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While the economic case for carbon pricing is compelling, public support for it remains low. Using a stated-choice experiment with a sample of 6000 German household heads, we examine how their fairness preferences influence support for carbon taxes under different revenue uses. We find that respondents who prefer green spending are more likely to support a carbon tax, but the support diminishes considerably for higher tax rates – in contrast to respondents who support social cushioning. When restricted to options for direct revenue redistribution, Germans prefer lump-sum payments over directing payments to the poorest or the most affected. Preferences over these options depend both on genuinely different concepts of fairness and economic circumstances. Our findings have implications for advancing carbon pricing, as its support can be increased substantially when designed according to citizens' fairness preferences. [ABSTRACT FROM AUTHOR]

• Optimal climate change mitigation mostly focused representative agent framework. • Incomplete insurance markets adds realism and new mechanism for welfare. • Poorer households prefer stronger mitigation policies even absent redistribution. • Redistribution provides extra insurance. • Representative agent framework likely to underestimate welfare impacts of mitigation. Policy makers concerned with setting optimal values for carbon instruments to address climate change externalities often employ integrated assessment models (IAMs). In the past, these tools have relied on representative agent assumptions or other restrictive behaviour and welfare aggregations. However, there is an important trend in the economics of climate change towards including a greater degree of heterogeneity. In the face of global inequality and significant vulnerability of asset poor households, we relax the complete markets assumption and introduce a realistic degree of global household inequality. In contrast to the representative agent framework, we find that a household's position on the global wealth distribution predicts the identity of their most-preferred carbon price. Specifically, poor agents prefer strong public action against climate change to mitigate the risk for which they are implicitly more vulnerable. We find that the carbon tax fills the role of insurance, reducing the volatility of future welfare. It is this role that drives the wedge between rich and poor households' policy preferences, even in the absence of redistribution. Taking into account the risk channel, we derive an optimal tax value four times larger than standard estimates from representative agent models. [ABSTRACT FROM AUTHOR]

Through its NDC, Brazil pledged to reduce its GHG emissions by 43% below 2005 levels in 2030, respectively. Carbon pricing could play a key role in meeting this objective. However, a range of issues can emerge when introducing it. Among these issues, the distributional impact has been frequently highlighted as an obstacle to the public acceptance of such a mitigation policy. This paper examines the short-run welfare and emission effects of an economy-wide carbon tax on Brazilian households. The distributional impact is examined by estimating the tax burden relative to annual expenditures and changes in total GHG emissions across income levels, using tax rates consistent with the Paris Agreement and considering a lump-sum rebate that keeps the government revenue neutral. For this, we calculate energy-related GHG emissions coefficients from fossil fuel burning for the whole household consumption basket, and price and expenditure elasticities which account for the zero-expenditure and underdeclaration problems. Our results indicate that the incidence of the carbon tax is effective in reducing emissions in the short run, but imposes welfare losses, especially on the poor. The consideration of compensation mechanisms is critical when designing this type of environmental tax, specially in the context of a highly complex tax-system. [ABSTRACT FROM AUTHOR]

We use a dynamic global forest model to examine how U.S. tax reform could influence forest stocks and carbon sequestration. Scenario analysis estimates several impacts from adjusting current policies that affect timberland investment, area, harvests, and carbon. First, increases in tax rates faced by timberland owners cause timber assets to be revalued downward even though the physical forest is initially unchanged, resulting in substantial declines in both regeneration and management. Second, timber stocks fall over time, reflecting a decrease in investment. Third, tax revenues could increase by nearly $3.4 billion/yr compared to baseline, but at the expense of increasing trade deficits by up to $3.3 billion/yr. Fourth, timberland area could decrease by 12 million hectares. Last, cumulative carbon sequestration over the next 50 years could be reduced by more than 3 billion tCO2e, −22% from the current policy baseline if forestland tax incentives are removed. Fifth, maintaining the existing tax policies in perpetuity incentivizes carbon sequestration levels equivalent to imposing a price of $70/tCO2e on the forest sector, highlighting the ecosystem service benefits of maintaining current tax policy. Finally, we estimate that current US forest tax policy provides about $8 billion/yr in climate change mitigation benefits by 2050. • We model the impact of current forest taxation policy on the U.S. timber sector. • Tax provisions incentivize management, conservation, and carbon sequestration. • U.S. forest carbon could be reduced by 22% if tax provisions are removed. • Current policy equates to a carbon price of $70/tCO 2 e without tax incentives. [ABSTRACT FROM AUTHOR]

Blue carbon in mangroves represents one of highest values of carbon stocks per hectare, and could play an important role in climate change mitigation. In this study we estimated the carbon prices needed to promote mangrove conservation and restoration under mechanisms of payment for ecosystem services (PES). We mapped the remaining and deforested mangroves across the globe in 2017, and crossed this information with carbon stocks in the biomass and soil and with land opportunity and restoration costs. In accordance with previous studies we found that Southeast Asia holds the largest opportunities for blue carbon programs to support conservation and restoration. Conserving remaining mangroves would avoid the release of up to 15.51 PgCO 2 to the atmosphere, and could be achieved at carbon prices between 3.0 and 13.0 US$ per tCO 2 for 90% of remaining mangroves. Restoring mangroves can sequester up to 0.32 PgCO 2 globally. Carbon prices between 4.5 and 18.0 US$ per tCO 2 could support the restoration of 90% of deforested mangroves. Such prices, however, may not apply to contexts of high-profit alternative land-uses. In such contexts, the valuation of co-benefits and the combination of carbon-based mechanisms and sustainable management may be a viable pathway. [ABSTRACT FROM AUTHOR]