„KAZENVOMOD": Modeling Macroeconomic Effects of Environmental Regulation in Kazakhstan in Computable General Equilibrium (CGE)

Project leader: Manuela Troschke
Researchers: Miriam Frey (IOS), Lyazzat Nugumanova (IOS)
Consortium: IOS Regensburg, Institute for Economic Research Astana, Karaganda Economic University
Duration: June 2015-May 2017
Financing Body: German Federal Ministry of Education and Science BMBF 

Aim and scientific content of the project

Kazakhstan is taking leadership in the region with respect to a greener economy. To reach that aim, reform of environmental regulation is needed. Environmental pollution and environmental goods have to be internalized in cost calculations of economic agents. Since those are likely to lobby for weak regulation, policy makers need information on economic effects of regulatory measures.

The project will address effects of regulatory reforms in three environmental fields: CO2 emissions, which play a role in international climate treaties; water use that has to become more efficient taking into account the Aral Sea disaster; hazardous industrial wastes that have long-term cost effects if not stored safely.

Expected outputs

The scientific output of the project is divided into three workpackages that address environmental regulation in Kazakhstan : Background, macroeconomic effects, and trade effects. The background of environmental regulation and respective actors will be described in a working paper on environmental governance in Kazakhstan; a technical paper on theory and practice of regulation will analyze the three regulatory fields targeted by the project in detail and discuss alternatives. On this background, macroeconomic effects of different environmental regulation regimes will be calculated in the second workpackage within a CGE model of the Kazakh economy that is refined and shaped by introducing new specifications and datasets; by further enlarging and specifying the model, trade effects of CO2 emissions will be calculated accordingly in the third workpackage. Research results of CGE modelling will be published in at least two working papers.

The knowledge transfer component of the project is based on joint academic work and scientific exchange, within and beyond the team of researchers. All publications will be produced by mixed German-Kazakh research teams. Two workshops, carried out in Kazakhstan, aim at enhancing capacities of internal and external researchers to apply CGE modelling to environmental regulation questions. Also, Kazakh researchers are provided with the opportunity of individually designed research stays in Germany and Europe that combine project purpose and personal career development alike.

Expected outcome

National and international stakeholders will be informed on project results with short policy papers and through a stakeholder workshop at the end of the project. The envisaged outcome of the project is the implementation of regulatory environmental measures, that balance the seemingly trade-off between environmental and economic goals.