Mitigating poverty: the patterns of multiple carbon tax and recycling regimes for Peru

Malerba, Daniele / Anja Gaentzsch / Hauke Ward
External Publications (2020)

in: Energy Policy (149), article number 111961, online first

DOI: 10.1016/j.enpol.2020.111961
Volltext/Document

Carbon taxes are an economically effective and efficient policy measure to address climate change mitigation. However, they can have severe adverse distributional effects. Recycling parts of the fiscal revenues to vulnerable, lower income households through cash transfers (social assistance) is an option to also overcome associated political difficulties. This paper simulates the distributional impacts of such a combined policy reform in Peru. In a first step, we assess the distributional impacts of varying carbon tax rates. In a second step, we evaluate different scenarios of recycling revenues through existing or expanded transfer schemes towards vulnerable households. The results indicate that a national carbon tax, without compensation, would increase poverty but have no significant impact on inequality. When tax revenues are recycled through transfer schemes, however, poverty would actually decrease. Depending on the amount to be redistributed and the design of the cash transfer scheme, our simulations show a proportional reduction in the poverty headcount of up to around 17%. In addition, the paper underlines how crucial it is to go beyond aggregate measures of poverty to better identify losers from such reform; and assure that the “leave no one behind” principle of the Sustainable Development Goals (SDGs) is addressed.

About the author

Malerba

Further experts

Aleksandrova, Mariya

Climate risk governance 

Balasubramanian, Pooja

Social Economics 

Bauer, Steffen

Political scientist 

Beck, Tanja

Political Science 

Brandi, Clara

Economy and Political Science 

Brehm, Johannes

Economy 

Brüntrup, Michael

Agricultural Economy 

Burchi, Francesco

Development Economy 

Dick, Eva

Sociologist and Spatial Planner 

Dippel, Beatrice

Comparatist 

Hägele, Ramona

Political Scientist 

Iacobuta, Gabriela

Environmental Researcher 

Kuhn, Sascha

Social Psychology 

Lehmann, Ina

Political Science 

Mathis, Okka Lou

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Never, Babette

Political Scientist 

Pegels, Anna

Economist 

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