The Economic and Environmental Effects of Iran’s Membership in the Shanghai Cooperation Organization on Air, Land, and Maritime Transport: A Static Computable General Equilibrium Approach

This study evaluates the economic, trade, transport, and environmental effects of tariff reduction scenarios between Iran and the member countries of the Shanghai Cooperation Organization (SCO), with particular emphasis on energy consumption and carbon dioxide emissions. The effects of these scenarios on the Iranian economy, SCO member countries, and other regions of the world are examined within a computable general equilibrium (CGE) framework. Given the macroeconomic and equilibrium characteristics of the model, the analysis simultaneously considers interactions among economic sectors and regions. The research follows an analytical and simulation-based approach and employs a static computable general equilibrium model and its energy-extended version. The required data are obtained from the GTAP version 11 database, with 2017 as the base year. We consider two policy scenarios: complete tariff elimination and a 50 percent reduction in tariffs between Iran and SCO member countries relative to the baseline. This framework enables the simultaneous assessment of the economic, trade, energy, and environmental consequences of trade policies. The study applies an energy-extended computable general equilibrium approach to examine the relationships among trade changes, transport sector activities, energy consumption, and carbon dioxide emissions. Moreover, the study disaggregates the transport sector into land, maritime, and air transport and analyzes regional differences in the effects of the trade scenarios. The results indicate that, under the complete tariff elimination scenario, Iran’s economic welfare increases relative to the baseline, while total carbon dioxide emissions decrease. However, carbon dioxide emissions increase in some transport subsectors. Under the 50 percent tariff reduction scenario, Iran’s economic welfare declines relative to the baseline, while total carbon dioxide emissions also decrease. The reduction in total carbon dioxide emissions is greater under the 50 percent tariff reduction scenario than under the complete tariff elimination scenario. In contrast, SCO member countries experience welfare gains and a slight increase in total carbon dioxide emissions under both scenarios. Overall, the findings indicate that trade liberalization can have different effects on economic welfare, energy consumption, and carbon dioxide emissions across scenarios, sectors, and regions, and that changes in aggregate emissions do not necessarily follow the same pattern as changes at the sectoral level.