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PREM Working Paper 05-02 - Fighting CO2 pollution and poverty while promoting growth: searching for triple dividends in South Africa

Author(s)Van Heerden, J., Gerlagh, R., Blignaut, J., Horridge, M., Hess, S., Mabugu, R., Mabugu, M.
Co-Author(s)
Date2005-05-30
Theme(s)Climate
Method(s)Economic Modelling
Serie(s)Working Papers

Summary

A CGE model of South Africa is used to find the potential for a ‘double or triple dividend’, if the revenues raised from an energy related environmental tax are recycled into households and industry through lowering existing taxes. Four environmental taxes and three revenue-recycling schemes are compared. The environmental taxes are (i) a tax on greenhouse gas emissions, (ii) a fuel tax, (iii) a tax on electricity use, and (iv) an energy tax. The four taxes are constructed such that they have a comparable effect on emissions. The revenue is recycled through either (i) a direct tax break on both labour and capital, (ii) an indirect tax break to all households, or (iii) a reduction in the price of food. A triple dividend is found when any one of the environmental taxes is recycled through a reduction in food prices.

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