Work detail

"Distributional Aspects of Environmental Regulation: Theory and Empirical Evidence in the Case of the Czech"

Author: Mgr. Milan Ščasný, PhD. (4.10.2006)
Year: 2006 - summer
Work type: Dissertations
Language: Czech
Pages: 255
Awards and prizes:
Abstract: This thesis focuses on measurement of the welfare effects of environmental regulation. Firstly economic literature on disparities in financial effects due to a policy intervention and on disparities in environmental quality is reviewed. Then, the attention is paid to conceptual issues on welfare measurement. Modeling of household energy and transport demand system follows. Consumer behavior is analyzed separately for various household groups classified according to their specific consumer and expenditure patterns in order to address equity issues associated with environmental taxation more properly. Using microeconomic data from the Czech Household Budget Survey, we estimate the Almost Ideal Demand System for types of non-durable energy goods (electricity, gas, heat and coal) and transport goods (bus, rail, urban public transport, and motor fuels). Elasticity estimations are in line with the estimates provided by the empirical literature on this subject, however, we also find several specific responses of the Czech consumers. Using the results from household demand system estimates, we simulate the effects of various non-marginal tax changes including revenue recycling options. We predict changes in energy and transport expenses, and paid taxes, estimate a compensation variation and total net welfare impacts for each individual and defined household group. We use the marginal Gini index and Suits index to measure partial and overall tax regressivity. Then, sensitivity analysis on various assumptions for demand responsiveness follows. We find, for instance, that the highest public revenues are generated by an increase in heat or fuel taxation. Heat taxation will have, however, strongly adverse social effects if it is not adequately compensated for, while the burden of fuel taxation will be spread more evenly. Lastly, we introduce a model for assessment of welfare effects due to change in environmental quality. Due to data limitation we were able only derive a total value of benefit due to environmental quality improvement and how each household group contributes to this value. We confirm that total environmental benefits are not sufficient to balance dead-weight-loss due to the environmental tax reform we examined. Deriving value for one component of total environmental benefits we also confirm that since the richer tends to enjoy environmental benefits more than poorer households, the regressivity of the tax change found would be thus even more deepened.
Keywords: welfare; distributive impacts; consumer behavior; energy demand; environmental policy
JEL classification: D12, H23, H31, Q41, R41
Downloadable: 833_dissms-1scasny.txt
February 2023




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