Economists have long favored the use of taxes as instruments of environmental protection. Many economic analysts assert that in situations involving serious externalities taxes are the most effective mechanism for “getting the prices right” -- that is, for helping prices closely approximate marginal social costs. The notion that taxes can improve welfare outcomes by internalizing externalities traces back at least as far as Pigou (1938) and is a central tenet of environmental economics.

/pdf/environmental-taxation-and-the-double-dividend-a-reader-s-4u15tfybz3.pdf

Environmental Taxation and the “Double Dividend:” A Reader’s Guide

In recent years there has been great interest in the possibility of substituting environmentally motivated or 'green' taxes for ordinary income taxes. Some have suggested that such revenue-neutral reforms might offer a 'double dividend:' not only (1) improve the environment but also (2) reduce certain costs of the tax system. This paper articulates different notions of 'double dividend' and examines the theoretical and empirical evidence for each. It also draws connections between the double dividend issue and principles of optimal environmetal taxation in a second-best setting. A weak double dividend claim is that returning tax revenues through cuts in distortionary taxes leads to cost savings relative to the case where revenues are returned lump sum. This claim is easily defended on theoretical grounds and (thankfully) receives wide support from numerical simulations.The stronger versions contend that revenue-neutral swaps of environmental taxes for ordinary distortionary taxes involve zero or negative gross costs.Analyses numerical results tend to cast doubt on the strong double dividend claim.Yet the theoretical case against the strong form is not air-tight, and numerical dividend claim is dividend claim is rejected (upheld) are related to the conditions where the second-best optimal environmental tax is less than (greater than) the marginal environmental damages.The difficulty of establishing a strong double dividend claim heightens the importance of attending to and evaluating the (environmental) benefits from environmental taxes.

Environmental Taxation and the "Double Dividend:" A Reader's Guide

Environmental policies typically combine the identification of a goal with some means to achieve that goal. This chapter focuses exclusively on the second component, the means – the “instruments” – of environmental policy, and considers, in particular, experience around the world with the relatively new breed of economic-incentive or market-based policy instruments. I define these instruments broadly, and consider them within four categories: charge systems; tradable permits; market friction reductions; and government subsidy reductions. Within charge systems, I consider effluent charges, deposit-refund systems, user charges, insurance premium taxes, sales taxes, administrative charges, and tax differentiation. Within tradeable permit systems, I consider both credit programs and cap-and-trade systems. Under the heading of reducing market frictions, I examine market creation, liability rules, and information programs. Finally, under reducing government subsidies, I review a number of specific examples from around the world. By defining market-based instruments broadly, I cast a large net for this review of applications. As a consequence, the review is extensive. But this should not leave the impression that market-based instruments have replaced, or have come anywhere close to replacing, the conventional, command-and-control approach to environmental protection. Further, even where these approaches have been used in their purest form and with some success, such as in the case of tradeable-permit systems in the United States, they have not always performed as anticipated. In the final part of the chapter, I ask what lessons can be learned from our experiences. In particular, I consider normative lessons for design and implementation, analysis of prospective and adopted systems, and identification of new applications.

/pdf/experience-with-market-based-environmental-policy-gdndc2wgh9.pdf

Experience with Market-Based Environmental Policy Instruments

Humanity's Current Dilemma The Global Ecosystem and the Economic Subsystem From Localized Limits to Global Limits Population and Poverty Beyond Brundtland Toward Sustainability The Fragmentation of Economics and the Natural Sciences The Historical Development of Economics and Ecology Early Codevelopment of Economics and Natural Science Economics and Ecology Specialize and Separate Reintegration of Ecology and Economics Conclusions Principles and Objectives of Ecological Economics Sustainable Scale, Fair Distribution, and Efficient Allocation Ecosystems, Biodiversity, and Ecosystem Services Substitutability versus Complementarity of Natural, Human, Social, and Built Capital Population and Carrying Capacity Measuring Welfare and Well-Being Valuation, Choice, and Uncertainty Trade and Community Institutions, Instruments, and Policies History of Environmental Institutions and Instruments The Need to Develop a Shared Vision of a Sustainable Society Successes, Failures, and Remedies Policy Instruments: Some Background Examples of Policies, Instruments, and Institutions Governance Conclusions and Prospects for the Future References Index

/pdf/an-introduction-to-ecological-economics-40s9dys8vw.pdf

An Introduction to Ecological Economics

/pdf/harmful-non-indigenous-species-in-the-united-states-11m8escbzr.pdf

Harmful Non-Indigenous Species in the United States

Green Fees: How a Tax Shift Can Work for the Environment and the Economy

Green fees: Charging for environmentally damaging activities

(1993). Pollution and Energy Taxes: Their Environmental and Economic Benefits. Challenge: Vol. 36, No. 4, pp. 9-14.

Pollution and Energy Taxes: Their Environmental and Economic Benefits

http://digitalcommons.pace.edu/cgi/viewcontent.cgi?article=1527&context=pelr

Green Fees and the Need for Fiscal Restructuring: Opportunities and Challenges

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Green Fees: How a Tax Shift Can Work for the Environment and the Economy

Green fees: Charging for environmentally damaging activities

Pollution and Energy Taxes: Their Environmental and Economic Benefits

Green Fees and the Need for Fiscal Restructuring: Opportunities and Challenges