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Will environmental taxes help to mitigate climate change? A comparative study based on OECD countries

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  • He, Pinglin
  • Zhang, Shuhao
  • Wang, Lei
  • Ning, Jing

Abstract

Climate change and the resulting extreme weather events bring significant economic losses and many unstable factors. It is an important means to actively seek environmental protection and climate governance countermeasures to meet severe challenges. As an environmental protection tool widely used by the Organization for Economic Cooperation and Development (OECD), environmental taxes are expected to play an important role in combating climate change and reducing extreme weather events. Based on public goods theory, collective cooperation theory, externality theory and double dividend theory of environmental taxes, this paper takes 36 OECD countries as research samples and empirically tests the role of environmental taxes in mitigating climate change process and reducing extreme weather events through the establishment of panel Auto-Regressive Distributed Lag (ARDL) model. The empirical results show that the environmental taxes on the whole is conducive to reducing the frequency of abnormal temperature weather and plays a positive role in reducing carbon dioxide emissions in OECD countries. Further research shows that environmental budget and environmental technologies play a positive role in the process of environmental taxes to delay climate change and reduce extreme weather events. In other words, we should attach importance to the investment of environmental protection funds and the research and development of environmental protection technology while carrying out environmental taxes. The robustness test shows that the main regression results of this paper have strong robustness. The research in this paper enriches theories and existing literature related to environmental taxes and climate change, and provides new research ideas and policy guidance for delaying the process of climate change and responding to extreme weather events.

Suggested Citation

  • He, Pinglin & Zhang, Shuhao & Wang, Lei & Ning, Jing, 2023. "Will environmental taxes help to mitigate climate change? A comparative study based on OECD countries," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1440-1464.
    • Handle: RePEc:eee:ecanpo:v:78:y:2023:i:c:p:1440-1464
    DOI: 10.1016/j.eap.2023.04.032
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    4. Josef Gotvald, 2024. "The role of environmental taxes and other political instruments on the road to climate neutrality [Role environmentálních daní a dalších politických nástrojů na cestě za klimatickou neutralitou]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2024(1), pages 47-76.
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