THE DOUBLE DIVIDEND OF A NEW ENVIRONMENTAL TAX REFORM WITH PROMOTION OF RESOURCE SUBSTITUTION

• Type: Article in International Conference Proceedings Book
• Date: 2019

Authors

S. Silva (Author) FEP; Soares, I (Author) FEP; Óscar Afonso (Author) FEP

Conference proceedings International

Title: PROCEEDINGS OF THE 4TH INTERNATIONAL CONFERENCE ON ENERGY & ENVIRONMENT (ICEE 2019): BRINGING TOGETHER ENGINEERING AND ECONOMICS

Pages: 15-20

4th International Conference on Energy and Environment - Bringing together Engineering and Economics (ICEE)

Guimaraes, PORTUGAL, MAY 16-17, 2019

Indexing

ISI Web of Knowledge - 4 Citations

Other information

Authenticus ID: P-00R-E5N

Abstract (EN): We discuss the importance of the indicators chosen for the first (environmental) and second (economic) dividends of an Environmental Tax Reform (ETR) to conclude about the existence or not of a double dividend. With this in mind, we construct an equilibrium model where production uses non-polluting renewable and polluting non-renewable resources. Afterwards, we test a new type of ETR where polluting resources use is taxed and the revenues are used to subsidize renewables extraction/production. Our results show that the choice of indicators for the first and second dividends is critical to the conclusions. Focusing solely on total emissions and total output may be misleading for the evaluation of the interest to implement a certain ETR. Considering alternative indicators may provide a different insight on the policy instruments to be implemented. In particular, if we choose emissions per output as the indicator for the first dividend and utility/welfare as the indicator for the second dividend, we show that our ETR always provides a double dividend. Hence, if we choose the traditional indicators, the ETR may not seem particularly interesting. However, with other indicators, which still reflect very important aspects of the environment-economy relationship, the ETR is desirable. For that reason, we argue that the attractiveness of a certain ETR and in particular, its double dividend, should be evaluated under a broader range of indicators.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 6