The Incidence of Pollution Control Policies

Ian Parry, Hilary Sigman, Margaret Walls and Roberton Williams

No 11438, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper reviews theoretical and empirical literature on the household distribution of the costs and benefits of pollution control policies, and ways of integrating distributional issues into environmental cost/benefit analysis. Most studies find that policy costs fall disproportionately on poorer groups, though this is less pronounced when lifetime income is used, and policies affect prices of inputs used pervasively across the economy. The policy instrument itself is also critical; freely allocated emission permits may hurt the poor the most, as they transfer income to shareholders via scarcity rents created by higher prices, while emissions taxes offer opportunities for progressive revenue recycling. And although low-income households appear to bear a disproportionate share of environmental risks, policies that reduce risks are not always progressive, for example, they may alter property values in ways that benefit the wealthy. The review concludes by noting a number of areas where future research is badly needed.

JEL-codes: H22 H23 Q52 (search for similar items in EconPapers)
Date: 2005-06
New Economics Papers: this item is included in nep-env, nep-pbe and nep-res
Note: PE EEE
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Citations: View citations in EconPapers (28)

Published as Tietenberg, Tom and Henk Folmer (eds.) International Yearbook of Environmental and Resource Economics 2006/2007. Cheltenham, UK: Edward Elgar, 2006.

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Related works:
Working Paper: The Incidence of Pollution Control Policies (2005)
Working Paper: The Incidence of Pollution Control Policies (2005)
Working Paper: The Incidence of Pollution Control Policies (2005)
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