The Costs of Kyoto Adjustments for Spanish Households
In this paper we present a microsimulation model to calculate the effects of a tax levied on Spanish energy-related CO2 (carbon dioxide) emissions in order to comply with EU (Kyoto-mandated) targets. The model uses the results of our prior estimation of a demand system with Spanish household data from 1973 to 1995, which is especially designed for simultaneous analysis of different energy goods. Our objective is to obtain in-depth information on the behavioural responses by different types of households, which will allow us to determine the welfare effects of tax-induced price changes, their distribution across society and the environmental consequences within the residential sector. The results show a significant response by households, sizeable emission reductions, important tax revenues, moderate welfare changes and distributional effects. The simulated policy can therefore be considered a feasible option for tackling some of the current and severe inefficiencies in Spanish energy and environmental domains.
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