Reevaluating the first and the second dividends of environmental tax reforms
There is increasing global interest in market-based climate change policies following the last elections in the United States. In this context an Exxon Mobil chief executive came out in favour of a carbon tax. This paper is concerned with the welfare analysis of Environmental Tax Reforms (ETR), and takes up the claims for the need of an unambiguous and operative definition of the double dividend both for empirical purposes and political advisement. In this paper, we contest the usual definition of the second dividend and its assimilation to an "efficiency dividend". We propose alternative definitions by suggesting a different splitting of the total welfare variation between the first and the second dividend in order to isolate the efficiency effects of the ETR. The new definitions become clearly understandable and easy for economic and policy interpretation. Concepts like "weak" and "strong" double dividend turn out to be unnecessary. Finally, we analyze ETR for the US economy to illustrate the advantages of the proposed definitions for policy implementation.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John Pezzey & Andrew Park, 1998. "Reflections on the Double Dividend Debate," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(3), pages 539-555, April.
- Tol, Richard S. J., 2005. "The marginal damage costs of carbon dioxide emissions: an assessment of the uncertainties," Energy Policy, Elsevier, vol. 33(16), pages 2064-2074, November.
- Pearce, David W, 1991. "The Role of Carbon Taxes in Adjusting to Global Warming," Economic Journal, Royal Economic Society, vol. 101(407), pages 938-48, July.
- Tim Callan & Sean Lyons & Sue Scott & Richard S. J. Tol & Stefano Verde, 2008.
"The Distributional Implications of a Carbon Tax in Ireland,"
WP250, Economic and Social Research Institute (ESRI).
- Callan, Tim & Lyons, Sean & Scott, Susan & Tol, Richard S.J. & Verde, Stefano, 2009. "The distributional implications of a carbon tax in Ireland," Energy Policy, Elsevier, vol. 37(2), pages 407-412, February.
- Mireille Chiroleu-Assouline & Mouez Fodha, 2005.
"Double Dividend with Involuntary Unemployment: Efficiency and Intergenerational Equity,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 31(4), pages 389-403, 08.
- Mireille Chiroleu-Assouline & Mouez Fodha, 2005. "Double Dividend with Involuntary Unemployment: Efficiency and Intergenerational Equity," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00089913, HAL.
- Terkla, David, 1984. "The efficiency value of effluent tax revenues," Journal of Environmental Economics and Management, Elsevier, vol. 11(2), pages 107-123, June.
- A. Bovenberg & Frederick Van der Ploeg, 1998. "Consequences of Environmental Tax Reform for Unemployment and Welfare," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 12(2), pages 137-150, September.
- Garbaccio, Richard F. & Ho, Mun S. & Jorgenson, Dale W., 1999. "Controlling carbon emissions in China," Environment and Development Economics, Cambridge University Press, vol. 4(04), pages 493-518, October.
- Glomm, Gerhard & Kawaguchi, Daiji & Sepulveda, Facundo, 2008.
"Green taxes and double dividends in a dynamic economy,"
Journal of Policy Modeling,
Elsevier, vol. 30(1), pages 19-32.
- Gerhard Glomm & Daiji Kawaguchi & Facundo Sepulveda, 2006. "Green Taxes and Double Dividends in a Dynamic Economy," Caepr Working Papers 2006-017, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
- Ian W. H. Parry & Roberton C. Williams III & Lawrence H. Goulder, 1997.
"When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets,"
NBER Working Papers
5967, National Bureau of Economic Research, Inc.
- Parry, Ian W. H. & Williams, Roberton III & Goulder, Lawrence H., 1999. "When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 52-84, January.
- Parry, Ian & Goulder, Lawrence & Williams III, Roberton, 1997. "When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets," Discussion Papers dp-97-18-rev, Resources For the Future.
- Schob, Ronnie, 1996. "Evaluating Tax Reforms in the Presence of Externalities," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 537-55, October.
- Inge Mayeres & Stef Proost, 1998.
"Marginal Tax Reform, Externalities and Income Distribution,"
Working Papers Department of Economics
ces9832, KU Leuven, Faculty of Economics and Business, Department of Economics.
- Mayeres, Inge & Proost, Stef, 2001. "Marginal tax reform, externalities and income distribution," Journal of Public Economics, Elsevier, vol. 79(2), pages 343-363, February.
- Jorgenson, Dale W. & Wilcoxen, Peter J., 1993. "Reducing US carbon emissions: an econometric general equilibrium assessment," Resource and Energy Economics, Elsevier, vol. 15(1), pages 7-25, March.
- Morris, Glenn E. & R V Sz, Tam S & Zalai, Ern & Fucsk , J Zsef, 1999. "Integrating environmental taxes on local air pollutants with fiscal reform in Hungary: Simulations with a computable general equilibrium model," Environment and Development Economics, Cambridge University Press, vol. 4(04), pages 537-564, October.
- Bovenberg, A.L. & Goulder, L.H., 1996. "Optimal environmental taxation in the presence of other taxes : General equilibrium analyses," Other publications TiSEM 5d4b7517-c5c8-4ef6-ab76-3, Tilburg University, School of Economics and Management.
- Lee, Dwight R. & Misiolek, Walter S., 1986. "Substituting pollution taxation for general taxation: Some implications for efficiency in pollutions taxation," Journal of Environmental Economics and Management, Elsevier, vol. 13(4), pages 338-347, December.
- Burtraw, Dallas & Palmer, Karen & Krupnick, Alan & Toman, Michael & Paul, Anthony & Bloyd, Cary, 2001. "Ancillary Benefits of Reduced Air Pollution in the United States from Moderate Greenhouse Gas Mitigation Policies in the Electricity Sector," Discussion Papers dp-01-61-, Resources For the Future.
- Parry Ian W. H., 1995. "Pollution Taxes and Revenue Recycling," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages S64-S77, November.
- Ronnie Schöb, 1997. "Environmental Taxes and Pre-Existing Distortions: The Normalization Trap," International Tax and Public Finance, Springer, vol. 4(2), pages 167-176, May.
- Mayeres, Inge & Proost, Stef, 1997. " Optimal Tax and Public Investment Rules for Congestion Type of Externalities," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(2), pages 261-79, June.
- Patuelli, Roberto & Nijkamp, Peter & Pels, Eric, 2005.
"Environmental tax reform and the double dividend: A meta-analytical performance assessment,"
Elsevier, vol. 55(4), pages 564-583, December.
- Bovenberg, A.L. & de Mooij, R.A., 1994.
"Environmental levies and distortionary taxation,"
Other publications TiSEM
4b32deaa-ec2f-4de7-b59b-9, Tilburg University, School of Economics and Management.
- Springer, Urs & Varilek, Matthew, 2004. "Estimating the price of tradable permits for greenhouse gas emissions in 2008-12," Energy Policy, Elsevier, vol. 32(5), pages 611-621, March.
- Aldy, Joseph E. & Pizer, William A., 2008.
"Issues in Designing U.S. Climate Change Policy,"
dp-08-20, Resources For the Future.
- Lars Hakonsen, 2001. "A Note on Green Taxes and Double Dividends," International Tax and Public Finance, Springer, vol. 8(1), pages 75-80, January.
- Sterner, Thomas, 2007. "Fuel taxes: An important instrument for climate policy," Energy Policy, Elsevier, vol. 35(6), pages 3194-3202, June.
- A. Bovenberg, 1999. "Green Tax Reforms and the Double Dividend: an Updated Reader's Guide," International Tax and Public Finance, Springer, vol. 6(3), pages 421-443, August.
- Springer, Urs, 2003. "The market for tradable GHG permits under the Kyoto Protocol: a survey of model studies," Energy Economics, Elsevier, vol. 25(5), pages 527-551, September.
- Parry, Ian W. H., 1997. "Environmental taxes and quotas in the presence of distorting taxes in factor markets," Resource and Energy Economics, Elsevier, vol. 19(3), pages 203-220, August.
- Fernández, Esther & Pérez, Rafaela & Ruiz, Jesús, 2010. "Double dividend, dynamic Laffer effects and public abatement," Economic Modelling, Elsevier, vol. 27(3), pages 656-665, May.
When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:38:y:2010:i:11:p:6654-6661. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.