Poverty and distributional effects of carbon pricing in low- and middle-income countries - A global comparative analysis
- Even though concerns about adverse distributional implications for the poor are one of the most important political challenges for carbon pricing, the existing literature reveals ambiguous results. For this reason, we assess the expected incidence of moderate carbon price increases for different income groups in 87 mostly low- and middle-income countries. Building on a consistent dataset and method, we find that for countries with per capita incomes of below USD 15,000 per year (at PPP-adjusted 2011 USD) carbon pricing has, on average, progressive distributional effects. We also develop a novel decomposition technique to show that distributional outcomes are primarily determined by differences among income groups in consumption patterns of energy, rather than of food, goods or services. We argue that an inverse U-shape relationship between energy expenditure shares and income explains why carbon pricing tends to be regressive in countries with relatively higher income. Since these countries are likely to have more financial resourcesEven though concerns about adverse distributional implications for the poor are one of the most important political challenges for carbon pricing, the existing literature reveals ambiguous results. For this reason, we assess the expected incidence of moderate carbon price increases for different income groups in 87 mostly low- and middle-income countries. Building on a consistent dataset and method, we find that for countries with per capita incomes of below USD 15,000 per year (at PPP-adjusted 2011 USD) carbon pricing has, on average, progressive distributional effects. We also develop a novel decomposition technique to show that distributional outcomes are primarily determined by differences among income groups in consumption patterns of energy, rather than of food, goods or services. We argue that an inverse U-shape relationship between energy expenditure shares and income explains why carbon pricing tends to be regressive in countries with relatively higher income. Since these countries are likely to have more financial resources and institutional capacities to deal with distributional issues, our findings suggest that mitigating climate change, raising domestic revenue and reducing economic inequality are not mutually exclusive, even in low- and middle-income countries. (C) 2018 The Authors. Published by Elsevier Ltd.…
Author details: | Ira Irina Dorband, Michael Jakob, Matthias KalkuhlORCiDGND, Jan Christoph SteckelORCiDGND |
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DOI: | https://doi.org/10.1016/j.worlddev.2018.11.015 |
ISSN: | 0305-750X |
Title of parent work (English): | World development |
Publisher: | Elsevier |
Place of publishing: | Oxford |
Publication type: | Article |
Language: | English |
Year of first publication: | 2019 |
Publication year: | 2019 |
Release date: | 2021/03/31 |
Tag: | Carbon pricing; Decomposition analysis; Distributional effect; Global comparison; Household data; Low- and middle-income countries |
Volume: | 115 |
Number of pages: | 12 |
First page: | 246 |
Last Page: | 257 |
Funding institution: | German Federal Ministry of Education and Research (BMBF)Federal Ministry of Education & Research (BMBF) [01LS1610B]; Heinrich Boll Foundation |
Organizational units: | Wirtschafts- und Sozialwissenschaftliche Fakultät / Sozialwissenschaften |
DDC classification: | 3 Sozialwissenschaften / 30 Sozialwissenschaften, Soziologie / 300 Sozialwissenschaften |
Peer review: | Referiert |
Publishing method: | Open Access / Hybrid Open-Access |
License (German): | CC-BY-NC-ND - Namensnennung, nicht kommerziell, keine Bearbeitungen 4.0 International |
External remark: | Zweitveröffentlichung in der Schriftenreihe Postprints der Universität Potsdam :[ Wirtschafts- und Sozialwissenschaftliche Reihe ; 103 |