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On the emission and distributional effects of a CO2eq-tax on agricultural goods—The case of Germany

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  • Schaper, Julian
  • Franks, Max
  • Koch, Nicolas
  • Plinke, Charlotte
  • Sureth, Michael

Abstract

We analyze how a potential CO2eq-tax on the most emission-intensive agricultural goods in Germany affects CO2eq-emissions and the income distribution.Based on data from the German survey of income and expenditure, we use a linear approximated Exact Affine Stone Index demand system to estimate own-price and cross-price elasticities for meat, dairy goods and eggs. These elasticities allow us to obtain demand changes and thus emission reductions following the introduction of a CO2eq-weighted carbon tax based on the social cost of carbon. We find that it can reduce annual agricultural emissions in Germany by more than 15.3 MtCO2eq or about 22.5%. The tax generates an annual revenue of more than 8.2 billion EUR. Since the carbon tax is regressive, we consider the distributional effects of a per capita lump-sum compensation scheme. We show that this “fee and dividend” approach has a slightly progressive effect on the distribution of income.

Suggested Citation

  • Schaper, Julian & Franks, Max & Koch, Nicolas & Plinke, Charlotte & Sureth, Michael, 2025. "On the emission and distributional effects of a CO2eq-tax on agricultural goods—The case of Germany," Food Policy, Elsevier, vol. 130(C).
    • Handle: RePEc:eee:jfpoli:v:130:y:2025:i:c:s0306919224002057
    DOI: 10.1016/j.foodpol.2024.102794
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