Environmental taxation and regulation
Lans Bovenberg () and
Lawrence H. Goulder
Chapter 23 in Handbook of Public Economics, 2002, vol. 3, pp 1471-1545 from Elsevier
This chapter examines government policy alternatives for protecting the environment. We compare environmentally motivated taxes and various non-tax environmental policy instruments in terms of their efficiency and distributional impacts. Much of the analysis is performed in a second-best setting where the government relies on distortionary taxes to finance some of its budget. The chapter indicates that in this setting, general-equilibrium considerations have first-order importance in the evaluation of environmental policies. Indeed, some of the most important impacts of environmental policies take place outside of the market that is targeted for regulation.Section 2 examines the optimal level of environmental taxes, both in the absence of other taxes and in the second-best setting. Section 3 analyzes the impacts of environmental tax reforms, concentrating on revenue-neutral policies in which revenues from environmental taxes are used to finance cuts in ordinary, distortionary taxes. Here we explore in particular the circumstances under which the "recycling" of revenues from environmental taxes through cuts in distortionary taxes can eliminate the non-environmental costs of such reforms -- an issue that has sparked considerable interest in recent years. Section 4 compares environmental taxes with other policy instruments -- including emissions quotas, performance standards, and subsidies to abatement -- in economies with pre-existing distortionary taxes. We first compare these instruments assuming that policymakers face no uncertainties as to firms' abatement costs or the benefits of environmental improvement, and then expand the analysis to explore how uncertainty on the part of regulators and the associated monitoring and enforcement costs affect the choice among alternative policy instruments. Section 5 concentrates on the trade-offs between efficiency and distribution in a second-best setting. Section 6 offers conclusions.
JEL-codes: H0 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (66) Track citations by RSS feed
Downloads: (external link)
http://www.sciencedirect.com/science/article/B7P63 ... 6465d28ee7bb88f7387c
Full text for ScienceDirect subscribers only
Working Paper: Environmental Taxation and Regulation (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:pubchp:3-23
Access Statistics for this chapter
More chapters in Handbook of Public Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().