'The Journal of Transdisciplinary Environmental Studies' (TES)
Volume 2, Number 2, Jan. 2003
The Potential of Eco-Taxes as Instruments
An Analysis of the Critical Design Elements.
Stuart Wright and Christina Mallia,
Department of Environment, Technology and Social Studies, Roskilde University, Denmark
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Abstract: Eco-taxes attach a cost to particular polluting activities, thereby internalising the negative external environmental effects of the production process, which in turn stimulates target groups to adopt more environmentally benign techniques and technologies in order to reduce polluting emissions and hence their tax burden. Through a comparative analysis of two case studies of eco-taxes, generally recognised as being successful, this paper attempts to isolate the design features of both policies that have resulted in the successful fulfilment of environmental objectives. The paper analyses what can be expected of these instruments if properly designed and an assessment of the potential of such instruments, as tools to aid a transition to more sustainable industrial sectors is explored. To this end, the Swedish charge on nitrogen oxide emissions from energy production and the Dutch Minas system targeting nutrient surpluses from agriculture provide a basis for assessment.
The study concludes that by designing instruments to the individual contextual circumstances to which they will be applied, by considering the potential pitfalls of the policy-making process and the barriers to technical and technological change within target groups, eco-taxes can indeed spur technical change and incremental innovation through the imposition of a charge that is greater than the marginal abatement costs for individual firms. Well-designed policies can thus result in an enduring eco-upgrading of the particular sector, to which the instrument is applied.
Key Words: Eco-taxes, policy design, technical change, environmental sustainability.
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