Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/289978 
Year of Publication: 
2022
Series/Report no.: 
IDB Working Paper Series No. IDB-WP-01404
Publisher: 
Inter-American Development Bank (IDB), Washington, DC
Abstract (Translated): 
One reason carbon prices are difficult to implement is that they might imply high additional costs on poor and vulnerable households. In response, studies often highlight that recycling revenues through cash transfers can render carbon pricing reforms progressive. This neglects that existing cash transfer programs target households from low-income groups often imperfectly and that impacts of a carbon price are heterogeneous within income groups. In this study we analyze the role of existing cash transfer schemes to alleviate distributional effects of carbon pricing in 16 Latin American and Caribbean countries. We find carbon pricing to be regressive in 11 countries, progressive in 5, and show that differences within income groups exceed differences between them. Beyond total household expenditures, car ownership and cooking fuel explain the variance in carbon pricing impacts. We show that households who are most affected by carbon pricing, some of them poor, do not necessarily have access to existing cash transfer programs. Governments aiming to compensate households may broaden coverage of existing cash transfer programs or consider complementing instruments such as in-kind transfers or removing existing distortionary taxes.
Subjects: 
Fijación de precios del carbono
mitigación del cambio climático
pobreza energética
aceptabilidad social
incidencia tributaria
JEL: 
C67
H23
O54
Q52
Q54
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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