Development of an interactive multi-region enviro-economic equilibrium (IMR3E) model for managing inner- and inter-region carbon-emission mitigation

Abstract

Under the multiple pressures of climate change, carbon mitigation and economic development, systematically studying the compound effects of economic and environmental policies on the system is desired. An interactive multi-region enviro-economic equilibrium (IMR3E) model is developed to i) explore various carbon-mitigation effects (and their interactions) under multiple policy alternatives (in terms of carbon, income and production taxes) and their combinations. ii) characterize interactions among sectoral activities of multiple provinces, as well as their inner- and inter-region social-economic and environmental (SEE) effects. It is discovered that about 20 % of the carbon emission of the Yangtze River Economic Belt is to meet the final demands in other provinces (mainly in Guangdong and Beijing) outside the YREB. The power generation sector and the non-metallic mineral products industry (including the cement industry) are the main sources of external carbon emissions. Moreover, the composite effects of the implementation of different enviro-economic policies in YREB will be amplified along with the supply chain, and are reflected in the impact on carbon emissions of different provinces. The adjustment of YREB's production tax and carbon tax will have a certain impact on the indirect emission intensity of other provinces, while the income tax will not. For system symbiosis (i.e., an ecological indicator that reflects the fitness of the entire system), adjusting production tax is the most important factor, and a lower production tax level is the most beneficial. Regarding the consumption-based carbon emission intensity of other provinces, carbon tax policy has the greatest impact, with a contribution rate of over 95 %. Moreover, the interaction of carbon tax and production tax should be fully valued when adjusting the industrial structure.