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Distributional impact of carbon pricing in Chinese provinces

Author

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  • Wang, Qian
  • Hubacek, Klaus
  • Feng, Kuishuang
  • Guo, Lin
  • Zhang, Kun
  • Xue, Jinjun
  • Liang, Qiao-Mei

Abstract

Based on a Multi-Regional Input-Output (MRIO) model, and combined with the 2012 MRIO table for 30 Chinese provinces, this paper analyzes the distributional impacts of carbon pricing on households within and across Chinese provinces. The results show regressive distributional effects of carbon pricing across provinces, i.e. poor provinces are affected more by the price. Carbon pricing also shows rural-urban regressivity (i.e. rural households are impacted more heavily than urban households) in more than half of the provinces. Within each selected province, carbon pricing has mostly regressive effects, i.e. poorer urban households are more affected than richer urban households in all provinces and poorer rural households more than richer rural households in one third of the provinces. When looking more specifically at direct energy consumption, we find that the carbon pricing on domestic fuels generally shows regressivity, while pricing carbon on transport fuels shows progressivity. In addition, the impact of carbon pricing on residential direct expenditures (mainly on electricity and coal) is the most important contributor to the regional regressivity across provinces.

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  • Wang, Qian & Hubacek, Klaus & Feng, Kuishuang & Guo, Lin & Zhang, Kun & Xue, Jinjun & Liang, Qiao-Mei, 2019. "Distributional impact of carbon pricing in Chinese provinces," Energy Economics, Elsevier, vol. 81(C), pages 327-340.
    • Handle: RePEc:eee:eneeco:v:81:y:2019:i:c:p:327-340
    DOI: 10.1016/j.eneco.2019.04.003
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    More about this item

    Keywords

    Carbon pricing; Carbon tax; Income distribution; Inequality; Climate change; Input-output analysis;
    All these keywords.

    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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