The Economics of Inequality and the Environment

Moritz Drupp, Ulrike Kornek, Jasper N. Meya and Lutz Sager

No 11036, CESifo Working Paper Series from CESifo

Abstract: Environmental degradation and economic inequality are two of the defining challenges of the twenty-first century. We synthesize conceptual mechanisms that underpin inequality-environment interlinkages and take stock of the relevant empirical evidence. We propose three channels of interaction, describing, first, how the cost of environmental policy is distributed across households, second, how environmental benefits vary with household income, third, how income inequality and redistribution shape environmental outcomes. The three channels determine how both environmental quality and economic inequality matter for policy appraisal. We argue that it is crucial to consider inequality-environment interlinkages in economic research and policy design, as neither issue can be fully understood in isolation, and close by highlighting future research needs.

Date: 2024
New Economics Papers: this item is included in nep-ene, nep-env and nep-pke
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