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Carbon taxes, industrial production, welfare and the environment

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  • Wesseh, Presley K.
  • Lin, Boqiang
  • Atsagli, Philip

Abstract

Conventional wisdom holds that, ignoring environmental benefits, carbon taxes should adversely affect low-income countries more than they should affect high-income regions. Simulating various ranges of optimal carbon taxes and testing their impacts, this study draws an opposite conclusion to the above assertion. However, when the model is adjusted to reflect benefits from environmental cleanup, carbon taxes create welfare gains in all regions except for low-income countries. In addition, implementing carbon taxes reduces environmental damages by approximately 50% in absolutely all the six regions considered. Notwithstanding the existence of a tradeoff between welfare and environment for low-income countries implies that energy conservation policies aimed at lowering greenhouse gas emissions would leave people worse-off in these countries.

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  • Wesseh, Presley K. & Lin, Boqiang & Atsagli, Philip, 2017. "Carbon taxes, industrial production, welfare and the environment," Energy, Elsevier, vol. 123(C), pages 305-313.
    • Handle: RePEc:eee:energy:v:123:y:2017:i:c:p:305-313
    DOI: 10.1016/j.energy.2017.01.139
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    9. Wenwen Zhang & Shichun Xu & Zhengxia He & Basil Sharp & Bin Zhao & Shuxiao Wang, 2019. "Impacts of U.S. Carbon Tariffs on China’s Foreign Trade and Social Welfare," Sustainability, MDPI, vol. 11(19), pages 1-21, September.
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    13. Chang-Jing Ji & Yu-Jie Hu & Bao-Jun Tang, 2018. "Research on carbon market price mechanism and influencing factors: a literature review," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 92(2), pages 761-782, June.
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    15. Ifft, Jennifer E. & Spini, Pietro & Wilcox, Steven, 2018. "The distributional implications of carbon taxation for U.S. crop farms," 2018 Annual Meeting, August 5-7, Washington, D.C. 274423, Agricultural and Applied Economics Association.
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