Environmentally Extended Social Accounting Matrix for Climate Change Policy Analysis for India

Linking economic growth and climate change is crucial policy issue for the developing economy and India is one among them. But to understand the implication of economic growth on GHG emission and input use efficiency improvement on economic growth, it requires an accounting framework which can integrate both the economic and environmental indicators. In this context this study has focused on construction of ESAM and further applied it to the ESAM multiplier model for impact analysis. The analysis presented in this study shows that 5% increase in overall export along with the 10% increase in efficiency in fertilizer, coal, petroleum and electricity use will boost the economic growth by around 2% and reduce CO2 emissions by around 11%. But this study also shows that the input use efficiency results cost advantages to the investors at a greater extent than employment generation and it cause further income inequality. However, the positive implication is that the efficiency improvement for input which are highly subsidised would improve economy’s fiscal health which can further be used for employment generation.