Distributional impacts of carbon pricing in developing Asia

Peer Reviewed
22 September 2021

Jan C. Steckel, Ira I. Dorband, Lorenzo Montrone, Hauke Ward, Leonard Missbach, Fabian Hafner, Michael Jakob, Sebastian Renner


Understanding who would be affected in which way by carbon pricing is pivotal for effective and socially equitable policy design, addressing climate change, and reducing inequality. This paper focuses on eight key countries in developing Asia (Bangladesh, India, Indonesia, Pakistan, Philippines, Thailand, Turkey, and Vietnam). By combining national household surveys with input-output data, we compare the distributional effects of four carbon pricing design options, including a globally harmonized carbon price, a national carbon price, and sectoral carbon prices in the power and transport sectors, respectively. Our analysis reveals a substantial degree of variation regarding who would be affected across policy designs and countries. Looking into national carbon pricing as the most favorable policy option from an economic point of view, we find that differences in distributional outcomes are generally more pronounced within income groups than across income groups. These differences are mainly driven by households’ energy use patterns, which vary across countries. Equally recycling revenues back to all citizens would overcompensate the burden of a carbon price for the poorest households in all countries.

Sustainable Development Goals
Publication reference
Steckel, J. C., Dorband, I. I., Montrone, L., Ward, H., Missbach, L., Hafner, F., … Renner, S. (2021). Distributional impacts of carbon pricing in developing Asia. Nature Sustainability. doi:10.1038/s41893-021-00758-8
Publication | 28 September 2021