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Six Distributional Effects of Environmental Policy

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  • Don Fullerton
Abstract
While prior literature has identified various effects of environmental policy, this note uses the example of a proposed carbon permit system to illustrate and discuss six different types of distributional effects: (1) higher prices of carbon‐intensive products, (2) changes in relative returns to factors like labor, capital, and resources, (3) allocation of scarcity rents from a restricted number of permits, (4) distribution of the benefits from improvements in environmental quality, (5) temporary effects during the transition, and (6) capitalization of all those effects into prices of land, corporate stock, or house values. The note also discusses whether all six effects could be regressive, that is, whether carbon policy could place disproportionate burden on the poor.

Suggested Citation

  • Don Fullerton, 2011. "Six Distributional Effects of Environmental Policy," Risk Analysis, John Wiley & Sons, vol. 31(6), pages 923-929, June.
    • Handle: RePEc:wly:riskan:v:31:y:2011:i:6:p:923-929
    DOI: 10.1111/j.1539-6924.2011.01628.x
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    References listed on IDEAS

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    1. Rausch Sebastian & Metcalf Gilbert E. & Reilly John M & Paltsev Sergey, 2010. "Distributional Implications of Alternative U.S. Greenhouse Gas Control Measures," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(2), pages 1-46, July.
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    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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