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Green Taxes in a Post-Paris World: Are Millions of Nays Inevitable?

Author

Listed:
  • Stefano Carattini

    () (Yale University
    London School of Economics and Political Science)

  • Andrea Baranzini

    (HES-SO/University of Applied Sciences Western Switzerland)

  • Philippe Thalmann

    (Swiss Federal Institute of Technology Lausanne - Ecole Polytechnique Fédérale de Lausanne (EPFL))

  • Frédéric Varone

    (University of Geneva)

  • Frank Vöhringer

    (Swiss Federal Institute of Technology Lausanne - Ecole Polytechnique Fédérale de Lausanne (EPFL))

Abstract

Abstract Turning the Paris Agreement’s greenhouse gas emissions pledges into domestic policies is the next challenge for governments. We address the question of the acceptability of cost-effective climate policy in a real-voting setting. First, we analyze voting behavior in a large ballot on energy taxes, rejected in Switzerland in 2015 by more than 2 million people. Energy taxes were aimed at completely replacing the current value-added tax. We examine the determinants of voting and find that distributional and competitiveness concerns reduced the acceptability of energy taxes, along with the perception of ineffectiveness. Most people would have preferred tax revenues to be allocated for environmental purposes. Second, at the same time of the ballot, we tested the acceptability of alternative designs of a carbon tax with a choice experiment survey on a representative sample of the Swiss population. Survey respondents are informed about environmental, distributional and competitiveness effects of each carbon tax design. These impacts are estimated with a computable general equilibrium model. This original setting generates a series of novel results. Providing information on the expected environmental effectiveness of carbon taxes reduces the demand for environmental earmarking. Making distributional effects salient generates an important demand for progressive designs, e.g. social cushioning or recycling via lump-sum transfers. The case of lump-sum recycling is particularly striking: it is sufficient to show its desirable distributional properties to make it one of the most preferred designs, which corresponds to a completely novel result in the literature. We show that providing detailed information on the functioning of environmental taxes may contribute to close both the gap between acceptability ex ante and ex post and the gap between economists’ prescriptions and the preferences of the general public.

Suggested Citation

  • Stefano Carattini & Andrea Baranzini & Philippe Thalmann & Frédéric Varone & Frank Vöhringer, 2017. "Green Taxes in a Post-Paris World: Are Millions of Nays Inevitable?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(1), pages 97-128, September.
  • Handle: RePEc:kap:enreec:v:68:y:2017:i:1:d:10.1007_s10640-017-0133-8
    DOI: 10.1007/s10640-017-0133-8
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    1. repec:eee:enepol:v:121:y:2018:i:c:p:565-575 is not listed on IDEAS
    2. Andrea Baranzini, Stefano Carattini, Martin Peclat, 2017. "What drives social contagion in the adoption of solar photovoltaic technology," GRI Working Papers 270, Grantham Research Institute on Climate Change and the Environment.
    3. Baranzini, Andrea & Borzykowski, Nicolas & Carattini, Stefano, 2018. "Carbon offsets out of the woods? Acceptability of domestic vs. international reforestation programmes in the lab," Journal of Forest Economics, Elsevier, vol. 32(C), pages 1-12.
    4. Klenert, David & Mattauch, Linus & Combet, Emmanuel & Edenhofer, Ottmar & Hepburn, Cameron & Rafaty, Ryan & Stern, Nicholas, 2017. "Making Carbon Pricing Work," MPRA Paper 80943, University Library of Munich, Germany.
    5. repec:eee:eneeco:v:74:y:2018:i:c:p:417-426 is not listed on IDEAS
    6. Andrea Baranzini & Nicolas Borzykowski & Stefano Carattini, 2016. "Carbon offsets out of the woods? The acceptability of domestic vs. international reforestation programmes," GRI Working Papers 257, Grantham Research Institute on Climate Change and the Environment.
    7. repec:kap:pubcho:v:175:y:2018:i:1:d:10.1007_s11127-018-0513-9 is not listed on IDEAS
    8. Stefano Carattini & Simon Levin & Alessandro Tavoni, 2017. "Cooperation in the climate commons," GRI Working Papers 259, Grantham Research Institute on Climate Change and the Environment.

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