crisis or opportunity economic degrowth for social equity and ecological sustainability introduction to this special issue abstract this article reviews the burgeoning emerging literature on sustainable degrowth this is defined as an equitable downscaling of production and consumption that increases human well being and enhances ecological conditions at the local and global level in the short and long term the paradigmatic propositions of degrowth are that economic growth is not sustainable and that human progress without economic growth is possible degrowth proponents come from diverse origins some are critics of market globalization new technologies or the imposition of western models of development in the rest of the world all criticize gdp accounting though they propose often different social and ecological indicators degrowth theorists and practitioners support an extension of human relations instead of market relations demand a deepening of democracy defend ecosystems and propose a more equal distribution of wealth we distinguish between depression i e unplanned degrowth within a growth regime and sustainable degrowth a voluntary smooth and equitable transition to a regime of lower production and consumption the question we ask is how positive would degrowth be if instead of being imposed by an economic crisis it would actually be a democratic collective decision a project with the ambition of getting closer to ecological sustainability and socio environmental justice worldwide most articles in this issue were originally presented at the april 2008 conference in paris on economic degrowth for ecological sustainability and social equity this conference brought the word degrowth and the concepts around it into an international academic setting articles of this special issue are summarized in this introductory article hueting d alessandro and colleagues van den bergh kerschner spangenberg and alcott discuss whether current growth patterns are un sustainable and offer different perspectives on what degrowth might mean and whether and under what conditions it might be desirable matthey and hamilton focus on social dynamics and the obstacles and opportunities for voluntary social action towards degrowth lietaert and cattaneo with gavalda offer a down to earth empirical discussion of two practical living experiments cohousing and squats highlighting the obstacles for scaling up such alternatives finally van griethuysen explains why growth is an imperative in modern market economies raising also the question whether degrowth is possible without radical institutional changes

should a carbon tax be differentiated across sectors abstract if some but not all countries are cooperating to reduce co2 emissions one could make the following argument a high carbon tax for carbon intensive tradeable sectors in the cooperating countries will reduce the production of goods from these sectors and therefore co2 emissions in the cooperating countries however this will to a large extent be counteracted by increased production of such goods in the countries that have no climate policy and since it is only total co2 emissions from all countries that are relevant for the climate there is no point in a policy that simply relocates co2 emissions from the cooperating countries to the countries that have no climate policy according to this line of reasoning carbon intensive tradeable sectors should thus face a lower carbon tax than other sectors of the economy this paper shows that a carbon tax should not be differentiated across sectors in the economy provided one can use import and export tariffs on all traded goods it is also shown that such a differentiation of carbon taxes is optimal for the cooperating countries if they are prevented from using tariffs on the traded goods however informational or political factors constraining the use of tariffs are likely also to constrain the possibility of differentiating carbon taxes between sectors

status effects and environmental externalities abstract this paper examines a static competitive economy where the production of a consumption good generates pollution that adversely affects human welfare preferences are defined over consumption leisure pollution and economic status each person s status increases with her own consumption but decreases with the average consumption of society the achievement of a pareto efficient resource allocation requires a consumption tax to offset the incentive to overconsume in the pursuit of enhanced status in contrast with standard prescriptions the efficient pollution tax generally exceeds the sum of individuals marginal willingness to pay for pollution abatement these findings remain unaltered when preferences are modified to incorporate altruistic concern for others well being altruism however suggests a potential role for government intervention to achieve a desirable i e pareto efficient distribution of welfare between individuals

optimally differentiated carbon prices for unilateral climate policy abstract economic thought on climate policy as an instance of environmental regulation is strongly influenced by the principle of a uniform carbon price economists acknowledge that this principle breaks down in a second best world with other distortions such as taxes and market power in domestic and international markets however systematic analysis of this point in the economic climate policy literature is scarce in the present paper a computable general equilibrium cge set up is chosen in order to examine what pattern of differentiated carbon prices emerges as optimal in a second best world the cge model worldscan which is considered to be representative of the class of models routinely used for numerical climate policy analysis produces three main results first the optimal pattern of carbon prices is highly differentiated ranging from almost prohibitive taxes to high subsidies with a range of more than 1700 euros per ton of co 2 second the welfare gain from switching from a uniform price to optimally differentiated prices is enormous equivalent to a 27 emission reduction for free third the most important drivers of carbon price differentiation are market power in export markets as well as taxes on consumption intermediate inputs and domestic output this shows that carbon price differentiation cannot be dismissed as a policy option lightly however before translating these findings into concrete policy advice the relevant features of modelling pre existing distortions in cge models need close revision

distributional and efficiency impacts of increased us gasoline taxes we examine the impacts of increased us gasoline taxes in a model that links the markets for new used and scrapped vehicles and recognizes the consider able heterogeneity among households and cars household choice parameters derive from an estimation procedure that integrates individual choices for car ownership and miles traveled we find that each cent per gallon increase in the price of gasoline reduces the equilibrium gasoline consumption by about 0 2

how robust is the uniform emissions pricing rule to social equity concerns abstract this paper examines pollution tax differentiation across industries in light of social equity concerns using theoretical and numerical general equilibrium analyses in an optimal tax framework we characterize the drivers for non uniform optimal taxes stemming from the interaction of household heterogeneity with social preferences quantitatively assessing the case of price based co2 emissions control in the u s economy we find that uniform emissions pricing is approximately optimal when social concerns are defined over inequity induced by the environmental tax the deviation from uniform emissions pricing however becomes non negligible when pollution tax rebates deviate much from optimal transfer schemes or when social concerns are defined over both policy induced impacts and inequity unrelated to environmental policy our results are robust to a number of model extensions including the stringency of the environmental target downstream vs upstream taxation pre existing distortionary taxes and parametric uncertainty in firms and households equilibrium tax responses

marginal tax reform externalities and income distribution the paper examines welfare improving and revenue neutral directions marginal policy reforms for an economy with nonidentical individuals and an externality that has a feedback effect on the consumption of taxed goods it considers three types of policy instruments the indirect taxes the uniform poll transfer and public abatement this extends the framework set up by ahmad and stern 1984 bovenberg and de mooij 1994 and schob 1996 the theoretical model is illustrated for a specific externality namely congestion caused by peak car transport

environmental policy public finance and the labour market in a second best world abstract environmental and tax policies and the optimal provision of clean and dirty public goods are analysed within the context of a second best framework of optimal taxation households consume both clean and dirty commodities degradation of the natural environment occurs due to the consumption of dirty private and public goods but can be offset when the government engages in abatement activities increased environmental concern implies a higher dirt tax a lower tax on labour less employment more public abatement and a cleaner environment if the elasticity of substitution between private consumption commodities and leisure is large and that between clean and dirty goods is small public consumption may expand while private consumption contracts otherwise public consumption falls

environment versus growth a criticism of degrowth and a plea for a growth in recent debates on environmental problems and policies the strategy of degrowth has appeared as an alternative to the paradigm of economic growth this new notion is critically evaluated by considering five common interpretations of it one conclusion is that these multiple interpretations make it an ambiguous and rather confusing concept another is that degrowth may not be an effective let alone an efficient strategy to reduce environmental pressure it is subsequently argued that a growth i e being indifferent about growth is a more logical social aim to substitute for the current goal of economic growth given that gdp per capita is a very imperfect indicator of social welfare in addition focusing ex ante on public policy is considered to be a strategy which ultimately is more likely to obtain the necessary democratic political support than an ex ante explicit degrowth strategy in line with this a policy package is proposed which consists of six elements some of which relate to concerns raised by degrowth supporters

efficiency costs of meeting industry distributional constraints under environmental permits and taxes many pollution related industries wield strong political influence and can e ectively veto policy initiatives that would harm their profits a politically realistic approach to environmental policy therefore seems to require the alleviation of significant profitlosses to these industries the regulatory authority can do this by freely allocating some emissions permits or by exempting some inframarginal emissions from a pollution tax however such policies compel the government to forego an e cient potential revenue source and to rely more heavily on ordinary distortionary taxes as a result achieving distributional objectives comes at a cost in terms of e ciency using analytically and numerically solved equilibrium models we analyze the e ciency costs implied by the distributional constraint that adverse impacts on profits in particular industries must be avoided both models indicate that the e ciency cost implied by this constraint dwarfs the other e ciency costs when the required amount of abatement is very small when the abatement requirement becomes more extensive however the cost of this constraint diminishes relative to the other e ciency costs of pollution control we also calculate the compensation ratio the share of potential policy revenue that the government must forego to protect the industries in question we show how this ratio is a ected by the extent of abatement supply and demand elasticities and the potential for end of pipe treatment one definition of this ratio corresponds to the share of pollution permits that must be freely allocated to prevent profit losses in the targeted industries numerical simulations of sulfur dioxide pollution control suggest that the bush administration s clear skies initiative would exceed this ratio freely allocating more permits than necessary to preserve profits our models also highlight significant di erences between gross and net policy revenues when abatement is extensive a large fraction of the revenue collected from emissions permits or taxes is o set by the revenue loss from erosion of the base of existing factor taxes

does ecological economics have a future contradiction and reinvention in the age of climate change abstract this paper addresses the role of neoclassical methodologies in ecological economics and the contradictions these methodologies pose to the field s critical founding principles we first consider robert costanza s treatment of nicholas stern s global deal and then survey climate change related articles published in this journal over the past five years this survey reveals how mainstream neoclassical methodologies dominate discourse and do so by marginalizing more critical political economy analyses this situation imperils the field s founding vision of a no growth steady state it also fails to address the related growth dynamics of capitalism without such a critical treatment the field s formal embrace of methodological pluralism actually entails an ideological empiricism that renders ecological economics theoretically incoherent this situation undermines the field s historical promise as an alternative economic paradigm ecological economics now faces a problematic future its survival in a form faithful to its founding vision will require an explicit choice to address its internal contradictions and reinvent itself in ways relevant to our contemporary context without such a choice ecological economics will likely succumb to an implicit acceptance of the hegemony of mainstream economic methodologies and their pro growth imperatives

a simple theory of advertising as a good or bad our analysis treats advertisements and the goods advertised as complements in stable metautility functions and generates new results for advertising by building on and extending the general analysis of complements by assimilating the theory of advertising into the theory of complements we avoid the special approaches to advertising found in many studies that place obstacles in the way of understanding the effects of advertising we also use this approach to evaluate advertising from a welfare perspective whether there is excessive or too little advertising depends on several variables the effects on consumer utility the degree of competition in the market for advertised goods the induced changes in prices and outputs of advertised goods and whether advertising is sold to consumers

externalities and optimal taxation this paper reexamines the optimal tax design problem income and commodities in the presence of externalities the nature of the second best and the choice of the tax instruments are motivated by the informational structure in the economy the main results are i environmental levies linear or nonlinear differ in formula from pigouvian taxes by the expressions for the optimal tax on private goods ii externalities do not affect commodity tax formulas linear and nonlinear for private goods iii externalities do not affect the income tax structure if commodity taxes are nonlinear and affect it if commodity taxes are linear and iv a general income tax plus strictly pigouvian taxes are sufficient for efficient taxation if individuals of different types have identical marginal rates of substitution at any given consumption bundle

pollution taxes and revenue recycling abstract discussions of environmental policy and the tax system have emphasized the value of pollution tax revenues which can be used to reduce other tax distortions in the economy however by raising private marginal production costs environmental taxes also tend to reduce gdp and exacerbate the welfare costs of conventional taxes for environmental taxes in consumption goods industries the net welfare change from these two effects is negative unless this good is a relatively weak substitute for leisure an estimate for the optimal pollution tax with full revenue recycling is 63 to 78 of marginal environmental damages

embodied carbon tariffs in a world where the prospects of a global agreement to control greenhouse gas emissions are bleak the idea of using trade policy as an implicit regulation of foreign emission sources has gained many supporters in countries contemplating unilateral climate policies embodied carbon tariffs tax the direct and indirect carbon emissions embodied in imported goods the appeal seems obvious as oecd countries are on average large net importers of embodied emissions from non oecd countries carbon tariffs could substantially extend the reach of oecd climate policies we investigate this claim by simulating the effects of embodied carbon tariffs with a computable general equilibrium model of global trade and energy use we find that embodied carbon tariffs do effectively reduce carbon leakage however the scope for improvements in the global cost effectiveness of unilateral climate policy is limited the main welfare effect of the tariffs is to shift the burden of oecd climate policy to the developing world

the theory of reform and indian indirect taxes abstract given a set of value judgements an initial state and a model of the economy one can ask whether some feasible tax change would increase welfare we do this by defining the marginal cost in terms of welfare of raising an extra rupee from the i th good the inverse optimum problem is the calculation of non negative welfare weights on households which imply that the initial state is optimum if no such welfare weights exist then a pareto improvement is possible we illustrate the concepts and results using data from the indian economy for 1979 1980 directions of tax reform for a number of specific social welfare functions and for pareto improvements are presented

distributional impacts of carbon pricing a general equilibrium approach with micro data for households article i nfo many policies to limit greenhouse gas emissions have at their core efforts to put a price on carbon emissions carbon pricing impacts households both by raising the cost of carbon intensive products and by changing factor prices a complete analysis requires taking both effects into account the impact of carbon pricing is determined by heterogeneity in household spending patterns across income groups as well as heterogeneity in factor income patterns across income groups it is also affected by precise formulation of the policy how is the revenue from carbon pricing distributed as well as the treatment of other government policies e g the treatment of transfer payments what is often neglected in analyses of policy is the heterogeneity of impacts across households even within income or regional groups in this paper we incorporate 15 588 households from the u s consumer and expenditure survey data as individual agents in a comparative static general equilibrium framework these households are represented within the mit usrep model a detailed general equilibrium model of the u s economy in particular we categorize households by full household income factor income as well as transfer income and apply various measures of lifetime income to distinguish households that are temporarily low income e g retired households drawing down their financial assets from permanently low income households we also provide detailed within group distributional measures of burden impacts from various policy scenarios

the desirability of commodity taxation under non linear income taxation and heterogeneous tastes abstract this paper revisits the atkinson stiglitz result on uselessness of commodity taxation in the presence of optimal non linear income taxation in a more general setup namely when tastes are heterogeneous this general analysis displays the key economic assumptions under which the atkinson stiglitz result is robust a small tax on a given commodity is desirable if high income earners have a relatively higher taste for this commodity or if consumption of this commodity increases with leisure an application to the case of savings suggests that even in the presence of optimal non linear earnings taxation there is a role for a supplemental capital income tax in the standard overlapping generation model

environmental taxes with heterogeneous consumers an application to energy consumption in france abstract this paper constructs a model with four groups of households who have preferences over labor supply consumption of polluting energy related and non polluting non energy goods and emissions it quantifies the model for the french economy and computes its optimal tax equilibria under nine second best tax regimes we find that the redistributive role of environmental taxes requires the polluting goods to be taxed at a rate much below their marginal social damage these goods may even require an outright subsidy if the society values equality a lot secondly if environmental taxes that have an exclusively externality correcting role they benefit all types although the gains are rather modest the gains and losses become more substantial when environmental taxes have a redistributive role as well third setting the environmental tax at its pigouvian level rather than its optimal externality correcting cum redistributive level benefits the high income group at the expense of the low income groups fourth nonlinear taxation of polluting goods and nonlinear commodity taxation in general is a powerful redistributive mechanism fifth introducing environmental taxes in the current french tax system with its suboptimal income taxes results in substantial welfare gains for the highest income group and a sizable loss for the least well off persons

optimal emission pricing in the presence of international spillovers decomposing leakage and terms of trade motives abstract carbon leakage provides an efficiency argument for differentiated emission prices in favor of emission intensive and trade exposed sectors under unilateral climate policy however differential emission pricing can be used as a beggar thy neighbor policy to exploit terms of trade adopting an optimal tax framework we propose a method to decompose the leakage and terms of trade motives for emission price differentiation we employ our method for the quantitative impact assessment of unilateral climate policy based on empirical data we find that the leakage motive yields only small efficiency gains compared to uniform emission pricing likewise the terms of trade motive has rather limited potential for strategic burden shifting we conclude that in many cases the simple first best rule of uniform emission pricing remains a practical guideline for unilateral climate policy design

optimal environmental taxation in the presence of other taxes general equilibrium analyses this paper examines the optimal setting of environmental taxes in economies where other distortionary taxes are present we employ analytical and numerical models to explore the degree to which in a second best economy optimal environmental tax rates differ from the rates implied by the pigovian principle according to which the optimal tax rate equals the marginal environmental damages both models indicate contrary to what several analysts have suggested that the optimal tax rate on emissions of a given pollutant is generally less than the rate supported by the pigovian principle moreover the optimal rate is lower the larger are the distortions posed by ordinary taxes numerical results indicate that previous studies may have seriously overstated the size of the optimal carbon tax by disregarding pre existing taxes this abstract was borrowed from another version of this item

lifetime incidence and the distributional burden of excise taxes this implies that low income households in one year have some chance of being higher income households in other years and significantly affects the estimated distributional burden of excise taxes this paper shows that household expenditures on gasoline alcohol and tobacco as a share of total consumption a proxy for lifetime income are much more equally distributed than expenditures as a share of annual income from a longer horizon perspective excise taxes on these goods are therefore much less regressive than standard analyses suggest this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

the evolution of preferences why sovereign preferences may not lead to sustainable policies and what to do about it abstract the conventional economic paradigm assumes that tastes and preferences are exogenous to the economic system and that the economic problem consists of optimally satisfying those preferences tastes and preferences usually do not change rapidly and in the short term this assumption makes sense sustainability is an inherently long term problem and in the long run it does not make sense to assume tastes and preferences are fixed and given if preferences are expected to change over time and under the influence of education advertising changing cultural assumptions etc the old assumption of consumer sovereignty is not adequate different criteria of optimality are needed how preferences change how they relate to the goal of sustainability and how they can or should be actively influenced to satisfy the new criteria needs to be determined ecological economics has emphasized the three rank ordered goals of ecological sustainability fair distribution and allocative efficiency this paper examines how preferences evolve and change over time and the implications of this for developing policies that meet these three goals in democratic societies

why environmental sustainability can most probably not be attained with growing production the concepts of welfare economic growth production environmentally sustainable national income environmental sustainability environmental function and asymmetric entering are defined because the confusion about these concepts hampers sound information based on these concepts the arguments are enumerated why it is plausible that environmental sustainability most probably cannot be attained with a growing production level national income ni and why broad acceptance of a lower production level meaning de growth of production will make attaining this goal much easier or at least possible some consequences of unsustainable development are provided and the alleged conflict between employment and environment is refuted the conclusion is that our planet is threatened by a wrong belief in a wrongly formulated growth

redistribution and pollution taxes with non linear engel curves abstract this paper analyses optimal corrective taxation and optimal income redistribution the pigouvian pollution tax is higher if pollution damages disproportionally hurt the poor due to equity weighting of pollution damages moreover under general utility functions optimal pollution taxes should be set below the pigouvian tax if the poor spend a disproportionate fraction of their income on polluting goods however if engel curves are linear optimal pollution taxes should follow the first best rule for the pigouvian corrective tax even if the government wants to redistribute income and the poor spend a disproportional part of their income on polluting goods the often used quasi linear ces and stone geary utility functions all have linear engel curves if engel curves are linear and if pollution taxes are not optimised pareto improving green tax reforms exist that move the pollution tax closer to the pigouvian tax simulations demonstrate that optimal corrective taxes should be pigouvian if the demand for polluting goods is derived from a les demand system but deviate from the pigouvian taxes if demand for polluting goods demand is derived from a piglog demand system

differentiated carbon prices and the economic cost of decarbonization employing a numerical general equilibrium model with multiple fuels end use sectors heterogeneous households and transport externalities this paper examines three motives for differentiated carbon pricing in the context of swiss climate policy fiscal interactions with the existing tax code non hbox co 2 related transport externalities and social equity concerns interaction effects with mineral oil taxes reduce carbon taxes on motor fuels and transport externalities increase them we show that the cost effective overall carbon tax on motor fuels should be lower than the one on thermal fuels this is found in spite of the fact that pre existing taxes on motor fuels are well below our estimate of the transport externality per unit of transport fuel consumption differentiating taxes in favor of motor fuels yields only slightly more equitable incidence effects among households suggesting that equity considerations play a minor role when designing differentiated carbon pricing policies

carbon taxes with exemptions in an open economy a general equilibrium analysis of the german tax initiative abstract sectoral exemptions from environmental regulation are applied in many countries to avoid adverse adjustment effects in specific industries the problem with exemptions is that they can make environmental policy more costly our paper analyzes the welfare costs of exemptions in environmental policy together with the issue of unilateral carbon taxes in an open economy several countries within the eu have introduced or contemplated unilateral taxes to reduce anthropogenic co2emissions taxes which are unilaterally imposed in an open economy can have significant impacts on production and employment of energy and export intensive industries to save jobs by maintaining international competitiveness most co2taxation schemes include exemptions for energy and export intensive industries as a compromise between environmental objectives and employment in these sectors this paper shows that such compromises are costly as the tax base narrows the dead weight loss increases our calculations illustrate this point in the framework of a static general equilibrium model for west germany calibrated to 1990 data we evaluate the excess costs of exemptions as a means of saving jobs in specific industries relative to an alternative instrument a uniform carbon tax cum wage subsidy which achieves an identical level of national emissions and employment at a fraction of the cost