially when those policies are directly related to farmer decision making, like the New Zealand Emissions Trading Scheme (NZ ETS). Accordingly, in the third paper of this thesis, I explore the economic and land use change impacts of production and permanent exotic forestry permits in the NZ ETS. I link a forestry model, a CGE model, and land use change functions to measure the expected proportion of foresters who will change land use from production to permanent forests at harvesting age from 2014 to 2050. The modelling analysis shows that this land use change increases carbon sequestration in New Zealand from 11 to 28 percent by 2050 (relative to the baseline), depending on farmers’ responsiveness to the carbon price. Any increase in carbon sequestration, driven by the expansion in land used for permanent forests, increases both GDP and welfare relative to the baseline.

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http://hdl.handle.net/10292/18013

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