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Can Smart Policies Reconcile Singapore's Green Economy with Sand Imports from Southeast Asia?

: Hübler, Michael; Pothen, Frank

Fulltext urn:nbn:de:0011-n-5863298 (969 KByte PDF)
MD5 Fingerprint: 67c4829355c567cd1ebedf5834136070
Created on: 29.4.2020

Hannover economic papers : HEP. Online resource (2018), Art. dp-644, 41 pp.
ISSN: 0949-9962
Journal Article, Electronic Publication
Fraunhofer IMWS ()

This article tries to increase public awareness of a crucial but rarely discussed global challenge by introducing a novel economic analysis: drawing on insights from various disciplines, it studies policies regulating sand extraction and trade. While sand is essential for construction and land reclamation worldwide, its extraction causes severe ecological damage in oceans, in rivers and on beaches and thus has high social costs. To derive solutions to this paramount global challenge, this article focuses on sand exports from developing countries in Southeast Asian to Singapore as a prominent example. It evaluates output, export and import taxes as the means to reduce sand extraction and trade. To this end, it utilizes an Eaton and Kortum type trade model within a general equilibrium framework. Overall, an output tax can reduce sand extraction to a large extent, while the economic costs are small for Singapore and slightly positive for the Southeast Asian sand exporters. As a novel policy, the sand tax can be implemented as a Sand Extraction Allowances Trading Scheme (SEATS). This policy can help sustainably balance Singapore's economic growth with Southeast Asia's economic development.