No. 114: How effective are emission taxes in reducing air pollution?

Year: 2023

Type: Working Paper

Abstract

This paper examines the role of environmental taxes in reducing air pollution. Using unique satellite data to observe area-wide levels of nitrogen dioxide (NO2), we leverage an emission tax introduction in 2013 in the Comunidad Valenciana. We find that this environmental tax reduced NO2 levels only modestly by 1.2%. While the effect does not depend on prevalence of dirty versus clean firms in an area, we find that the NO2 burden decreased more substantially in areas with a higher density of firms and in areas with innovative and large firms. Overall, our results imply that emission taxes are not very effective in reducing air pollution.

Publication Information

TRR 266 researchers

Martin Jacob IESE Business School

External researchers

Thilo Erbertseder

Hannes Taubenböck

DOI

DOI Link

Cite this article as

Erbertseder, T., Jacob, M., Taubenböck, H., & Zerwer, K. (2023). How effective are emission taxes in reducing air pollution? TRR 266 Accounting for Transparency Working Paper Series No. 114. http://dx.doi.org/10.2139/ssrn.4353315

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Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, Goethe University Frankfurt, University of Cologne and Leibniz University Hannover who share the same research agenda.