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Protecting the poor with a carbon tax and equal per capita dividend – Nature.com

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CLIMATE POLICY
Nature Climate Change (2021)
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We find that if all countries adopt the necessary uniform global carbon tax and then return the revenues to their citizens on an equal per capita basis, it will be possible to meet a 2 °C target while also increasing wellbeing, reducing inequality and alleviating poverty. These results indicate that it is possible for a society to implement strong climate action without compromising goals for equity and development.
The revenues from a carbon tax capable of achieving a 2 °C target will be large enough to fund substantial policies that can promote equity and protect vulnerable populations.
An equal per capita redistribution of carbon tax revenues within countries — a relatively straightforward policy to implement — can increase wellbeing, reduce inequality and alleviate poverty.
These benefits occur in countries at all levels of development, primarily accrue to individuals at the bottom of the income distribution, and are even greater with global equal per capita redistribution.
Large benefits will occur even if some revenues are lost to administrative costs or are saved to fund other programs, and they can make the poorest citizens net beneficiaries this decade.
Given an equal per capita refund, the optimal timing of global greenhouse gas mitigation is characterized by rapid initial reductions, followed by a slower climb towards net zero emissions.
BASED ON M. Budolfson et al. Nat. Clim. Change https://doi.org/10.1038/s41558-021-01217-0 (2021).
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Sterner, T. Fuel Taxes and the Poor: the Distributional Effects of Gasoline Taxation and their Implications for Climate Policy (Routledge, 2012). A volume compiling studies from around the world that together challenge the conventional wisdom that gasoline taxation, an important and much debated instrument of climate policy, has a disproportionately detrimental effect on poor people.
Klenert, D. et al. Making carbon pricing work for citizens. Nat. Clim. Change 8, 669–677 (2018). A study that synthesizes findings on the optimal use of carbon revenues from both traditional economic analyses and studies in behavioural and political science that are focused on public acceptability.
Carattini, S., Kallbekken, S. & Orlov, A. How to win public support for a global carbon tax. Nature 565, 289–291 (2019). An article describing evidence indicating that charges on emissions could be popular if revenues are given back to citizens.
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Economists’ Statement on Carbon Dividends (Climate Leadership Council, 2021); https://clcouncil.org/economists-statement/A statementsigned by over 3600 economists, including 28 Nobel laureatesthat describes five policy recommendations to address global climate change, including the use of a carbon tax whereby all revenue is returned directly to citizens through equal per capita rebates.
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This article has received funding from the NAVIGATE project of the European Union’s Horizon 2020 research and innovation program under grant agreement no. 821124 (S.F., M. Fleurbaey, U.K., A.M., F.W. and S.Z.) and the National Institute of Environmental Health Sciences (NIEHS)-funded HERCULES Center P30ES019776 (N.S.). The authors thank C. Burnham and the Climate Futures Initiative at Princeton University for support.
Department of Environmental and Occupational Health and Justice, Rutgers School of Public Health, Center for Population-Level Bioethics, Rutgers University, New Brunswick, NJ, USA
Mark Budolfson
Department of Philosophy, Rutgers University, New Brunswick, NJ, USA
Mark Budolfson
Division of Social Sciences, Yale-NUS College, Singapore, Singapore
Francis Dennig
Energy and Resources Group, University of California, Berkeley, CA, USA
Frank Errickson
School of Public and International Affairs, Princeton University, Princeton, NJ, USA
Frank Errickson
Mercator Research Institute on Global Commons and Climate Change, Berlin, Germany
Simon Feindt & Ulrike Kornek
Technische Universität Berlin, Department of Economics of Climate Change, Berlin, Germany
Simon Feindt
Department of Global Health and Population, Harvard TH Chan School of Public Health, Harvard University, Boston, MA, USA
Maddalena Ferranna
Paris School of Economics, Paris, France
Marc Fleurbaey
Joint Research Centre, European Commission, Seville, Spain
David Klenert
Potsdam Institute for Climate Impact Research, Potsdam, Germany
Ulrike Kornek
Department of Economics, University of Oklahoma, Norman, OK, USA
Kevin Kuruc
CNRS, CIRED, Nogent-sur-Marne, France
Aurélie Méjean
School of International Affairs & Department of Civil and Environmental Engineering, Pennsylvania State University, State College, PA, USA
Wei Peng
Gangarosa Department of Environmental Health, Rollins School of Public Health, Emory University, Atlanta, GA, USA
Noah Scovronick
Department of Economics, University of Texas, Austin, TX, USA
Dean Spears
International Institute for Applied Systems Analysis, Laxenburg, Austria
Fabian Wagner
Paris School of Economics, CNRS, Centre d’Economie de la Sorbonne, Paris, France
Stéphane Zuber
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Correspondence to Mark Budolfson or Noah Scovronick.
The authors declare no competing interests.
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Budolfson, M., Dennig, F., Errickson, F. et al. Protecting the poor with a carbon tax and equal per capita dividend. Nat. Clim. Chang. (2021). https://doi.org/10.1038/s41558-021-01228-x
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DOI: https://doi.org/10.1038/s41558-021-01228-x
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Nature Climate Change (Nat. Clim. Chang.) ISSN 1758-6798 (online) ISSN 1758-678X (print)
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