PREM Discussion Papers

Discussion Paper No. 1 - August 2008
A Tax-Based Approach to Slowing Global Climate Change
Joseph Aldy, Eduardo Ley, and Ian Parry

This paper discusses the design of CO2 taxes at the domestic and international level and the choice of taxes versus a cap-and-trade system. There is a strong case for taxes on uncertainty, fiscal, and distributional grounds, though this critically hinges on policy specifics and how revenues are used. The efficient near-term tax is at least U.S. $5–$20 per ton of CO2 and the tax should be imposed upstream with incentives for downstream sequestration and abatement of other  greenhouse gases. At the international level a key challenge is the
possibility that emissions taxes might be undermined through offsetting changes in other energy policies.

Incidence of Environmental Policies in Developing Countries: A Survey
A. Estache and L. Savard (forthcoming 2008)

Climate Change and Poverty— Towards an Integrated Policy Framework for Adaptation
L. Cord, C. Hennet, and G. van der Vink (forthcoming 2008)