The Effects of Methane (CH₄) and Nitrous Oxides (N₂O) Taxes on the Korean Agricultural Sector

메탄과 아산화질소 배출저감을 위한 과세 효과분석 -한국농업부문을 중심으로-

The purpose of this paper is to come up with the measures for sustainable development of the agricultural sector in store for the strengthened U.N. Framework Convention on Climate Change. We analyze the spillover effects of Methane and Nitrous Oxides taxes (carbon tax) on the Korean agricultural sector. Unlike the other sectors, the agricultural sector has a unique characteristic generating greenhouse gas in the process of production itself even without consuming much fossil fuel. In order to estimate the impacts of those taxes, non-linear optimization method has been used with various assumed scenarios. The production effect, income and' price effect, and greenhouse gas emission reduction effect in the agricultural sector have been estimated through this method. The empirical results show that the paddy sector has a bigger tax effect than the livestock sector. In the paddy sector, the carbon tax has more impacts in the suburban areas than in the rural areas, while the swine farming section in the livestock sector has a conspicuous income effect in the midst of low greenhouse gas emission effect. These results allude us to apply graded tax rates to the crop, the livestock, and the region of different kind. Even if the agricultural sector has a less tax effect when compared with other industrial sectors, an environmental tax might be an effective measure to prevent global warming.