From 29-30 January 2015, Ca' Foscari University of Venice, The Energy and Resources Institute (TERI) and the United Nations Environment Programme (UNEP) will host the GGKP's Third Annual Conference on the theme of "Fiscal Policies and the Green Economy Transition: Generating Knowledge – Creating Impact" in Venice, Italy.
Debashis Chakraborty will present his paper 'Does fiscal policy influence per capita CO2 emission? A cross-country empirical analysis' at the GGKP's Annual Conference on January 30 in the session 'D1:Reforming environmentally harmful subsidies'. Debashis Chakraborty is an Assistant Professor of Economics at the Indian Institute of Foreign Trade (IIFT), New Delhi.
Q&A with Debashis Chakraborty
1. Briefly describe the topic and conclusion of your paper.
Our study focuses on identifying the statistical relationship between budgetary transfers of subsidy and per capita CO2 emission for 131 countries (covering both developing and developed economies) over 1990-2010. The study finds that higher budgetary subsidy is detrimental for environmental sustainability and higher tax is conducive for lower per capita CO2 emissions. Apart from per capita income, higher share of manufacturing in GDP and higher level of urbanization also bear adverse influence on environment. The empirical observations further indicate that structural composition of an economy plays a crucial role in per capita CO2 emissions.
2. Through your research, what do you find as the role for fiscal policy in the transition to a green economy?
Our study finds that by cutting down environmentally harmful subsidies and/or by reforming/repackaging subsidies to promote adoption of environmentally benign practices and technologies (e.g. renewable energy technologies), fiscal policy could help in transition to green economy. Fiscal policy could also play an important role for developing countries like India to accelerate the economic transition from manufacturing to service sectors (which lead to a relatively greener outcome) by increasing public investment in human capital formation (e.g. education, healthcare and infrastructure services like water supply and sanitation) that strengthens the technique effect.
3. What are the key policy implications of your research?
Our study observes three distinct policy implications. First, it shows that the level of government reporting budgetary subsidy is important for analysis like ours. Information on broad based government (i.e. General Government according to IMF classification) instead of sub-national or central government is desirable. Second, adoption of transparent accounting method is important for appropriate determination of size of the subsidy. Third, better fiscal discipline in reporting subsidies data and capturing implicit subsidies are some of the issues that needs to be taken up negotiations at the appropriate multilateral forums like IMF, World Bank and the WTO.
4. What do you hope to gain from the GGKP’s 3rd Annual Conference?
This conference is first of its kind that we will be attending and we are looking forward to hear policy discourse at the high-level panel discussions and the technical sessions to enrich our understanding on the recent ideas on what roles fiscal policies could play in achieving green economy in general and for developing countries like India in particular. We are also eagerly looking to learn from relevant policy research questions and methods of analysis that will be discussed during the conference.
5. Which sessions at the conference are you interested in attending and why? (See programme here).
Apart from the high-level panel discussions, we would look forward to attend the following sessions.
6. What are the next steps for your research?
We are presently exploring the idea to analyze the effect of environmentally harmful subsidies both from the perspective of free and fair international trade and achieving sustainable development. The research outcome will be beneficial for national and sub-national governments in India to adopt Environmental Fiscal Reforms especially in the coming regime of indirect taxes – known as Goods and Services Tax (GST) which will be enforced from 1 April 2016. We are looking forward for successful case studies on environmental fiscal instruments which could be adopted in India, given the constraints in our Environmental Rules and Regulations.