Market-based environmental regulation in the post-kyoto world : analysis of Turkey's action plan in general equilibrium framework

Abstract

The purpose of this dissertation is to investigate the economic impacts of Turkey’s environmental regulation based on emission trading schemes in the post-Kyoto world. The dissertation is composed of two main parts. The first part is dedicated to the methodology underlying the Multi-Region Environmental and Trade Policy Analysis (MR-ETPA) model, which is developed for simulating market-based environmental regulation policies in general equilibrium framework. In the second part, the MR-ETPA model is further used for simulating the potential emission trading schemes that Turkey considers to apply, i.e. unilateral nationwide trading and international trading of permits within the European Union Emission Trading Scheme (EU ETS). The results indicate that Turkey has economic gains under bilateral trading within the EU ETS in comparison to domestic trading schemes. The economic benefits of the European Union highly depend on the design of the Turkish emission trading scheme. While unilateral trading schemes result in economic gains for the European Union, the net effect under bilateral trading very much depends on the total cost burden that Turkey imposes on the individual sectors.