Open AccessA Taxing Environment: Evaluating the Multiple Objectives of Environmental Taxes
Author(s) -
Marie Lynn Miranda,
Brack W. Hale
Publication year - 2002
Publication title -
environmental science and technology
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.851
H-Index - 397
eISSN - 1520-5851
pISSN - 0013-936X
DOI - 10.1021/es025637s
Subject(s) - subsidy , externality , economics , natural resource economics , incentive , environmental tax , environmental policy , public economics , environmental impact assessment , energy tax , environmental economics , microeconomics , tax reform , biology , ecology , market economy
Environmental taxes have attracted attention in recent years as a tool to internalize environmental externalities. This paper evaluates Sweden's experience with environmental taxes in the energy sector by examining how environmental taxes compare with estimated environmental externalities associated with the use of oil, coal, natural gas, and forest residue fuels. We also analyze how environmental taxes influence fuel choices in the energy sector by comparing the production, environmental, and tax costs for the same fuels. We find that (i) the Swedish environmental taxes correspond imperfectly with environmental costs; (ii) the Swedish tax and subsidy system introduces changes in fuel choice decisions; (iii) the energy users are responding to the incentives created by the tax and subsidy systems in ways that are consistent with economic theory; and (iv) the Swedish experience with environmental taxes and subsidies bears directly on wider evaluations of energy policy approaches internationally.