# Contents

|1. Introduction ........................................................................................................................... 1|
|---|
|2. Environmental policy debate in Russia ................................................................................. 3|
|3. Trade and the environment literature: implications for Russia ............................................. 4|
|4. CGE model for Russia: structure and data ............................................................................ 7|
|4.1 Production and Geographic Structure ............................................................................. 7|
|4.1.1 Sectors, Regions and Core Data. .............................................................................. 7|
|4.1.2 Price determination for competitive goods and services sectors. ............................. 8|
|4.1.3 Structure of Production for Non-Fossil Fuel Sectors. .............................................. 9|
|4.1.4 Goods produced subject to increasing returns to scale ............................................. 9|
|4.1.5 Services sectors that are produced in Russia under increasing returns to scale and|
|imperfect competition ...................................................................................................... 11|
|4.1.6 Factors of Production ............................................................................................. 12|
|4.1.7 Trade ....................................................................................................................... 13|
|4.1.8 Government ............................................................................................................ 14|
|4.2 Emissions Modeling ...................................................................................................... 14|
|4.3 Key Data ........................................................................................................................ 15<br>|
|4.3.1 Emissions Data. ...................................................................................................... 15|
|4.3.2 Ad Valorem Equivalence of Barriers to Foreign Direct Investment in Services|
|Sectors ............................................................................................................................. 16|
|4.3.3 Share of Expatriate Labor Employed by Multinational Service providers. ............ 18|
|4.3.5 Input-output tables .................................................................................................. 19|
|4.3.6 Regional IO tables and Trade Flows of the Regions .............................................. 19|
|4.3.7 FDI Shares .............................................................................................................. 21|
|5. Results of Policy scenarios .................................................................................................. 21|
|5.1. Policy scenarios ............................................................................................................ 21|
|5.2. WTO Accession results ................................................................................................ 25|
|5.2.1 Explaining Differences across Regions. ................................................................. 25|
|5.2.2 Impact of WTO Accession on Carbon Emissions. ................................................. 26|
|<br>5.3. Evaluating Alternate Policy Reforms to Reduce Carbon Emissions by 20 Percent ..... 27|
|5.3.1 Market Based Carbon Emissions Trading (“Cap and Trade”). .............................. 27|
|5.3.2. Carbon Emissions Intensity Standards .................................................................. 28|
|5.3.3 Energy Efficiency Standards ................................................................................. 28|
|5.4 Combining WTO Accession with Policies to Reduce Carbon Emissions by 20 Percent<br>|
|............................................................................................................................................. 29|
|5.4.1 WTO Accession Combined with Carbon Emissions Trading ............................... 29|
|5.4.2 WTO Accession Combined with Emission Intensity Standards ............................ 29|
|5.4.3 WTO Accession Combined with Energy Efficiency Standards ............................. 30|
|6. Sensitivity Analysis ............................................................................................................. 30|
|6.1 Results with Constant Returns to Scale and Perfect Competition ................................. 30|
|6.2 Piecemeal Sensitivity Analysis ...................................................................................... 31|
|7. Conclusions ......................................................................................................................... 32|
|References ............................................................................................................................... 33|
|Tables ...................................................................................................................................... 37|
|Figures ..................................................................................................................................... 75|
|Appendix: Environmental Database of the Model: Documentation of the Sources and|
|Construction ............................................................................................................................ 85|
|A.1. Non-CO2 emission accounting .................................................................................... 85|
|A.2. CO2 emissions accounting .......................................................................................... 89|
|Appendix References .......................................................................................................... 89|

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