Global socio-economic and climate change mitigation scenarios through the lens of structural change

Lefèvre, Julien; Gallic, Thomas Le; Fragkos, Panagiotis; Mercure, Jean-François; Simsek, Yeliz; Paroussos, Leonidas

doi:10.1016/j.gloenvcha.2022.102510

Cited by 25 publications

(11 citation statements)

References 69 publications

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“…As a first major result, we find that carbon pricing implies the risk of delaying the structural transformation process, mainly by increasing the cost of production and therefore changing the relative competitiveness of Indian manufacturing sectors over time compared to non-manufacturing Indian sectors as well as to manufacturing sectors in other countries. The development effect indicated by the decrease in manufacturing production goes beyond the secondorder impact found by Lefevre et al [25] in a global study, in which, due to a longer time horizon (until 2050), economies have more time to adapt. Changes in output and value-added shares can be expected to be large on a disaggregated manufacturing sector level (see figures A.9 and A.10 in the appendix), in particular in the fossil energy sector.…”

Section: Discussionmentioning

confidence: 63%

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Macroeconomic structural change likely increases inequality in India more than climate policy

Leimbach,

Hübler,

Mahlkow

et al. 2024

Environ. Res. Lett.

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The decarbonization of India’s economy will have different effects across income groups. As India is in the middle of the transformation process from an agriculture-based economy towards an industry- and service-based economy, called economic structural change, the extent of income distribution across households strongly depends also on the speed of economic transformation. While a number of recent studies have analyzed the distributional effects of carbon pricing, the specific role of structural change across sectors has not been in the focus of the related literature. Our study contrasts distributional effects from climate policy with distributional effects from structural change in India and asks how far carbon pricing supports or hinders structural change and development. We develop and apply a comprehensive model framework that combines economic growth and international trade dynamics related to structural change with detailed household income and expenditure data for India. Our study shows that changes in income and inequality due to carbon pricing vary with the changes in the sectoral structure of economies. Our results indicate that carbon pricing tends to delay economic structural change by retarding the reallocation of economic activities from the agricultural sector to the manufacturing sector. Furthermore, the results emphasize that the increase in inequality due to structural change is substantially stronger than due to carbon pricing. Consequently, socially sensitive policies supporting the process of structural transformation appear to be more important for poor households than lowering climate policy ambitions.

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Section: Discussionmentioning

confidence: 63%

“…We contribute by adding the structural change development perspective and find out that climate policy tends to slow down structural change. Only two other studies have a comparable focus-Lefevre et al [25] and Ciarli and Sanova [26]. The former, however, does not look into distributional effects on the household level as we do.…”

Section: Introductionmentioning

confidence: 79%

Macroeconomic structural change likely increases inequality in India more than climate policy

Leimbach,

Hübler,

Mahlkow

et al. 2024

Environ. Res. Lett.

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“…The eight models cover all the main modeling paradigms in the literature: 2 detailed-process IAMs, 2 bene t-cost IAMs, 3 Computable General Equilibrium (CGE) models, and 1 macro-econometric model. The diversity in representing economic processes, in the solution concept, and the technological, sectoral and regional resolution is a primary added value of this modeling exercise, given the widely different results available in the literature on the economics of decarbonization (Köberle et al, 2021;Guivarch et al, 2022;Lefèvre et al, 2022). See the Methods section for details about the participating models.…”

Section: Methodsmentioning

confidence: 99%

A Multi-Model Assessment of Inequality and Climate Change

Emmerling,

Andreoni,

Charalampidis

et al. 2024

Preprint

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Climate change and inequality are critical and interrelated defining issues for this century. Despite growing empirical evidence on the economic incidence of climate policies and impacts, mainstream model-based assessments are often silent on the interplay between climate change and economic inequality. For example, all the major model comparisons reviewed in IPCC neglect within-country inequalities. Here we fill this gap by presenting a model ensemble of eight large-scale Integrated Assessment Models belonging to different model paradigms and featuring economic heterogeneity. We study the distributional implications of Paris-aligned climate target of 1.5 degree and include different carbon revenue redistribution schemes. Moreover, we account for the economic inequalities resulting from residual and avoided climate impacts. We find that price-based climate policies without compensatory measures increase economic inequality in most countries and across models. However, revenue redistribution through equal per-capita transfers can offset this effect, leading to on average decrease in the Gini index by almost two points. When climate benefits are included, inequality is further reduced, but only in the long term. Around mid-century, the combination of dried-up carbon revenues and yet limited climate benefits leads to higher inequality under the Paris target than in the Reference scenario, indicating the need for further policy measures in the medium term.

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“…The properties of the climate policy and structural change scenarios are discussed in the Introduction and Results sections. The pattern of structural change, as displayed in Figure 1 for the baseline scenario, also largely applies under different climate policy scenarios, implying that climate policies will not substantially change the macroeconomic structural transformation 37 .…”

Section: Scenario Designmentioning

confidence: 99%

Structural change likely increases inequality in India more than climate policy

Leimbach

Hübler

Mahlkow

et al. 2022

Preprint

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The decarbonization of India’s economy will affect economic actors differently. Here we study the distributional effects of climate policy in India, taking the specific role of structural economic change into account. We contrast distributional effects from climate policy with distributional effects from structural change and quantify how far carbon pricing supports structural change and economic development. We develop and apply a comprehensive model framework that combines long-term growth and medium-term trade dynamics related to structural change with detailed household income and expenditure data for India. Our results emphasize that distributional effects from structural change are stronger than from carbon pricing. Consequently, governments should not focus solely on the distributional effects of climate policy, but also consider the larger context of economic transformation processes when designing and implementing social policies.

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Global socio-economic and climate change mitigation scenarios through the lens of structural change

Cited by 25 publications

References 69 publications

Macroeconomic structural change likely increases inequality in India more than climate policy

Macroeconomic structural change likely increases inequality in India more than climate policy

A Multi-Model Assessment of Inequality and Climate Change

Structural change likely increases inequality in India more than climate policy

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