IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/5950.html

Market-based instruments for international aviation and shipping as a source of climate finance

Author

Listed:
  • Keen, Michael
  • Parry, Ian
  • Strand, Jon

Abstract

The international aviation and maritime sectors today enjoy relatively favorable tax treatment, as their fuels are not taxed and the sectors are not subject to any value-added tax or turnover tax. Nor are these fuel uses subject to any global measures to reduce their associated CO2 emissions, even though they represent at least 5 percent of the global greenhouse gas emissions. A carbon charge on fuels for international aviation and shipping equal to $25 per tonne of emitted CO2 could raise about $12 billion from aviation and about $26 billion from shipping by 2020. Market-based instruments ought to be used to raise such revenue, preferably charges based on the carbon contents of fuels. Such charges would also scale back emissions by at least 5-10 percent. Developing countries ought to be able to keep their own tax revenue, and additional compensation to them for the economic burdens of these carbon charges may be warranted. Such compensation would constitute at most 40 percent of the raised global revenue. Implementing these charges can be a challenge, especially for aviation, where a large number of bilateral air-service agreements would need to be rewritten.

Suggested Citation

  • Keen, Michael & Parry, Ian & Strand, Jon, 2012. "Market-based instruments for international aviation and shipping as a source of climate finance," Policy Research Working Paper Series 5950, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5950
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/01/17/000158349_20120117140509/Rendered/PDF/WPS5950.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Axel Michaelowa & Karsten Krause, 2000. "International maritime transport and climate policy," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 35(3), pages 127-136, May.
    2. Hummels, David & Lugovskyy, Volodymyr & Skiba, Alexandre, 2009. "The trade reducing effects of market power in international shipping," Journal of Development Economics, Elsevier, vol. 89(1), pages 84-97, May.
    3. Larry Dwyer & Peter Forsyth (ed.), 2006. "International Handbook on the Economics of Tourism," Books, Edward Elgar Publishing, number 2827, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rosa Maria Arnaldo Valdés & Victor Fernando Gomez Comendador & Luis Manuel Braga Campos, 2021. "How Much Can Carbon Taxes Contribute to Aviation Decarbonization by 2050," Sustainability, MDPI, vol. 13(3), pages 1-13, January.
    2. Margit Schratzenstaller-Altzinger & Alexander Krenek, 2016. "Sustainability-oriented EU Taxes:The Example of a European Carbon-based Flight Ticket Tax," WIFO Studies, WIFO, number 58888.
    3. Alexander Krenek & Margit Schratzenstaller, 2017. "Sustainability-oriented tax-based own resources for the European Union: a European carbon-based flight ticket tax," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(4), pages 665-686, November.
    4. Pereda, Paula Carvalho & Lucchesi, Andrea & Oliveira, Thais Diniz & Wolf, Rayan, 2025. "Carbon tax in the shipping sector: Assessing economic and environmental impacts," Energy Policy, Elsevier, vol. 204(C).
    5. Peeters, Paul M. & Eijgelaar, Eke, 2014. "Tourism's climate mitigation dilemma: Flying between rich and poor countries," Tourism Management, Elsevier, vol. 40(C), pages 15-26.
    6. Alexander Krenek & Mark Sommer & Margit Schratzenstaller-Altzinger, 2020. "A WTO-compatible Border Tax Adjustment for the ETS to Finance the EU Budget," WIFO Working Papers 596, WIFO.
    7. Bofinger, Heinrich & Strand, Jon, 2013. "Calculating the carbon footprint from different classes of air travel," Policy Research Working Paper Series 6471, The World Bank.
    8. Atanas Pekanov & Margit Schratzenstaller-Altzinger, 2019. "A Global Financial Transaction Tax. Theory, Practice and Potential Revenues," WIFO Working Papers 582, WIFO.
    9. Assmann, Lisa & Andersson, Jonas & Eskeland, Gunnar S., 2015. "Missing in Action? Speed optimization and slow steaming in maritime shipping," Discussion Papers 2015/13, Norwegian School of Economics, Department of Business and Management Science.
    10. Alexander Krenek & Mark Sommer & Margit Schratzenstaller-Altzinger, 2019. "Sustainability-oriented Future EU Funding. A European Border Carbon Adjustment," WIFO Working Papers 587, WIFO.
    11. Margit Schratzenstaller-Altzinger, 2017. "The Next Multiannual Financial Framework (MFF), its Structure and the Own Resources," WIFO Studies, WIFO, number 60722.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sun, Xiaolei & Liu, Chang & Wang, Jun & Li, Jianping, 2020. "Assessing the extreme risk spillovers of international commodities on maritime markets: A GARCH-Copula-CoVaR approach," International Review of Financial Analysis, Elsevier, vol. 68(C).
    2. Reshat Maliqi, 2016. "Corruption, the Challenge for Kosovo Institutions," European Journal of Multidisciplinary Studies Articles, Revistia Research and Publishing, vol. 1, ejms_v1_i.
    3. E. M. Ekanayake & Mihalis Halkides & John R. Ledgerwood, 2012. "Inbound International Tourism To The United States: A Panel Data Analysis," International Journal of Management and Marketing Research, The Institute for Business and Finance Research, vol. 5(3), pages 15-27.
    4. D. A. Izotov & K. I. Tochkov, 2020. "Interaction of the Russian Far East and Asia-Pacific Countries: Assessment of Institutional and Tariff Barriers to Trade," Regional Research of Russia, Springer, vol. 10(2), pages 182-193, April.
    5. Kadochnikov, Sergey M. & Fedyunina, Anna A., 2017. "The impact of financial and human resources on the export performance of Russian firms," Economic Systems, Elsevier, vol. 41(1), pages 41-51.
    6. Jan Hoffmann & Naima Saeed & Sigbjørn Sødal, 2020. "Liner shipping bilateral connectivity and its impact on South Africa’s bilateral trade flows," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 22(3), pages 473-499, September.
    7. Jota Ishikawa & Nori Tarui, 2015. "Backfiring with backhaul problems: Trade and Industrial Policies with Endogenous Transport Costs," Working Papers 201514, University of Hawaii at Manoa, Department of Economics.
    8. Yun Eui Choi & Kihwan Song & Min Kim & Junga Lee, 2017. "Transformation Planning for Resilient Wildlife Habitats in Ecotourism Systems," Sustainability, MDPI, vol. 9(4), pages 1-28, March.
    9. Amador, João & Cabral, Sónia & Ramos Maria, José, 2007. "International Trade Patterns over the Last Four Decades: How does Portugal Compare with other Cohesion Countries?," MPRA Paper 5996, University Library of Munich, Germany.
    10. Seetaram, Neelu, 2010. "Computing airfare elasticities or opening Pandora's box," Research in Transportation Economics, Elsevier, vol. 26(1), pages 27-36.
    11. Steven, Adams B. & Corsi, Thomas M., 2012. "Choosing a port: An analysis of containerized imports into the US," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(4), pages 881-895.
    12. Laurent Corthay & Jan Loeprick, 2010. "Taxing Tourism in Developing Countries : Principles for Improving the Investment Climate Through Simple, Fair, and Transparent Taxation," World Bank Publications - Reports 10485, The World Bank Group.
    13. Hayakawa, Kazunobu & Ishikawa, Jota & Tarui, Nori, 2020. "What goes around comes around: Export-enhancing effects of import-tariff reductions," Journal of International Economics, Elsevier, vol. 126(C).
    14. Albaladejo, Isabel P. & González-Martínez, María Isabel & Martínez-García, María Pilar, 2016. "Nonconstant reputation effect in a dynamic tourism demand model for Spain," Tourism Management, Elsevier, vol. 53(C), pages 132-139.
    15. James Mak, 2016. "Creating Tourism Improvement Districts to Raise Stable Funding for Destination Marketing and Promotion," Working Papers 2016-2, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    16. Graziano Abrate & Giampaolo Viglia & Javier Sanchez García & Santiago Forgas-Coll, 2016. "Price Competition within and between Airlines and High-Speed Trains: The Case of the Milan—Rome Route," Tourism Economics, , vol. 22(2), pages 311-323, April.
    17. Juan Gabriel Brida & Diego Giuliani, 2013. "Empirical Assessment of the Tourism-Led Growth Hypothesis: The Case of the Tirol—Südtirol—Trentino Europaregion," Tourism Economics, , vol. 19(4), pages 745-760, August.
    18. Álvarez-Albelo, Carmen D. & Hernández-Martín, Raúl & Padrón-Fumero, Noemi, 2017. "Air passenger duties as strategic tourism taxation," Tourism Management, Elsevier, vol. 60(C), pages 442-453.
    19. Siying Ding & Ahmad Lashkaripour & Volodymyr Lugovskyy, 2024. "A Global Perspective on the Incidence of Monopoly Distortions," CESifo Working Paper Series 11211, CESifo.
    20. Jean-Jacques Nowak & Sylvain Petit & Mondher Sahli, 2012. "Intra-Tourism Trade in Europe," Tourism Economics, , vol. 18(6), pages 1287-1311, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:5950. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.