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The French Tax on Air Pollution: Some Preliminary Results on its Effectiveness

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  • Katrin Millock

    (CIRED (CNRS-EHESS))

  • Céline Nauges

    (LEERNA, INRA-Toulouse)

Abstract

Empirical evidence evaluating the efficiency of economic instruments is still rare, despite significant theoretical advances over the last decades. The objective of this paper is to evaluate one form of environmental taxation, the French tax on air pollution from 1990-99. While starting out in 1985 as a tax levied only on emissions of sulphur dioxide (SO2 ), the tax base was subsequently extended to encompass also emissions of nitrogen oxides (NOx), hydrochloric acid (HCl), and volatile organic compounds (VOC). The revenues of the French tax on air pollution were earmarked for abatement subsidies and the financing of air quality surveillance systems. Using a plant-level database, we find a negative, significant effect of the tax on emissions of SO2, NOx, and HCl. The abatement elasticity with regard to the tax is quite small, however.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2003.44.

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Date of creation: Apr 2003
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Handle: RePEc:fem:femwpa:2003.44

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Keywords: Environmental tax; emissions regulation; earmarking; air quality;

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References

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  1. Michael Greenstone, 1998. "The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufacturers," Working Papers 787, Princeton University, Department of Economics, Industrial Relations Section..
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  4. Knut Alfsen & Hugo Birkelund & Morten Aaserud, 1995. "Impacts of an EC carbon/energy tax and deregulating thermal power supply on CO 2, SO 2 and NO x emissions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 5(2), pages 165-189, March.
  5. Cansier, Dieter & Krumm, Raimund, 1997. "Air pollutant taxation: an empirical survey," Ecological Economics, Elsevier, vol. 23(1), pages 59-70, October.
  6. Murdoch, James C & Sandler, Todd & Sargent, Keith, 1997. "A Tale of Two Collectives: Sulphur versus Nitrogen Oxides Emission Reduction in Europe," Economica, London School of Economics and Political Science, vol. 64(254), pages 281-301, May.
  7. Sterner, Thomas & Hoglund, Lena, 2000. "Output-Based Refunding of Emission Payments: Theory, Distribution of Costs, and International Experience," Discussion Papers dp-00-29, Resources For the Future.
  8. Nadeau, Louis W., 1997. "EPA Effectiveness at Reducing the Duration of Plant-Level Noncompliance," Journal of Environmental Economics and Management, Elsevier, vol. 34(1), pages 54-78, September.
  9. Brannlund, Runar & Kristrom, Bengt, 2001. "Too hot to handle?: Benefits and costs of stimulating the use of biofuels in the Swedish heating sector," Resource and Energy Economics, Elsevier, vol. 23(4), pages 343-358, October.
  10. Joskow, Paul L & Schmalensee, Richard & Bailey, Elizabeth M, 1998. "The Market for Sulfur Dioxide Emissions," American Economic Review, American Economic Association, vol. 88(4), pages 669-85, September.
  11. Robert N. Stavins, 1998. "What Can We Learn from the Grand Policy Experiment? Lessons from SO2 Allowance Trading," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 69-88, Summer.
  12. Fischer, Carolyn, 2001. "Rebating Environmental Policy Revenues: Output-Based Allocations and Tradable Performance Standards," Discussion Papers dp-01-22, Resources For the Future.
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Cited by:
  1. N. Riedinger & E. Hauvy, 2003. "The cost of air pollution abatement for French firms: An estimation at the firm-level," Documents de Travail de la DESE - Working Papers of the DESE g2003-01, Institut National de la Statistique et des Etudes Economiques, DESE.
  2. Katrin Millock & Céline Nauges & Thomas Sterner, 2004. "Environmental Taxes: A Comparison of French and Swedish Experience from Taxes on Industrial Air Pollution," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 2(1), pages 30-34, 04.

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