What do we know about carbon taxes? an inquiry into their impacts on competitiveness and distribution of income

The Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) has set legally binding emissions targets for a basket of six greenhouse gases and timetables for industrialised countries. It has also incorporated three international flexibility mechanisms. However, the Articles defining the flexibility mechanisms carry wording that their use must be supplemental to domestic actions. This has led to the open debates on interpretations of these supplementarity provisions. Such debates ended at the resumed sixth Conference of the Parties (COP) to the UNFCCC, held in Bonn, July 2001, and at the subsequent COP-7 in Marrakesh, November 2001. The final wording in the Bonn Agreement, reaffirmed in the Marrakesh Accords, at least indicates that domestic policies will have an important role to play in meeting Annex B countries’ emissions commitments. Carbon taxes have long been advocated because of their cost-effectiveness in achieving a given emissions reduction. In this paper, the main economic impacts of carbon taxes are assessed. Based on a review of empirical studies on existing carbon/energy taxes, it is concluded that competitive losses and distributive impacts are generally not significant and definitely less than often perceived. However, given the ultimate objective of the Framework Convention, future carbon taxes could have higher rates than those already imposed and thus the resulting economic impacts could be more acute. In this context, it has been shown that how to use the generated fiscal revenues will be of fundamental importance in determining the final economic impacts of carbon taxes. Finally, we briefly discuss carbon taxes in combination with other domestic and international instruments.Border tax adjustments; carbon taxes; distribution of income; double dividend; emissions trading; energy taxes; international competitiveness

Uncertainty and global warming : an option - pricing approach to policy

Uncertainty is inherent in the analysis of global warming issues. Not only is there considerable scientific uncertainty about the magnitude of global warming, but even if that problem were resolved, there is uncertainty about what monetary value to assign to the costs and benefits of various policies to reduce global warming. And yet the influence of uncertainty in policymaker's decisions is ignored in most studies of the issue. The authors try to explicitly incorporate the effect of uncertainty in the choice of global warming abatement policies. The approach they develop draws on the emerging literature on investment under uncertainty - in particular, that on the option-valuation approach. Their numerical applications focus on the Cline's (1992) analysis of global warming, but it may be applied to a range of global warming analyses. First, they assess whether it is optimal to implement Cline's strategy of limiting global warming today, or whether it should be postponed, and for how long. Then, they identify the optimal policy to be implemented today for different levels of uncertainty about the costs and benefits of policies to reduce global warming.Economic Theory&Research,Montreal Protocol,Decentralization,Climate Change,Environmental Economics&Policies,Economic Theory&Research,Climate Change,Montreal Protocol,Carbon Policy and Trading,Environmental Economics&Policies

People first resist but later tend to embrace garbage taxes

Taxing trash bags reduces unsorted waste by 40%, argue Stefano Carattini, Andrea Baranzini and Rafael Laliv

Is Taxing Waste a Waste of Time? Evidence from a Supreme Court Decision

Environmental taxes are often underexploited. This paper analyses the effectiveness of a garbage tax, assessing its effects on multiple outcomes as well as its acceptability. We study how a Supreme Court decision, mandating the Swiss Canton of Vaud to implement a tax on garbage, affects garbage production and beliefs about the tax. We adopt a difference-in-differences approach exploiting that parts of Vaud already implemented a garbage tax before the mandate. Pricing garbage by the bag (PGB) is highly effective, reducing unsorted garbage by 40%, increasing recycling of aluminium and organic waste, without causing negative spillovers on adjacent regions. The effects of PGB seem very persistent over time. Our assessment of PGB looks very favourable. It may surprise that PGB is not implemented more often. Hence, we look at people\u27s perceptions. We find that people are very concerned with PGB ex ante. Public opposition seems to be the main obstacle to PGB. However, implementing PGB reduces concerns with effectiveness and fairness substantially. After implementing PGB, people accept 70% higher garbage taxes compared to before PGB. We argue that environmental taxes could be much more diffused, if people had the chance to experience their functioning and correct their belief

Designing Effective and Acceptable Road Pricing Schemes: Evidence from the Geneva Congestion Charge

While instruments to price congestion exist since the 1970s, less than a dozen cities around the world have a cordon or zone pricing scheme. Geneva, Switzerland, may be soon joining them. This paper builds on a detailed review of the existing schemes to identify a set of plausible design options for the Geneva congestion charge. In turn, it analyzes their acceptability, leveraging a large survey of residents of both Geneva and the surrounding areas of Switzerland and France. Our original approach combines a discrete choice experiment with randomized informational treatments. We consider an extensive set of attributes, such as perimeter, price and price modulation, use of revenues, and exemption levels and beneficiaries. The informational treatments address potential biased beliefs concerning the charge’s expected effects on congestion and pollution. We find that public support depends crucially on the policy design. We identify an important demand for exemptions, which, albeit frequently used in the design of environmental taxation, is underexplored in the analysis of public support. This demand for exemptions is not motivated by efficiency reasons. It comes mostly by local residents, for local residents. Further, people show a marked preference for constant prices, even if efficiency would point to dynamic pricing based on external costs. Hence, we highlight a clear trade-off between efficiency and acceptability. However, we also show, causally, that this gap can in part be closed, with information provision. Analyzing heterogeneity, we show that preferences vary substantially with where people live and how they commute. Even so, we identify several designs that reach majority support

Unconventional Determinants of Greenhouse Gas Emissions: The Role of Trust

[cat] Les normes socials han estat incloses en la teoria de l’acció col.lectiva per a superar les dificultats per explicar perquè la gestió del béns comuns podria ser més efectiva quan s’autoregula per les mateixes comunitats. El paper rellevant de la confiança en els altres s’ha identificat en diversos contextos d’acció social a nivell local, però només recentment s’ha considerat la idea que també podria ser rellevant en el cas de béns comuns de caire global, seguint l’evidència bàsicament descriptiva recollida per Elinor Ostrom. Però fins ara no hi havia proves quantitatives disponibles d’aquesta idea. Utilitzant un conjunt de dades de 29 països europeus durant el període 1990-2007, donem evidència empírica a favor del paper del nivell de confiança en els altres en el context dels béns públics globals. Concloem que el nivell de confiança en els altres té un impacte reductor de les emissions de gasos d’efecte hivernacle; per exemple, l’extrapolació dels resultats implicaria una reducció d’emissions d’Espanya del 12,5% si el nivell mitjà de confiança en els altres dels espanyols fos tan elevat com els dels suecs.[eng] Social norms have been included in the theory of collective action to overcome difficulties in explaining why commons may perform better when self-regulated. The role of trust has been identified in several contexts of local social dilemma, but only recently has been extended to global commons, based on large descriptive evidence collected by Elinor Ostrom. However, no quantitative evidence was available until now. Using a dataset of 29 European countries over the period 1990-2007, we provide empirical evidence in favor of the role of trust in global dilemma. We end up with a negative impact of trust on greenhouse gas emissions, whose extrapolation to Spain would imply a reduction in emissions of 12.5% if Spaniards would trust each other as Swedish people do

La demande des usages récréatifs pour un parc naturel

Dans cet article, grâce à la méthode du coût du trajet, nous avons déterminé la fonction de demande pour les usages récréatifs du Bois de Finges, une des pinèdes les plus vastes de Suisse et d’importance européenne. D’abord, nous avons identifié les variables ayant un impact sur le nombre de visites, tels que le coût de la visite, les caractéristiques socio-économiques usuelles des individus et les caractéristiques recherchées lors de la visite. Nos estimations montrent en particulier que le coût de la visite présente une influence négative sur le nombre de visites, avec une élasticité-prix d’environ – 0,5. En revanche, comme dans d’autres études similaires, nous trouvons que les variables socio-économiques usuelles (telles le revenu, l’âge, le genre, etc.) n’ont pas d’influence significative sur le nombre de visites. Nous avons ensuite calculé la fonction de demande proprement dite, à partir de laquelle nous avons pu mesurer les bénéfices monétaires des usages récréatifs du Bois de Finges. Ces bénéfices se situent entre environ CHF 1 100 et 1 500 par personne et par année. Ces résultats sont du même ordre de grandeur que ceux obtenus dans des études appliquant la méthode du coût du trajet pour les forêts en Suisse. Ces estimations peuvent être utiles pour l’évaluation des bénéfices monétaires minimaux découlant de l’usage récréatif du Bois de Finges. Cependant, comme toute autre forêt, le Bois de Finges offre toute une série d’autres services qui possèdent aussi une valeur économique, mais qui n’ont pas été considérés dans cette étude.In this paper we assess the recreation demand for the Bois de Finges, one of the largest pine forest in Switzerland and of European importance. In order to quantify the recreation benefits, we have applied the travel cost method. The data were collected through an on-site survey during 2004. Firstly, we have identified the variables having an impact on the number of visits, such as the cost of the visit, the socio-economic characteristics of the visitors and the characteristics researched by the visitors. Our estimations show in particular that the cost of the visit has a negative influence on the number of visits, with a price-elasticity of about –0.5. Moreover, as in other studies, we find that the usual socio-economic characteristics (such as income, age, gender) do not have a statistically significant impact on the number of visits. From the estimation of the relationship between the number of visits and its determinants, we calculated the demand function, from which we infer the monetary benefits of the recreation uses of Bois de Finges. For the average individual in the sample, this benefit is between about CHF 1 100 and CHF 1 500 per year. Those results could be useful to have an order of magnitude on the minimum monetary benefits from the recreation use of the Bois de Finges. However, as any other forest, the Bois de Finges offers many other services which also possess an economic value, but which have not been considered in this paper