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Taxes and Tradable Permits As Instruments for Controlling Pollution: Theory and Practice
Author: Mr. John Norregaard and Ms. Valerie Reppelin
Series:
IMF Working Papers
Volume/Issue:
Volume 2000: Issue 013
Language:
English
Publication Date:
01 Jan 2000
DOI:
https://doi.org/10.5089/9781451842999.001
ISBN:
9781451842999
ISSN:
1018-5941
Pages:
49
Keywords:
WP; emission tax; permits system; carbon tax; permits market; innovating firm; Environmental taxes; tradable permits; green tax reform; market structure; Emissions trading; Environmental policy; Greenhouse gas emissions; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper examines the relative merits of two dominant economic instruments for reducing pollution—”green” taxes and tradable permits. Theoretically, the two instruments share many similarities, and on balance, neither seems preferable to the other. In practice, however, most countries have relied more on taxes than on permits to control pollution. The analysis suggests a number of lessons to be learned from country experiences regarding the design and implementation of both instruments. While many, particularly European countries, currently have long-term programs involving environmental taxes, a willingness to experiment with tradable permits seems to be growing, especially given the Kyoto protocol emission targets.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund