Trade-offs between resource tax and carbon tax policies in China: Improvement in air quality and health co-benefits

Abstract

While resource tax and carbon tax have been confirmed to mitigate CO₂ emissions, the comparison between the two policies in terms of air quality and health co-benefits is rarely discussed. In this study, we employ a multi-regional computable general equilibrium model, an extend response surface model and health risks assessment model to assess the impacts of multiple regionally-varying resource and carbon tax scenarios on GDP, energy use, CO₂ and the atmospheric environment and public health through 2035 in China. Equal cumulative national GDP (2020–2035) across scenarios ensures policy comparability. Results show that the resource tax policy differentiated by the level of existing regional coal resource tax rate (RT1) achieves more reductions in CO₂ and air pollutants emissions with less GDP loss compared to other resource tax (RT2 – based on the level of regional coal output; RT3 – considering the spatial aggregation of ambient PM_2.5) and carbon tax (CT – aligned with RT3) policy scenarios in 2035 relative to BAU (Business-as-Usual). As to air quality improvement, RT1 leads to the most substantial reduction in average provincial PM_2.5 concentrations, by 8.1% in 2035 followed by RT2 (7.2%), RT3 (6.9%) and CT (5.1%). Additionally, RT1 generates the highest health co-benefit, avoiding 56,413 air pollution-related mortalities in 2035. Considering both emissions reduction and health co-benefits, RT1 emerges as a highly recommended approach over a carbon tax based on an integrated assessment. To achieve the 2035 ‘Beautiful China’ target and ensure steady growth, we recommend increasing the current regional-differentiated resource tax policy stringency except regions with good air quality, such as Ningxia and Qinghai.