NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Possibilities For Global Poverty Reduction Using Revenues From Global Carbon Pricing

James B. Davies, Xiaojun Shi, John Whalley

NBER Working Paper No. 16878
Issued in March 2011
NBER Program(s):   EEE

Global carbon pricing can yield revenues which are large enough to create significant global pro-poor redistributive opportunities. We analyze alternative multidecade growth trajectories for major global economies with carbon tax rates designed to stabilize emissions in the presence of both continued country growth and autonomous energy use efficiency improvement. In our central case analysis, revenues from globally internalizing carbon pricing rise to 7% and then fall to 5% of gross world product. High growth in India and China is the major equalizing force globally over time, but the incremental redistributive effects that can be achieved using global carbon pricing revenues are large both in absolute and relative terms. Revenues from carbon pricing depend on growth and energy efficiency improvement parameters as well as on the price elasticity of demand for fossil fuels.

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Document Object Identifier (DOI): 10.3386/w16878

The Possibilities for Global Inequality and Poverty Reduction Using Revenues from Global Carbon Pricing” (with James Davies, Xiaojun Shi). Journal of Economic Inequality, forthcoming.

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