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Distributional Effects of Environmental Trade Measures

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Abstract

I investigate the distributional effects of environmental trade measures. Distributional effects are assigned to two channels: ‘Use-side’ effects describe which consumers bear the burden of changing prices, while ‘source-side’ effects describe shifts in income between sectors, factors of production and different groups of workers. I present simple statistics to characterize the distributional tendencies of climate policies in each of these channels. I then apply these statistics to assess the distributional effects of two types of policy instruments: Border Carbon Adjustments and Green Industrial Policy. I conclude with a more detailed case study investigating the distributional effects of introducing Border Carbon Adjustments to complement an EU-wide carbon price. The analysis highlights the importance of modeling the effects of environmental trade policy at different scales, capturing shifts between countries, as well as shifts between sectors and income groups within them. Classification-Q56, Q58, F18

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  • Lutz Sager, 2021. "Distributional Effects of Environmental Trade Measures," Working Papers gueconwpa~21-21-11, Georgetown University, Department of Economics.
    • Handle: RePEc:geo:guwopa:gueconwpa~21-21-11
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    Keywords

    Climate Policy; International Trade; Redistributive Effects; Border Carbon Adjustment; Industrial Policy;
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