TY - JOUR
T1 - The distributional effects of a nitrogen tax
T2 - Evidence from Germany
AU - Johne, Clara
AU - Schröder, Enno
AU - Ward, Hauke
PY - 2023
Y1 - 2023
N2 - The high level of nitrogen emissions over the last decades and their adverse impact on the natural environment and human health are a pressing environmental issue. A nitrogen tax can be a cost-efficient and effective policy instrument to reduce nitrogen emissions. However, adverse effects on low- and middle-income households might lead to societal and political frictions that could end up in resistance. In this paper we investigate how a hypothetical nitrogen tax covering the specific external costs of nitrogen could be implemented and estimate its short-term distributional effects on household income groups in Germany. The findings show that the proposed tax would be regressive. However, if the tax rate is set equal to the true cost of nitrogen, the monetary impacts would overall be small, ranging from 1.15% of income for the first income quintile to 0.66% for the fifth. Complementary policy measures to lower the burden on low-income households, farmers and the energy sector could preempt social resistance against the tax.
AB - The high level of nitrogen emissions over the last decades and their adverse impact on the natural environment and human health are a pressing environmental issue. A nitrogen tax can be a cost-efficient and effective policy instrument to reduce nitrogen emissions. However, adverse effects on low- and middle-income households might lead to societal and political frictions that could end up in resistance. In this paper we investigate how a hypothetical nitrogen tax covering the specific external costs of nitrogen could be implemented and estimate its short-term distributional effects on household income groups in Germany. The findings show that the proposed tax would be regressive. However, if the tax rate is set equal to the true cost of nitrogen, the monetary impacts would overall be small, ranging from 1.15% of income for the first income quintile to 0.66% for the fifth. Complementary policy measures to lower the burden on low-income households, farmers and the energy sector could preempt social resistance against the tax.
KW - Distributional effects
KW - Environmental policy
KW - Germany
KW - Household impacts
KW - Nitrogen tax
UR - http://www.scopus.com/inward/record.url?scp=85150493220&partnerID=8YFLogxK
U2 - 10.1016/j.ecolecon.2023.107815
DO - 10.1016/j.ecolecon.2023.107815
M3 - Article
AN - SCOPUS:85150493220
SN - 0921-8009
VL - 208
JO - Ecological Economics
JF - Ecological Economics
M1 - 107815
ER -