Two World Views on Carbon Revenues
AbstractThe introduction of a price on carbon dioxide is expected to be more efficient than prescriptive regulation. It also instantiates substantial economic value. Initially programs allocated this value to incumbent firms (grandfathering), but the growing movement toward auctioning or emissions fees makes carbon revenues into a payment for environmental services. This paper asks, to whom should this payment accrue? If the atmosphere resource, as a common property resource, is viewed as the property of government, then the decision of how to use the revenue can be viewed as a fiscal problem, and efficiency considerations dominate. If the atmosphere is viewed as held in common, then the revenue might be considered compensation to owners and delivered as payment to individuals. This decision has efficiency and distributional consequences that affect the political economy and the likelihood and durability of climate policy. We summarize trends among six existing carbon-pricing programs.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-13-32.
Date of creation: 10 Oct 2013
Date of revision:
auction; cap and trade; emissions fee; emissions tax; allocation; grandfathering; climate change; policy;
Find related papers by JEL classification:
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries
- P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-16 (All new papers)
- NEP-ENE-2013-11-16 (Energy Economics)
- NEP-ENV-2013-11-16 (Environmental Economics)
- NEP-RES-2013-11-16 (Resource Economics)
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