Managing the trade-off between economic growth and protection of environmental quality : the case of taxing water pollution in the Olifants river basin of South Africa
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Date
Authors
Kyei, Clement Kweku
Hassan, Rashid M.
Journal Title
Journal ISSN
Volume Title
Publisher
IWA Publishing
Abstract
A series of pollution control measures have been introduced to protect water quality in the Olifants river basin, the third most water-stressed and most polluted basin in South Africa. This paper employed an environmentally extended computable general equilibrium (CGE) model to analyse the economic and environmental implications of a tax on water pollution in the basin. Implications of increasing the pollution tax rate currently in place for the levels of economic activities and water quality have been simulated under alternative tax revenue recycling schemes. Results of our policy simulations suggest that internalising the cost of water pollution through the tax regime achieves its environmental goals of protecting the aquatic ecosystem, by shifting production away from pollution-intensive sectors. This, however, comes at some cost to the regional economy of the basin. Recycling the tax revenue through income transfers to households or a subsidy to pollution abatement mitigates the adverse economic impacts.
Description
Keywords
Environmental CGE model, Market-based incentives, Olifants river, Pollution control policy, Water quality, Taxes, Welfare, Management, Impact, Policy analysis, Computable general equilibrium (CGE)
Sustainable Development Goals
Citation
Kyei, C. & Hassan, R. 2019, 'Managing the trade-off between economic growth and protection of environmental quality: The case of taxing water pollution in the Olifants river basin of South Africa', Water Policy, vol. 21, no. 2, pp. 277-290.