Give and take: An analysis of the distributional consequences of emission tax-and-rebate schemes with an application to greenhouse gas emissions from European agriculture

Donner et prendre: Une analyse des conséquences distributives des systèmes de taxes et de rabais sur les émissions avec une application aux émissions de gaz à effet de serre de l'agriculture européenne

Maxime Ollier and Stéphane De Cara
Additional contact information
Maxime Ollier: Agricultural and Resource Economics - Institute of Natural Resource Sciences - ZHAW - Zurich University of Applied Sciences, UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CEC - Chaire Economie du Climat - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres

Post-Print from HAL

Abstract: The potential regressivity of an emission tax is a major obstacle to the implementation of this otherwise cost-effective instrument. Rebates may help overcome this difficulty. Their distributional consequences depend on their design and the distribution of agents' initial emissions and abatement costs. We develop a stylized analytical framework to derive general conditions under which a tax-and-rebate scheme increases income inequality and compare the performances of various rebate designs. This framework is applied to the regulation of greenhouse gas emissions from European agriculture. An emission tax with no rebate is found to substantially reduce agricultural emissions (by approximately −15% for a 100 €/tCOeq tax), but also strongly affect the total sector income (approximately −20% with the same tax rate) as well as increase income inequality. A flat rebate considerably reduces income inequality relative to pre-policy levels. For the same impacts on aggregate income and budget, a rebate proportional to initial emissions leaves pre-existing inequality virtually unchanged. A well-designed rebate can thus be critical for the acceptability of climate policy instruments.

Keywords: Emission tax-and-rebate; Climate policy Emission tax-and-rebate Income inequality European agriculture (search for similar items in EconPapers)
Date: 2024-05
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04483758v1
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Ecological Economics, 2024, 219, pp.108154. ⟨10.1016/j.ecolecon.2024.108154⟩

Downloads: (external link)
https://hal.inrae.fr/hal-04483758v1/document (application/pdf)

Related works:
Journal Article: Give and take: An analysis of the distributional consequences of emission tax-and-rebate schemes with an application to greenhouse gas emissions from European agriculture (2024)
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: https://EconPapers.repec.org/RePEc:hal:journl:hal-04483758

DOI: 10.1016/j.ecolecon.2024.108154

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().