Regional Strategy Direction for Global Warming Prevention-The Case of Korea

Abstract

This paper attempts to construct a simple recursive multi-region computable general equilibrium model to analyze the impacts of various global warming prevention policies on an economy. In this paper, it is premised that the amount of carbon dioxide emitted in 2003 should be reduced by 25%. Two policy scenarios are suggested as follows: 1) the imposition of the carbon dioxide tax on an economy 2) the imposition of a carbon dioxide tax and tax revenue to be used only for forestation that results in enhancing the sink effect. Here, the carbon dioxide tax rate is endogenously determined by the amount of the carbon dioxide emitted in a region. The impacts of the two policies on the economies of two Korean regions are specifically analyzed in terms of economic efficiency and public welfare. Finally, the paper suggests policy direction for the Korean government regarding global warming prevention, based on the results obtained.