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Healthy Climate, Healthy Bodies: Optimal Fuel Taxation and Physical Activity

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  • Inge van den Bijgaart
  • David Klenert
  • Linus Mattauch
  • Simona Sulikova

Abstract

Transport has significant externalities including carbon emissions and air pollution. Public health research has identified additional social gains from active travel, due to health benefits of physical exercise. Per mile, these benefits greatly exceed the external costs from car use. We introduce active travel into an optimal fuel taxation model and analytically characterise the optimal second-best fuel tax. We find that accounting for active travel benefits increases the optimal fuel tax by 49% in the US and 36% in the UK. Fuel taxes should be implemented jointly with other policies aimed at increasing the uptake of active travel.

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  • Inge van den Bijgaart & David Klenert & Linus Mattauch & Simona Sulikova, 2020. "Healthy Climate, Healthy Bodies: Optimal Fuel Taxation and Physical Activity," CESifo Working Paper Series 8762, CESifo.
    • Handle: RePEc:ces:ceswps:_8762
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    Cited by:

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    2. Franziska Funke & Linus Mattauch & Inge van den Bijgaart & H. Charles J. Godfray & Cameron Hepburn & David Klenert & Marco Springmann & Nicolas Treich, 2022. "Toward Optimal Meat Pricing: Is It Time to Tax Meat Consumption?," Review of Environmental Economics and Policy, University of Chicago Press, vol. 16(2), pages 219-240.
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    4. Lassi Ahlvik & Anna Sahari, 2023. "Promoting active transport through health information: evidence from a randomized controlled trial," Working Papers 16, Finnish Centre of Excellence in Tax Systems Research.

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    More about this item

    Keywords

    transport externalities; congestion; active travel; fuel; health behaviour; optimal taxation;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • Z28 - Other Special Topics - - Sports Economics - - - Policy

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