IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v212y2023ics0921800923001805.html
   My bibliography  Save this article

Ship-owner response to carbon taxes: Industry and environmental implications

Author

Listed:
  • Cariou, Pierre
  • Halim, Ronald A.
  • Rickard, Bradley J.

Abstract

We consider the effects of a maritime bunker levy on ship-owner profits, trade, and emissions. Standard and augmented gravity models are employed using data from 2016 to estimate the impact of a change in transit time and transit cost on grain and soybean trade flows and on vessel speed. Results for a bunker levy of 50 USD per tonne of fuel, or less, stress that it will not trigger a change in the optimal speed of the vessel which is contrary to most theoretical models that predict an increase in fuel costs will always lead to a reduction in speed and carbon emissions. Bunker levies exceeding 100 USD per tonne may be needed to reduce carbon emissions when trade flows are sensitive to trade costs and transport time, as may be the case for many agricultural commodities.

Suggested Citation

  • Cariou, Pierre & Halim, Ronald A. & Rickard, Bradley J., 2023. "Ship-owner response to carbon taxes: Industry and environmental implications," Ecological Economics, Elsevier, vol. 212(C).
    • Handle: RePEc:eee:ecolec:v:212:y:2023:i:c:s0921800923001805
    DOI: 10.1016/j.ecolecon.2023.107917
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800923001805
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecolecon.2023.107917?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nabernegg, Stefan & Bednar-Friedl, Birgit & Muñoz, Pablo & Titz, Michaela & Vogel, Johanna, 2019. "National Policies for Global Emission Reductions: Effectiveness of Carbon Emission Reductions in International Supply Chains," Ecological Economics, Elsevier, vol. 158(C), pages 146-157.
    2. Jane Korinek & Patricia Sourdin, 2010. "Clarifying Trade Costs: Maritime Transport and Its Effect on Agricultural Trade," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(3), pages 417-435.
    3. Dominique Bureau & Lionel Fontagné & Katheline Schubert, 2017. "Trade and Climate: Towards Reconciliation," PSE-Ecole d'économie de Paris (Postprint) hal-01688874, HAL.
    4. Fremstad, Anders & Paul, Mark, 2019. "The Impact of a Carbon Tax on Inequality," Ecological Economics, Elsevier, vol. 163(C), pages 88-97.
    5. Mundaca, Gabriela & Strand, Jon & Young, Ian R., 2021. "Carbon pricing of international transport fuels: Impacts on carbon emissions and trade activity," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    6. Roar Adland & Haiying Jia, 2018. "Dynamic speed choice in bulk shipping," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 20(2), pages 253-266, June.
    7. Sommer, Stephan & Mattauch, Linus & Pahle, Michael, 2022. "Supporting carbon taxes: The role of fairness," Ecological Economics, Elsevier, vol. 195(C).
    8. Anne-Célia Disdier & Keith Head, 2008. "The Puzzling Persistence of the Distance Effect on Bilateral Trade," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 37-48, February.
    9. David Hummels, 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154, Summer.
    10. John C. Beghin & Heidi Schweizer, 2021. "Agricultural Trade Costs," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 500-530, June.
    11. Halim,Ronald Apriliyanto & Smith,Tristan & Englert,Dominik Paul, 2019. "Understanding the Economic Impacts of Greenhouse Gas Mitigation Policies on Shipping : What Is the State of the Art of Current Modeling Approaches ?," Policy Research Working Paper Series 8695, The World Bank.
    12. Dirk Heine & Susanne Gäde, 2018. "Unilaterally removing implicit subsidies for maritime fuels," International Economics and Economic Policy, Springer, vol. 15(2), pages 523-545, April.
    13. Dominioni,Goran & Heine,Dirk & Martinez Romera,Beatriz, 2018. "Regional carbon pricing for international maritime transport : challenges and opportunities for global geographical coverage," Policy Research Working Paper Series 8319, The World Bank.
    14. van Veen-Groot, Danielle B. & Nijkamp, Peter, 1999. "Globalisation, transport and the environment: new perspectives for ecological economics," Ecological Economics, Elsevier, vol. 31(3), pages 331-346, December.
    15. Adland, Roar & Cariou, Pierre & Wolff, Francois-Charles, 2020. "Optimal ship speed and the cubic law revisited: Empirical evidence from an oil tanker fleet," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 140(C).
    16. Giulia Brancaccio & Myrto Kalouptsidi & Theodore Papageorgiou, 2020. "Geography, Transportation, and Endogenous Trade Costs," Econometrica, Econometric Society, vol. 88(2), pages 657-691, March.
    17. Zhu, Yongbin & Shi, Yajuan & Wu, Jing & Wu, Leying & Xiong, Wen, 2018. "Exploring the Characteristics of CO2 Emissions Embodied in International Trade and the Fair Share of Responsibility," Ecological Economics, Elsevier, vol. 146(C), pages 574-587.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pierre Cariou & Ronald A. Halim & Bradley J. Rickard, 2022. "Ship-owner Response to Carbon Taxes: Industry and Environmental Implications," Applied Economics and Policy Working Paper Series 320702, Cornell University, Department of Applied Economics and Management.
    2. Coşar, A. Kerem & Demir, Banu, 2018. "Shipping inside the box: Containerization and trade," Journal of International Economics, Elsevier, vol. 114(C), pages 331-345.
    3. John C. Beghin & Heidi Schweizer, 2021. "Agricultural Trade Costs," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 500-530, June.
    4. Giulia Brancaccio & Myrto Kalouptsidi & Theodore Papageorgiou, 2023. "The impact of oil prices on world trade," Review of International Economics, Wiley Blackwell, vol. 31(2), pages 444-463, May.
    5. Marcias, Manuel & Chevassus-Lozza, Emmanuelle & Latouche, Karine, 2011. "Trade and Transport Modes, A Differentiated Impact of Distance," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114370, European Association of Agricultural Economists.
    6. Thomas Orliac, 2012. "The economics of trade facilitation [L'économie de la facilitation des échanges]," SciencePo Working papers Main tel-03681980, HAL.
    7. Jules Hugot & Camilo Umana Dajud, 2016. "Trade costs and the Suez and Panama Canals," Working Papers 2016-29, CEPII research center.
    8. Miren Lafourcade & Jacques-François Thisse, 2011. "New Economic Geography: The Role of Transport Costs," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 4, Edward Elgar Publishing.
    9. César Ducruet & Réka Juhász & Dávid Krisztián Nagy & Claudia Steinwender, 2019. "All Aboard: The Aggregate Effects of Port Development," Working Papers 1160, Barcelona School of Economics.
    10. Chen, Natalie & Novy, Dennis, 2008. "International Trade Integration: A Disaggregated Approach," CEPR Discussion Papers 7103, C.E.P.R. Discussion Papers.
    11. Timothy Besley & Thiemo Fetzer & Hannes Mueller, 2015. "The Welfare Cost Of Lawlessness: Evidence From Somali Piracy," Journal of the European Economic Association, European Economic Association, vol. 13(2), pages 203-239, April.
    12. Brülhart, Marius & Desmet, Klaus & Klinke, Gian-Paolo, 2020. "The shrinking advantage of market potential," Journal of Development Economics, Elsevier, vol. 147(C).
    13. Krolikowski, Pawel M. & McCallum, Andrew H., 2021. "Goods-market frictions and international trade," Journal of International Economics, Elsevier, vol. 129(C).
    14. Noblet, Sandrine & Belgodere, Antoine, 2010. "Coordination cost and the distance puzzle," MPRA Paper 27502, University Library of Munich, Germany.
    15. Keith Head & Thierry Mayer, 2013. "Innis Lecture: What separates us? Sources of resistance to globalization," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(4), pages 1196-1231, November.
    16. Giovanni Federico & Antonio Tena-Junguito, 2017. "A tale of two globalizations: gains from trade and openness 1800–2010," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(3), pages 601-626, August.
    17. Giovanni Federico & Antonio Tena-Junguito, 2017. "A tale of two globalizations: gains from trade and openness 1800–2010," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(3), pages 601-626, August.
    18. Maarten Bosker & Eltjo Buringh, 2020. "Ice(berg) Transport Costs," The Economic Journal, Royal Economic Society, vol. 130(629), pages 1262-1287.
    19. Dela‐Dem Fiankor & Fabio G. Santeramo, 2023. "Revisiting the impact of per‐unit duties on agricultural export prices," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(3), pages 1472-1492, September.
    20. Matthieu Crozet & Pamina Koenig, 2010. "Structural gravity equations with intensive and extensive margins," Canadian Journal of Economics, Canadian Economics Association, vol. 43(1), pages 41-62, February.

    More about this item

    Keywords

    Agricultural trade; Bunker levy; Carbon tax; Environmental policy; Maritime economics; Gravity model;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F18 - International Economics - - Trade - - - Trade and Environment
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:212:y:2023:i:c:s0921800923001805. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.