Carbon Pricing and Transit Accessibility to Jobs: Impacts on Inequality in Rio de Janeiro and Kinshasa

Andrew David Nell, Daniel Herszenhut, Camilla Knudsen, Shohei Nakamura, Marcus Saraiva and Paolo Avner

No 10341, Policy Research Working Paper Series from The World Bank

Abstract: Urban transport is a major driver of global carbon dioxide emissions. Without strong mitigation policies, rapid urbanization, especially in developing countries, is expected to exacerbate the problem. There is a growing consensus on the fundamental role of carbon pricing for achieving reductions in carbon dioxide emissions. However, carbon pricing policies are frequently criticized and resisted for having adverse distributional impacts, which could hinder their implementation, particularly when implemented as a fuel levy—which would impact private vehicle usage but may also affect transit services such as buses. Currently, there is a lack of evidence that quantifies these negative impacts, especially on people’s ability to reach economic opportunities and services. To this end, this paper studies the impact of a uniform carbon price, as one of the most commonly discussed climate policies, on access to employment opportunities via transit services in Kinshasa and Rio de Janeiro. Reduced access to jobs would contribute to fragmented urban labor markets and thus lead to negative social outcomes. Unlike most previous studies, this study defines access as being constrained by both travel time and travel budget. The results indicate that fuel price increases (simulating increases induced by a carbon tax) reduce accessibility, but the effect is lower in more compact and walkable cities as well as in cities that have green transit options. The paper also shows that fuel price increases have spatially and socially disparate outcomes, with the lowest income communities not necessarily being the most affected, in part because even in the absence of carbon pricing, they are found to be priced out of using transit services. The results demonstrate the importance of strategies and investments, such as land use planning and decarbonized transit services, but also possibly complementary social protection programs (such as targeted subsidies, or even cash transfers), to mitigate the negative distributional consequences of carbon pricing policies.

Date: 2023-03-06
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