analyzing the obstacles and solutions of green growth using computable general equilibrium model

The relatively new concept of green growth can be fruitfully connected to concepts and theories in neoclassical economics including market externalities and policies that would correct externalities such as Pigovian taxes. While environmental effects are often considered to be non-market, many of the impacts of environment are often reflected in market accounts through damages that might include, for example,less labor (due to environment related health problems), reduced productivity of agroecosystems, or damage to infrastructure and other produced assets. A variety of market, policy, and institutional failures mean that the earth’s natural capital tends to be used in ways that are economically inefficient and wasteful, without sufficient reckoning of the true social costs of resource depletion and without adequate reinvestment in other forms of wealth. Moreover, despite the gains from growth, 1.3 billion people still do not have access to electricity, 2.6 billion still have no access to sanitation, and 900 million lack safe, clean drinking water. Growth has not been inclusive enough. Our purepose in this papar is to show that sustained growth is necessary to achieve the urgent development needs of the world’s poor and that there is substantial scope for growing cleaner without growing slower. In this paper we use a computable general equilibrium (CGE) model for the Islamic republic of iran to analysing the effect of increasing in the prices of the energy carriers and redistributing this revenue to performing green growth policies such as investment in clean energies and poverty reduction. Our results shows that growth rate of GDP declines in respons to increasing in energy prices in each three scenarios but after suplemmentary measures such as distributing the revenue of increasing in energy prices, this reduction declines. This compensation will effectively stimulate domestic consumption and investment and consequently, mitigate the negative impacts of the distortionary causes by changing the energy prices. moreover efficient redistribution and informing the people from the values of environmental assets will help to the effectiveness of this policies.

Keywords:

energy price , computable general equilibrium , Green growth