Economics at your fingertips  

Mitigating poverty: The patterns of multiple carbon tax and recycling regimes for Peru

Daniele Malerba, Anja Gaentzsch and Hauke Ward

Energy Policy, 2021, vol. 149, issue C

Abstract: Carbon taxes are an economically effective and efficient policy measure to address climate change mitigation. However, they can have severe adverse distributional effects. Recycling parts of the fiscal revenues to vulnerable, lower income households through cash transfers (social assistance) is an option to also overcome associated political difficulties. This paper simulates the distributional impacts of such a combined policy reform in Peru. In a first step, we assess the distributional impacts of varying carbon tax rates. In a second step, we evaluate different scenarios of recycling revenues through existing or expanded transfer schemes towards vulnerable households. The results indicate that a national carbon tax, without compensation, would increase poverty but have no significant impact on inequality. When tax revenues are recycled through transfer schemes, however, poverty would actually decrease. Depending on the amount to be redistributed and the design of the cash transfer scheme, our simulations show a proportional reduction in the poverty headcount of up to around 17%. In addition, the paper underlines how crucial it is to go beyond aggregate measures of poverty to better identify losers from such reform; and assure that the “leave no one behind” principle of the Sustainable Development Goals (SDGs) is addressed.

Keywords: Carbon tax; Input-output analysis; Income distribution; Poverty; Cash transfer (search for similar items in EconPapers)
JEL-codes: C67 F64 H23 I38 O54 Q52 Q54 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.enpol.2020.111961

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2024-02-12
Handle: RePEc:eee:enepol:v:149:y:2021:i:c:s0301421520306728