Distributional consequences of climate change impacts on residential energy demand across Italian households

Lorenza Campagnolo and Enrica De Cian

Energy Economics, 2022, vol. 110, issue C

Abstract: The paper evaluates the macroeconomic and distributional implications for Italian households and regions of both climate change impacts and a carbon tax. We use a recursive-dynamic general equilibrium model to evaluate aggregate changes in prices, income and expenditure, and a sequential arithmetic micro-simulation module to downscale them to the household level. Climate change impacts are regressive, adding to the already regressive effects of a carbon tax. Wealthy households reduce expenditure on gas and petroleum fuels the most, whereas households in the lowest deciles increase electricity expenditure relatively more. Climate and policy impacts differ significantly also within income groups, reflecting regional variations in the size of climate shocks, the prevalent climate conditions, and the energy mix. We highlight a new emerging risk related to those households that will be exposed to higher temperatures and will not be able to sustain the electricity expenditure needed for adaptation, and we emphasize the importance of accounting for the distributional consequences of climate change impacts when designing climate policies.

Keywords: Households; Climate change; Energy poverty; Computable general equilibrium model (search for similar items in EconPapers)
JEL-codes: C68 D1 O52 Q43 (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:110:y:2022:i:c:s0140988322001906

DOI: 10.1016/j.eneco.2022.106020

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