TY  - JOUR
AU  - Fullerton,Don
TI  - Distributional Effects of Environmental and Energy Policy: An Introduction 
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14241
PY  - 2008
Y2  - August 2008
UR  - http://www.nber.org/papers/w14241
L1  - http://www.nber.org/papers/w14241.pdf
N1  - Author contact info:
Don Fullerton
Department of Finance
University of Illinois
BIF Box#30 (MC520)
515 East Gregory Drive
Champaign, IL  61820
Tel: 217/244-3621
Fax: 217/244-3102
E-Mail: dfullert@illinois.edu
AB  - This chapter reviews literature on the distributional effects of environmental and energy policy.  In particular, many effects of such policy are likely regressive.  First, it raises the price of fossil-fuel-intensive products, expenditures on which are a high fraction of low-income budgets.  Second, if abatement technologies are capital-intensive, then any mandate to abate pollution may induce firms to use more capital.  If demand for capital is raised relative to labor, then a lower relative wage may also hurt low-income households.  Third, pollution permits handed out to firms bestow scarcity rents on well-off individuals who own those firms.  Fourth, low-income individuals may place more value on food and shelter than on incremental improvements in environmental quality.  If high-income individuals get the most benefit of pollution abatement, then this effect is regressive as well.  Fifth, low-income renters miss out on house price capitalization of air quality benefits.  Well-off landlords may reap those gains.  Sixth, transition effects could well hurt the unemployed who are already at some disadvantage.  These six effects might all hurt the poor more than the rich.  This paper discusses whether these fears are valid, and whether anything can be done about them.
ER  -