Cash transfers in the context of carbon pricing reforms in Latin America and the Caribbean

Missbach, Leonard; Steckel, Jan Christoph; Vogt-Schilb, Adrien

doi:10.18235/0004568

“…Moreover, designing and implementing carbon pricing and redistributive policy instruments might be challenging for EMDEs with low state capacity and large informal sectors (Aleksandrova 2020 ). For example, in Latin America, even while compensation could be achieved for poor and vulnerable households with 30 percent of carbon pricing revenues on average (Vogt-Schilb et al 2019 ), characteristics which drive exposure to carbon pricing vary widely across countries and even within income groups-consequently, existing cash transfer programs do not cover all of the poorest, most vulnerable households, calling for a bespoke approach to revenue recycling (Missbach et al 2022 ).…”

Section: Carbon Pricing and Redistribution Fossil Fuel Subsidiesmentioning

confidence: 99%

The Relationship between Climate Action and Poverty Reduction

Lankes,

Macquarie,

Soubeyran

et al. 2023

0

View full text Add to dashboard Cite

There is growing awareness that actions by policymakers and international organizations to reduce poverty, and those to mitigate and adapt to climate change, are inextricably linked and interwoven. This paper examines relevant academic and policy literature and evidence on this relationship and explores the potential for a new form of development that simultaneously mitigates climate change, manages its impacts, and improves the wellbeing of people in poverty. First, as a key foundation, it outlines the backdrop in basic moral philosophy, noting that climate action and poverty reduction can be motivated both by a core principle based on the right to development and by the conventional consequentialism that is standard in economics. Second, it reviews assessments of the current and potential future impacts of weakly managed climate change on the wellbeing of those in poverty, paying attention to unequal effects, including by gender. Third, it examines arguments and literature on the economic impacts of climate action and policies and how those affect the wellbeing of people in poverty, highlighting the importance of market failures, technological change, systemic dynamics of transition, and distributional effects of mitigation and adaptation. Finally, the paper surveys the current state of knowledge and understanding of how climate action and poverty reduction can be integrated in policy design, indicating where further research can contribute to a transition that succeeds in both objectives.

show abstract

“…Some of these good practices are(Skovgaard and Van Asselt, 2018): (i) act at the right time, whether due to low fuel prices or political popularity, or in the context of a broader reform of the energy sector; (ii) involve early a wide range of stakeholders as well as different sectors of government; (iii) effectively communicate the subsidy reform, providing information on grant amounts and how funds spent on these subsidies could be redirected to other purposes; and (iv) implement compensatory measures for the main affected parties.18 Regarding compensatory measures, see, for example,Metcalf (2019). See alsoMissbach, Steckel, and Vogt-Schilb (2023) for a discussion relevant to LAC.…”

mentioning

confidence: 99%

Effective Carbon Rates on Energy Use in Latin America and the Caribbean: Estimates and Directions of Reform

Ahumada¹,

Espina-Mairal²,

Navajas³

et al. 2023

0

View full text Add to dashboard Cite

This paper estimates effective carbon rates (ECRs) on carbon dioxide (CO2) emissions from energy use for 18 Latin American and Caribbean (LAC) countries. We follow a methodology developed by the Organization for Economic Co-operation and Development (OECD) as this allows us to compare ECR estimates for LAC countries with those for other countries in other regions. We also adapt the OECD methodology to assess the effect of energy subsidies on ECRs. The results obtained indicate that ECRs were low in LAC countries in 2018. On average, LAC countries priced carbon emissions from energy use at 24 euros per ton of CO2 equivalent (EUR/tCO2e) emissions, while the average pricing in OECD countries was 41 EUR/tCO2e. When considering energy subsidies, the average ECR in LAC falls to 17 EUR/tCO2e. The difference in average carbon pricing observed between LAC and the OECD is, for the most part, explained by lower excise taxes in LAC and, to a lesser extent, to few LAC countries having carbon taxes and the lack of tradable carbon emission permit mechanisms. We also find a large heterogeneity of ECRs across LAC countries as well as across sectors within countries. ECRs are the highest in Costa Rica and the lowest in Ecuador. At the sector level, ECRs are on average the highest in the road transport sector and the lowest in the electricity sector and in the residential and commercial energy use sector. These differences stem mostly from the different taxation of the different energy products. The ECR estimates suggest that countries willing to introduce carbon pricing reforms must pay particular attention to reducing fuel energy subsidies and to increasing ECRs in sectors other than road transport, as these sectors constitute a large share of carbon emissions and are virtually untaxed.

show abstract

The Relationship between Climate Action and Poverty Reduction

Lankes,

Macquarie,

Soubeyran

et al. 2023

The World Bank Research Observer

3

0

View full text Add to dashboard Cite

There is growing awareness that actions by policymakers and international organizations to reduce poverty, and those to mitigate and adapt to climate change, are inextricably linked and interwoven. This paper examines relevant academic and policy literature and evidence on this relationship and explores the potential for a new form of development that simultaneously mitigates climate change, manages its impacts, and improves the wellbeing of people in poverty. First, as a key foundation, it outlines the backdrop in basic moral philosophy, noting that climate action and poverty reduction can be motivated both by a core principle based on the right to development and by the conventional consequentialism that is standard in economics. Second, it reviews assessments of the current and potential future impacts of weakly managed climate change on the wellbeing of those in poverty, paying attention to unequal effects, including by gender. Third, it examines arguments and literature on the economic impacts of climate action and policies and how those affect the wellbeing of people in poverty, highlighting the importance of market failures, technological change, systemic dynamics of transition, and distributional effects of mitigation and adaptation. Finally, the paper surveys the current state of knowledge and understanding of how climate action and poverty reduction can be integrated in policy design, indicating where further research can contribute to a transition that succeeds in both objectives.

show abstract

Cash transfers in the context of carbon pricing reforms in Latin America and the Caribbean

Cited by 3 publications

References 44 publications

The Relationship between Climate Action and Poverty Reduction

The Relationship between Climate Action and Poverty Reduction

Effective Carbon Rates on Energy Use in Latin America and the Caribbean: Estimates and Directions of Reform

The Relationship between Climate Action and Poverty Reduction

Contact Info

Product

Resources

About