The GEAR members Marina Sánchez-Serrano, Jorge Zafrilla, Mateo Ortiz and Guadalupe Arce have recently published in Regional Science Policy & Practice the paper entitled “Carbon taxation and related vulnerability of Spanish urban and rural households in a regional level”.

Consumer choices  are critical to reducing CO2 emissions from human activities. Climate policies aimed at reducing the carbon footprint of consumers often have a negative impact on low-income families and rural households with limited access to low-carbon consumption choices.

In this paper, we estimate households’ carbon footprint in Castilla-La Mancha (Spain) by urban-rural location and expenditure attributes and simulate the impacts of a carbon tax on the disposable income of different types of households.

A multiregional input-output model is proposed to assign global carbon footprints to products. This model will help us identify the main driving goods in each type of household’s carbon footprint and evaluate the household’s vulnerability after carbon taxation.

Our findings suggest that high-spending households would face the taxation strongest effects on car fuels and transport services, as they would have an impact of 2% of their total expenditure by the taxation on these products, while this effect in lower-income households would be 0,75%. A tax on basic housing services (electricity and heating) would have a regressive impact, undermining the consumption level of vulnerable households. They would be affected by 2,5%, while higher income households would spend between 1 and 1,5% of their total expenditure on paying the carbon tax on this product.

This heterogeneity across households leads us to recommend taxes and compensation mechanisms charged on adequate products to reduce households’ carbon footprints while avoiding the regressivity of climate policies and reducing urban-rural inequalities.

You can find the full text here:https://www.sciencedirect.com/science/article/pii/S1757780224003342