Welfare effects of emission taxes in Norway

Abstract

The welfare effects of introducing taxes on emissions of carbon dioxide is analysed within an empirical general equilibrium model of the Norwegian economy. A CO 2 tax regime where we aim at stabilising the CO, emissions at the 1990 emission level in 2020 is compared to a reference scenario without such taxes. In the simulations introduction of CO 2 taxes reduces gross domestic product, but increases net national real disposable income, private consumption and money metric utility. This difference in sign is due to a positive terms of trade effect, some of the CO2 taxes will be paid by foreigners through exports. The welfare effects differ from household to household depending on the composition of their total consumption. Poor households are less favourably affected than rich households, due to smaller budget shares for the rich households on consumer goods which imply relatively much CO 2 emissions.

Revenue functions and Dupuit curves for indirect taxes with cross-border shopping

“…Of particular interest would be to combine household and macro data, see Aasness and Holtsmark (1993) for an example. Finally, in applied analyses various economic theories such as welfare theory and theory of optimal taxation could be applied, see Aasness et al (1996) In what follows, we refer to prices (p jt ) facing consumers as consumer prices. They will be affected by excise taxes, VAT and other indirect taxes and subsidies.…”

Policy in motion: reassembling carbon pricing policy development in the personal transport sector in British Columbia

“…Findings indicate that carbon taxes tend to be regressive, imposing disproportionate costs on low income households (Wier et al, 2005;Jacobsen et al, 2003;Aasness et al, 1996). This strain is exacerbated when there is a lack of alternatives; fuel demand elasticity is directly related to the availability of viable sustainable transport options (Tiezzi, 2005).…”

CO2 Mitigation Costs And Ancillary Benefits In The Nordic Countries, The UK And Ireland: A Survey

“…Aasness et al (1996) find that poor households are less favourably affected than rich households. This is due to smaller budget shares of consumer goods implying relatively high CO 2 emissions for the rich households.…”

“…To sum up these studies, we see from Figure the Swedish study by Nilsson (1999) (ratio of 0.12) and the lowest costs naturally occur in the Norwegian study by Aasness et al (1996) (ratio of -0.06). Since the countries reviewed in this survey differ quite much with respect to energy structure etc, one might assume that the mitigation costs would differ significantly across the countries.…”

“…At the other extreme, increasing the tax level to $750 per ton CO 2 reduces emissions in 2020 by 48 per cent and GDP by 2.9 per cent. Aasness et al (1996) For Denmark, Frandsen et al (1995Frandsen et al ( , 1996 Frandsen et al (1995Frandsen et al ( ,1996. This is mainly due to simplifications in the latter studies such as finite trade elasticities for non-energy goods, no distortionary pre-existing taxes, and no labour-leisure choice.…”