تجزیه و تحلیل مدل تعادل عمومی قابل محاسبه اثرات متقابل سطح اقتصاد از سیاست های اجتماعی و زیست محیطی در شیلی

The analysis of the linkages between development policies and social and environmental variables is a neglected area within the development literature. This paper focuses on the key interrelations among the economic, social and environmental elements of the sustainable development triangle. A thorough review is undertaken of both social and environmental policies in Chile, underlining important economic growth and reforms. Using the static CGE model ECOGEM-Chile, the economywide impacts of several environmental, social and combined policies are simulated for the Chilean economy. Six different policies are simulated—three environmental policies that impose different taxes on PM10, SO2 and NO2 emissions, respectively; the same tax on PM10 in a context of high unemployment; one social policy that increases government transfers to households; and a mixed social-environmental policy package where the environmental tax on PM10 and the social transfer policy are simulated simultaneously. The results show that environmental tax policies may have negative social effects, using real disposable income by quintiles as proxy. The impacts depend on the use of the new revenues and the status of employment. Taxing PM10 emission yields better environmental results than taxing SO2 and NO2. Social policies do not show negative environmental impacts. Combined environmental and social policies improve results. Thus, specific compensating social policies would improve environmental policy acceptance, while also reducing poverty or strong income distribution disparities. The evidence suggests that environmental policies may have social impacts, but not vice versa. The results show that the ECOGEM-Chile model is useful for analyzing systematically and holistically, different economywide policies and their impact on the Chilean economy. Winners and losers may be identified, as well as the potential magnitude of gains and losses. The results obtained are not all straightforward, due to indirect effects.

In the 21st century, the concept of sustainable development is receiving increasing attention from world decision makers, in their search for new solutions to many critical problems including traditional development issues (such as economic stagnation, persistent poverty, hunger, malnutrition and illness), as well as newer challenges (like, worsening environmental degradation and accelerating globalisation). Governments have taken the responsibility to promote sustainable development—in response to Agenda 21 adopted unanimously at the 1992 United Nations Conference on Environment and Development (UNCED) in Rio 1992 and followed up at the 2002 World Summit on Sustainable Development (WSSD) in Johannesburg. While no universally acceptable practical definition of sustainable development exists, the concept has evolved to encompass three major points of view—economic, social and environmental (Munasinghe, 1992). For our purposes, sustainable development may be defined as a process for improving the range of opportunities that will enable individual human beings and communities to meet their needs, as well as to achieve their aspirations and full potential, over a sustained period of time, while maintaining the resilience of economic, social and environmental systems (Munasinghe, 1994). This wider perspective on human well-being has encouraged researchers to look beyond traditional development goals like maximizing economic output, and pay more attention to environmental and social effects. In this paper, we analyze the interrelation among environmental and social policies and their cross effects as well as the impacts on the key macroeconomic and sectoral variables, within a general equilibrium macroeconomic modeling framework applied to Chile. Thus, our work is the natural extension of a major trend in the literature, which has sought to examine countrywide or economywide policies (both macroeconomic and sectoral) and their powerful and pervasive impacts on environmental and social issues (see, for example, Munasinghe and Cruz, 1994, Reed, 1996 and Munasinghe, 2002). In the remainder of this section, we summarize the computable general equilibrium (CGE) modelling framework that is used, and then review the relevant literature. Section 2 describes the main economic, social and environmental issues and policies in Chile. The ECOGEM-Chile model is applied to explore alternative environmental and social policies, and simulation results are discussed in Section 3. Finally, Section 4 summarizes the main conclusions. 1.1. Computable general equilibrium (CGE) approach A general equilibrium approach will capture complex inter-linkages among economic, environmental and social variables, better than partial equilibrium methods. It is often difficult to integrate these three major domains (and associated systems). The economic domain is geared mainly towards improving human welfare, primarily through increases in the consumption of goods and services. The environmental domain focuses on protection of the integrity and resilience of environmental systems. The social domain emphasizes the enrichment of human relationships and achievement of individual and group aspirations, including equity. Since the precise definition of sustainable development remains an elusive (and perhaps unreachable) goal, it is more promising to pursue a less ambitious strategy that merely seeks to ‘make development more sustainable’ (Munasinghe, 1994). Thus, our study focuses on beneficial (or adverse) changes in selected economic, environmental and social variables. Such an incremental (or gradient-based) method is more practical, because they help to identify and eliminate many unsustainable activities—often avoiding sudden catastrophic (‘cliff edge’) outcomes. The practical goal is an approach that will (inter alia) permit continuing improvements in the present quality of life at a lower intensity of resource use and reduced environmental degradation, thereby leaving behind for future generations an undiminished stock of productive assets (i.e., manufactured, natural and social capital) that will enhance opportunities for improving their quality of life. Macroeconomic policies and strategies have widespread effects—typically, they range from exchange rate, interest rate and wage policies, to trade liberalization, privatization and similar programs. They are usually coupled with various sectoral measures, including pricing in key sectors like energy or agriculture, as well as broad sectorwide taxation or subsidy programs. Such economywide policies are often packaged within programs of structural adjustment, stabilization and sectoral reform, aimed at promoting economic stability, efficiency and growth, and ultimately improving human welfare. Even though their primary objectives might be economic, countrywide policies have pervasive (and sometimes unforeseen) environmental and social consequences. Thus, the complexity of the direct and indirect interrelations among economic, environmental and social variables calls for models that capture these complex linkages, and allow us to generate policy options that make development more sustainable. At the same time, these models must take into account market mechanisms and behavior of economic agents, which determine the effectiveness of public policies and achievement of desirable structural changes in the economy. In this context, computable general equilibrium (CGE) models represent the economy of a country in a more realistic way by incorporating market mechanisms in the allocation of resources. Also, they have proved to be useful in defining the main relationships in the economy, and in evaluating quantitatively ex-ante the effects of different economic, social or environmental policies, while capturing indirect side effects which in many cases are not evident on an intuitive basis. Fig. 1 presents schematically the relationships that can be modeled by means of a CGE, based on the circular flow of the economy. It includes the main agents (firms, households and government), flows of goods and services, payments to factors, international trade and relationships with the environment. Each agent is modeled according to certain behavior assumptions; in particular, it is common to assume optimizing producers and consumers. Additionally, each market is modeled according to the specific reality of the economy, for instance as a competitive or non-competitive market, or in the case of the labor market, with or without full employment. These models reach equilibria according to Walras law, that is to say, by equating demand and supply at all markets, thus determining prices and quantities. A fundamental characteristic of the productive sector in these models is that, in the same way as input–output models, they incorporate the demands for intermediate inputs and not just capital and labor. However, they differ from the input–output models by allowing substitution among production inputs. This characteristic furnishes equilibria, which take into account the transmission of the effects through all the relevant markets. Additionally, the government role is modeled applying taxes, subsidies and transfers. Full-size image (62 K) Fig. 1. Economy circular flow. Figure options Finally, it must be noted that the CGE model has integrated the analysis of long-term perspectives into the generation of development strategies and growth paths, with the short-term perspective focused on contingent situations and stabilization policies. All this without loosing sight of the relevance of sectoral aspects related to technological or investment processes. 1.2. Relevant applications of CGE models 1.2.1. Worldwide applications CGE models have become a standard method for analyzing a wide variety of traditional economic policies: structural adjustment, trade, taxation, foreign exchange, etc. (see the survey by Gunning and Keyser, 1993). More recently, other elements of sustainable development, including social, environmental, poverty and equity issues have been investigated, using general equilibrium methods (Conrad, 1999 and Munasinghe et al., 2005). After the initial use of a CGE model in Norway (Johansen, 1960), the first set of applications focused on problems of optimal taxation and trade policies in developed countries. Almost two decades later, applications to developing countries emerged (Adelman and Robinson, 1978 for Korea and Taylor et al., 1980 for Brazil). Throughout the 1980s, applications in developing countries evolved from the issues of poverty, income distribution and development strategies, through structural adjustment and stabilization policies to solve the debt crisis, trade problems and strategies. In the nineties, CGE models were used to analyze poverty and income distribution issues, as well as environmental problems (Devarajan, 1997 and Adkins and Garbaccio, 1999). Models for developing countries have become more practical and realistic, by moving away from the strict neoclassical framework of the original general equilibrium approach. Typical adaptations include departures from the Walrasian orthodoxy to account for structural rigidities like fixed wages, absence of mobility factor (Taylor, 1990), as well as permitting imperfect competition and increasing returns to scale in trade models. 1.2.2. Linkages with the environment Empirical research carried out at the World Bank in the late 1980s and early 1990s, including the application of CGE models to environmental issues, highlighted several conclusions that are relevant for this paper (Munasinghe and Cruz, 1994). One main outcome of this work was that it is difficult to generalize about the environmental and social impacts of economywide policies, since linkages tend to be extremely complex and country specific. Nevertheless, some general conclusions do emerge. On the positive side, liberalizing reforms such as the removal of resource price distortions, promotion of market incentives, and relaxation of trade and other constraints, often contribute to both economic and sustainability gains (i.e., win–win outcomes). For example, policies that improve the efficiency of industrial, or energy related activities, could reduce economic waste, increase the efficiency of natural resource use and limit environmental pollution. Similarly, improving land tenure rights and access to financial and social services not only yields economic gains but also promotes environmentally sustainable land management and helps the poor. In the same vein, evidence indicates that short-run policy measures aimed at restoring macroeconomic stability will generally yield economic, social and environmental benefits, since instability undermines sustainable resource use and especially penalizes the poor. For example, price, wage and employment stability encourage a longer-term view on the part of firms and households alike. Lower inflation rates not only lead to clearer pricing signals and better investment decisions by economic agents, but also protect fixed income earners. On the other hand, economywide structural reforms have had adverse environmental and social side effects. Such negative impacts are invariably unintended and occur when some broad policy changes are undertaken while other hidden or neglected policy, market or institutional imperfections persist. The remedy does not generally require reversal of the original reforms, but rather the implementation of additional complementary measures (both economic and non-economic) that remove such policy, market and institutional difficulties. These complementary measures are not only socially and environmentally beneficial in their own right, but also help to broaden the effectiveness of economywide reforms (see below). Typical examples of potential environmental damage caused by policy distortions include export promotion measures that increase the profitability of natural resource exports and encourage excessive extraction or harvesting of this resource if it were underpriced or subsidized (for example, low stumpage fees for timber). Similarly, trade liberalization could lead to the expansion of wasteful energy-intensive activities in a country where subsidized energy prices persist. Meanwhile, market failures such as external environmental effects of economic expansion (such as air or water pollution) induced by successful adjustment, may cause excessive environmental damage, if these externalities are not adequately reflected in market prices that influence such activities. Finally, unaddressed institutional constraints, like the poor accountability of state-owned enterprises (which would allow them to ignore efficient price signals), weak financial intermediation or inadequately defined property rights, tend to undermine incentives for sustainable resource management and worsen equity. The shorter-term stabilization process may also have unforeseen adverse environmental and social impacts. For example, general reductions in government spending are often required to limit budgetary deficits and bring inflation under control. Unless such cutbacks are carefully targeted, they may disproportionately penalize expenditures on environmental protection or poverty safety nets (Barcena et al., 2002). Another important linkage is the possible short-term necessary impact of adjustment on poverty and unemployment, whereby the poor are forced to increase their pressures on fragile lands and “open access” natural resources—due to the lack of economic opportunities elsewhere. In this case, appropriate measures designed to address the possible adverse consequences of adjustment will be justified—on both social and environmental grounds. Finally, economywide policies will have additional longer-term effects on sustainability, whose net impacts are less predictable. Some of these effects need to be traced through a general equilibrium framework that captures both direct and indirect links. For example, adjustment-induced changes often succeed in generating new economic opportunities and sources of livelihood, thereby alleviating poverty and helping to break the vicious cycle of environmental degradation and poverty. Higher incomes tend to increase the willingness-to-pay for better environmental quality, which leads to greater protection of the environment. However, while such growth is an essential element of sustainable development, it will increase the overall pressures on environmental resources. At the same time, properly valuing resources, increasing efficiency and reducing waste will help to reshape the structure of economic growth and limit undesirable environmental impacts. Finally, environmental policies themselves could have impacts on income distribution and employment. Many of these conclusions are illustrated by the use of CGE models applied to developing countries, in recent publications by Persson and Munasinghe (1995), Dessus and Bussolo (1996), Munasinghe (1996), Rodríguez et al. (1997) and De Miguel and Miller (1998). More generally, since the first environmental CGE models appeared (Forsund and Storm, 1988 and Dufournaud et al., 1988), the recent literature includes applications in many major areas, such as (a) models used to evaluate the effects of trade policies or international trade agreements on the environment (Lucas et al., 1992, Grossman and Krueger, 1993, Beghin et al., 1996, Madrid-Aris, 1998, Yang, 2001 and Beghin et al., 2002) or diverse applications in the area of the Global Trade Analysis Program (Hertel, 1997); (b) models used to evaluate climate change, which are usually focused on the stabilization of CO2, NOx and SOx emissions (Bergman, 1991, Jorgenson and Wilcoxen, 1993 and Li and Rose, 1995, or Rose and Abler, 1998 and Edwards et al., 2001); (c) models focused on energy issues, which usually apply energy taxation or pricing to evaluate the impacts that changes in the price of energy can have on pollution or costs control (Pigott et al., 1992 and Rose et al., 1995); (d) natural resource allocation or management models, whose objective is usually the efficient interregional or inter-sectoral allocation of multi-use natural resources—for example, allocation of water resources among agriculture, mining, industry, tourism, human consumption and ecological watersheds (Robinson and Gelhar, 1995, Mukherjee, 1996 and Ianchovichina et al., 2001); and (e) models focused on evaluating the economic impacts of environmental instruments, or of specific environmental regulations, such as the Clean Air Bill in the USA (Jorgenson and Wilcoxen, 1990 and Hazilla and Koop, 1990). Finally, double dividend issues have been a recent hot topic where CGE models have been increasingly applied. The theory of optimal taxation in the presence of externalities, i.e., the environmental taxation based on Pigou principles (Auerbach, 1985), has been under continuous discussion both on theoretical grounds and in empirical studies. Repetto et al. (1992) demonstrated in a partial equilibrium framework, how “green” tax reforms can improve the welfare of the economy by recycling the revenue to reduce distorting taxes. The debate on the existence of a double dividend derived in the necessity of applying general equilibrium frameworks. Thus, CGE models have been used to argue in favor or against the existence of a double dividend (Bovemberg and De Mooij, 1994, Bovemberg and Goulder, 1996, Fullerton and Metcalf, 1997, Bento and Rajkumar, 1998, Bosello et al., 1998, Parry and Oates, 1998, Jaeger, 1999, Koskela et al., 1999 and Parry and Bento, 1999, etc). 1.2.3. Applications in Chile The applications of computable general equilibrium models to Chile are few. Early applications tried to analyze the effects of alternative taxation policies on the rest of the economy. For example, Ruiz and Yarur (1990) used a recursive dynamic small and open economy (SOE) model and data from the I/O 1977, to study the effects of different taxation policies on the economy. In general, more recent applications have been dedicated to analyzing the effect of changes in tariff policies, arising from the debate on trade agreements among Chile and MERCOSUR, NAFTA, European Union, United States of America and Asia-Pacific. Coeymans and Larraín (1994) carried out a study of the consequences of Chile joining NAFTA. The model is set up for a SOE, and includes six productive sectors and three regions that trade with each other (Chile, U.S., Rest of the World or ROW). Data used for this study is taken mainly from the I/O table of 1986. The results indicate that an agreement between Chile and the U.S. would generate a new composition of trade with the U.S. and that a series of benefits would follow the agreement. Harrison et al. (1997) built a model that uses the database of the GTAP program (Global Trade Analysis Project).1 This multi-regional model, with 11 regions and 24 productive sectors, is used to analyze the entry of Chile into MERCOSUR, NAFTA, European Community and the rest of South America (RSA), and the effects of trade re-routing. The results of the study indicate that such free trade agreements are sometimes beneficial to Chile, and sometimes not. Harrison et al. (2002) applied the same model to assess the Chilean approach of sequentially negotiating bilateral free trade agreements, focusing on the importance of market access and lowering tariffs. The work of Bussolo et al. (1998) attempts to analyze the effects of trade agreements by focusing on the labour market. The model includes 24 productive sectors and 7 occupational categories, based on the updating of the SAM from 1986 to 1992. The article analyzes the effects of a tariff reform in two ways. Firstly, a competitive labor market is assumed. This assumption is later relaxed by introducing certain rigidities (changes in salary negotiation and minimum wages). Holand et al. (2002) applied a CGE to analyze the impacts of agricultural reforms consisting of price band removal and elimination of all tariffs on agricultural and food commodities in Chile. Urban employment, rural–urban migration and welfare effects are addressed. The CGE model by Beghin et al. (1996) is applied to environmental issues—an application of the TEQUILA model developed by the OECD development center. This study endeavors to analyze the environmental impact of implementing environmental policy, trade liberalization and trade agreements by means of a dynamic computable general equilibrium model. For this purpose, a multi-regional model that includes 26 regions and 72 productive sectors is built, which determines the emissions from estimated productive activity at the national level, and scaled for Santiago. The air concentration of particulates is estimated for Santiago by using a linear dispersion model for air pollutants. Finally, a dose–response function is used to translate this concentration into indexes of mortality and morbidity. The results indicate that particulate matter as well as SO2 and NO2 are complementary to economic activity, and that their abatement reduces mortality and morbidity significantly. Nevertheless, the analysis of the eventual entry of Chile into NAFTA appears to be beneficial for the environment, whereas the entry into MERCOSUR or a unilateral drop in tariffs will not. Taxing the above mentioned pollutants leads to increased emissions and concentrations of substitutes which are also toxic, as well as bio-accumulative gases, thereby causing a negative net effect on the indices used for mortality and morbidity. Beghin and Dessus (1999) applied a static version of the same model to assess the issue of double dividend, in the sense of substituting trade distortions for environmental taxes. O'Ryan et al. (2003) applied an adaptation of the OECD model to evaluate policy options for reducing air pollution in Chile. The model incorporated the recently published input–output matrix for Chile. These last examples illustrate CGE applications that assess economic and environmental linkages. In Chile, there has not been any attempt to evaluate the interrelation between the social and the environmental spheres of sustainable development. Chapter 3 addresses this issue by examining the cross effects of social and environmental policies for Chile. 2. Economic, social and environmental policies in Chile Since the mid-eighties and up to the end of the last millennium, Chile was viewed as an example for developing countries due to its rapid economic growth, based on an export-led development strategy. Furthermore, there were significant reductions in poverty during that period. However, the environment has suffered severe stress, while policies were applied and enforced to reduce these pressures only after the mid-nineties. This section discusses the main economic, social and environmental issues and policies.

During the nineties, Chile made dedicated efforts to improve environmental and social standards. Further improvements will have increasing marginal costs. Therefore, innovative new approaches should be taken; one possibility is to combine different policies so as to enhance positive cross effects or to mitigate the negative side effects of any specific policy. This paper presents an empirical application of the computable general equilibrium model, ECOGEM-Chile, to assess environmental and social linkages. The model incorporates complex interrelations between the diverse sectors and agents of the economy, which facilitates the analysis of cross effects in environmental and social policies. Six different policies are simulated: three environmental policies that impose taxes on air emissions, aiming to reduce 10% of total PM10, SO2 and NO2 emissions, respectively; one social policy that increases government transfers to households; and a mixed social-environmental policy package, where the environmental tax on PM10 and the social transfer policy are simulated simultaneously. In the latter, public savings are maintained constant, i.e., revenues from the environmental policy are allocated to social related fiscal expansion. Finally, the first simulation–PM10 taxation–was replicated in a situation of high unemployment. In relation to environmental policies, it can be concluded that taxing PM10 emission yields better environmental results than taxing SO2 and NO2, without substantial differences in the macro, sectoral or social results. Strong links between different pollutants are indicated, encouraging policy-makers to analyze the pollutant to be taxed more specifically, to achieve optimal results. Considering the “superior” PM10 environmental policy, the simulation shows that macroeconomic impacts are slightly negative, but sectoral effects (positive and negative) can be strong. Therefore, policy-makers should consider a flexible policy with adjustment periods. Nevertheless, tax reforms aiming to tax environmental bads instead of goods seem to be able to achieve fairly good environmental results without economic and social loses. Under high unemployment situations, an environmental tax shock seems to be better absorbed by the economy. This is true because firms have more freedom to adjust their production functions through the labor market. Nevertheless, this does not imply that environmental taxation should be applied specifically during periods of economic recession or when labor markets are more flexible. With regard to the social policy applied, the simulation shows very low impacts on environmental quality, although the sign depends on the specific pollutant. In conclusion, the evidence suggests that environmental policies (such as those applied here) may have social impacts, but not vice versa. Since cross effects are relatively small, policy-makers should focus on the specific policy under consideration (environmental or social). Nevertheless, social and environmental policy-makers should coordinate among themselves, as it is possible to improve some results by combining both kinds of strategies. Thus, specific social policies may ameliorate negative sectoral and distributive effects of environmental policies, i.e., the mix of policies may improve overall results. In this context, compensating policies for potential losers might increase their acceptance of environmental policies. These results show that general equilibrium modeling, in this case through the ECOGEM-Chile model, is very useful for analyzing systematically and holistically, different economywide policies and their impact on the Chilean economy. Winners and losers may be identified with the potential magnitude of gains and losses. The results obtained are not all straightforward, i.e., indirect effects are relevant.