This study aims to quantify the economy-wide consequences for Israel of meeting potential targets of the post-2012 agreement, employing a Computable General Equilibrium (CGE) model of the Israeli economy. A tax per ton of carbon emissions leads to significant emission reductions, followed by a minor decrease in economic variables. The negative impact of auctioned permits and the carbon tax on GDP is minor even when parameter values are changed. The CGE approach followed in this research is applied for the first time to the Israeli economy and should contribute to a better informed debate on environmental policy in Israel.

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