 Welfare effects of carbon taxation on South African householdsJennifer Uju Okonkwo Energy Economics, 2021, vol. 96, issue C Abstract: This paper evaluates the welfare impacts of carbon taxation on South African households. Using household survey data for the period 2009–2015, I estimate the Quadratic Almost Ideal Demand System (QUAIDS) model to obtain elasticities and use them to simulate consumer responses to price changes resulting from carbon taxation. Results show that an increase in electricity and public transport prices following a carbon tax policy is regressive while a price increase in motor fuel is progressive. In addition, when there is a simultaneous increase in the prices of energy goods, the poorest and middle income households disproportionately suffer a higher welfare loss compared to the richest households. I also show that income is important in determining whether rural households experience a higher or lower welfare loss than urban households. Furthermore, revenue recycling in terms of lump-sum transfers of the tax revenue to households below the national poverty lines and the bottom 40% would offset the welfare loss from a carbon tax policy in South Africa. Keywords: Welfare; Carbon tax policy; South Africa; Household (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:96:y:2021:i:c:s0140988320302437 DOI: 10.1016/j.eneco.2020.104903 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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