Supporting Carbon Tax Implementation in Developing Countries through Results-Based Payments for Emissions Reductions
This paper discusses compensation mechanisms to strengthen incentives for lower-income countries to adopt carbon taxes through donor-funded support programs. The paper considers two cases: the provision of climate finance when the host country uses...
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/352481603127763989/Supporting-Carbon-Tax-Implementation-in-Developing-Countries-through-Results-Based-Payments-for-Emissions-Reductions http://hdl.handle.net/10986/34651 |
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okr-10986-346512022-09-20T00:10:44Z Supporting Carbon Tax Implementation in Developing Countries through Results-Based Payments for Emissions Reductions Strand, Jon CARBON TAX EMISSION REDUCTION GREENHOUSE GAS EMISSIONS CLIMATE CHANGE MITIGATION PARTNERSHIP FOR MARKET READINESS This paper discusses compensation mechanisms to strengthen incentives for lower-income countries to adopt carbon taxes through donor-funded support programs. The paper considers two cases: the provision of climate finance when the host country uses the additional mitigation to meet its own greenhouse gas mitigation target (the "incremental cost price"); and a transaction in an international carbon market with the mitigation credit created by host country mitigation transferred outside the country (the “opportunity cost price”). Both offset the host country's deadweight loss from imposing a carbon tax, which is lower when the host country enjoys large co-benefits from mitigation. Formulas are derived for the incremental cost price and the opportunity cost price. The opportunity cost price is always larger than the incremental cost price, as the host country under the opportunity cost price must use additional, more expensive mitigation policies to reach its mitigation target. The paper discusses additional costs and barriers that deter hosts from adopting carbon taxes. These arguments can help to explain why few low-income countries have so far adopted carbon taxes, and why the necessary compensation for tax adoption may exceed theoretical assessments. 2020-10-22T17:36:20Z 2020-10-22T17:36:20Z 2020-10 Working Paper http://documents.worldbank.org/curated/en/352481603127763989/Supporting-Carbon-Tax-Implementation-in-Developing-Countries-through-Results-Based-Payments-for-Emissions-Reductions http://hdl.handle.net/10986/34651 English Policy Research Working Paper;No. 9443 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |
| repository_type |
Digital Repository |
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Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
CARBON TAX EMISSION REDUCTION GREENHOUSE GAS EMISSIONS CLIMATE CHANGE MITIGATION PARTNERSHIP FOR MARKET READINESS |
| spellingShingle |
CARBON TAX EMISSION REDUCTION GREENHOUSE GAS EMISSIONS CLIMATE CHANGE MITIGATION PARTNERSHIP FOR MARKET READINESS Strand, Jon Supporting Carbon Tax Implementation in Developing Countries through Results-Based Payments for Emissions Reductions |
| relation |
Policy Research Working Paper;No. 9443 |
| description |
This paper discusses compensation
mechanisms to strengthen incentives for lower-income
countries to adopt carbon taxes through donor-funded support
programs. The paper considers two cases: the provision of
climate finance when the host country uses the additional
mitigation to meet its own greenhouse gas mitigation target
(the "incremental cost price"); and a transaction
in an international carbon market with the mitigation credit
created by host country mitigation transferred outside the
country (the “opportunity cost price”). Both offset the host
country's deadweight loss from imposing a carbon tax,
which is lower when the host country enjoys large
co-benefits from mitigation. Formulas are derived for the
incremental cost price and the opportunity cost price. The
opportunity cost price is always larger than the incremental
cost price, as the host country under the opportunity cost
price must use additional, more expensive mitigation
policies to reach its mitigation target. The paper discusses
additional costs and barriers that deter hosts from adopting
carbon taxes. These arguments can help to explain why few
low-income countries have so far adopted carbon taxes, and
why the necessary compensation for tax adoption may exceed
theoretical assessments. |
| format |
Working Paper |
| author |
Strand, Jon |
| author_facet |
Strand, Jon |
| author_sort |
Strand, Jon |
| title |
Supporting Carbon Tax Implementation in Developing Countries through Results-Based Payments for Emissions Reductions |
| title_short |
Supporting Carbon Tax Implementation in Developing Countries through Results-Based Payments for Emissions Reductions |
| title_full |
Supporting Carbon Tax Implementation in Developing Countries through Results-Based Payments for Emissions Reductions |
| title_fullStr |
Supporting Carbon Tax Implementation in Developing Countries through Results-Based Payments for Emissions Reductions |
| title_full_unstemmed |
Supporting Carbon Tax Implementation in Developing Countries through Results-Based Payments for Emissions Reductions |
| title_sort |
supporting carbon tax implementation in developing countries through results-based payments for emissions reductions |
| publisher |
World Bank, Washington, DC |
| publishDate |
2020 |
| url |
http://documents.worldbank.org/curated/en/352481603127763989/Supporting-Carbon-Tax-Implementation-in-Developing-Countries-through-Results-Based-Payments-for-Emissions-Reductions http://hdl.handle.net/10986/34651 |
| _version_ |
1764481356605161472 |