Environment and Trade Policies in Tunisia: Comparing Economic Costs and Benefits of Pollution Abatement Policy

Abstract

The main research objective of this study is to provide a detailed empirical assessment of the economic impacts of climate policy in Tunisia, considering both costs and benefits. For this purpose, we tries to evaluate the impact of trade liberalization and regional integration on pollution emissions in Tunisia, and the economic consequences of taxing thirteen categories of effluents, as instrument of pollution abatement policy in Tunisia. A recursive dynamic computable general equilibrium model is used for this purpose. Our results indicate that economic integration of Tunisia with Europe will increase pollution and environmental degradation. We also find that economic implications of pollution abatement policies show that Tunisia can achieve pollution reduction targets, without seriously compromising economic growth objectives. Furthermore, Tunisia can expect a reduction of its energy consumption as result of this abatement policy.

Note: Title changed per author request.

Keywords: Tunisia, Pollution, Computable General Equilibrium Models, regional integration, trade and environment linkages