NSF/EPA: Effective Environmental Policy in the Presence of Distorting Taxes

本研究探讨了在既有扭曲性税收存在的情况下，环境保护政策工具的经济成本。最近的文献已经确定了潜在的显着的间接经济成本，环境税时，有预先存在的扭曲性税收的要素市场，如资本和劳动力。 这一成本抵消了通过环境税筹集的回收收入可能带来的预期收益，以减少先前存在的税收。 促使采取这一办法的深刻见解是，尽管如此，不增加收入的环境政策很可能通过与先前存在的税收的相互作用而产生成本，就像环境税一样。 然而，法规放弃了回收环境税收的潜在好处。本研究主要集中在不同环境下的收入提高和nonrevenue-raising工具的比较，并评估其在实现既定的环境目标的经济成本。 这项研究得到了NSF和EPA在环境研究伙伴关系下的补充资金的支持。 由国家科学基金会资助的部分侧重于在要素市场存在预先存在的税收的情况下对单一污染物的监管。 研究人员将使用一个分析模型，以促进环境政策和税收制度之间的相互作用的理解。将用数值模型补充理论模型，以处理一些无法明确确定的更复杂的相互关系。数值模型将考虑现有和潜在政策的成本，以减少美国经济中二氧化碳和二氧化硫等特定污染物的空气排放。 第二部分将由环境保护局提供资金，并将扩大对要素市场中预先存在的扭曲的分析，以考虑直接受环境管制的行业中预先存在的扭曲。 调查人员将模拟美国电力公用事业行业的机构设置，以考虑对多种污染物的监管，该行业的其他环境政策，以及可能表征该行业持续变化的各种形式的不完全竞争和市场结构。 关于这一主题的初步研究表明，在先前存在的扭曲性税收的背景下评估替代工具的经济绩效时，它们之间存在着显著和重要的差异。 这一研究项目的结果应能促进对环境管制的经济成本的理解，特别是有助于设计政策以尽量减少这一成本。

This research investigates the economic cost of policy instruments for environmental protection in the presence of preexisting distortionary taxes. Recent literature has identified the potentially significant indirect economic cost that an environmental tax has when there are preexisting distortionary taxes in factor markets such as capital and labor. This cost counteracts the anticipated benefits that might follow from recycling revenue raised by an environmental tax to reduce preexisting taxes. The insight that motivates this approach is that environmental policies that do not raise revenues nonetheless are likely to impose a cost through their interactions with preexisting taxes just as would an environmental tax. However, regulations forgo the potential benefit from recycling environmental tax revenues. This research focuses primarily on the comparison of revenue-raising and nonrevenue-raising instruments in various settings, and evaluates their economic cost in achieving a stated environmental goal. This research is supported by complementary funding by NSF and EPA under the Partnership for Environmental Research. The part to be funded by NSF focuses on the regulation of a single pollutant in the presence of preexisting taxes in factor markets. Investigators will use an analytical model to advance the understanding of the interactions between environmental policy and the tax system. The theoretical model will be complemented with numerical models to deal with some more complex interconnections that cannot be determined unambiguously. The numerical models will consider the costs of existing and potential policies for reducing air emissions of particular pollutants such as CO2 and SO2 in the U.S. economy. The second part will be funded by EPA and will extend the analysis of preexisting distortions in factor markets to consider preexisting distortions in an industry that is immediately subject to environmental regulation. Investigators will model the institutional setting of the U.S. electric utility industry to consider the regulation of multiple pollutants, other environmental policies special to the industry, and various forms imperfect competition and market structure that may characterize ongoing changes in the industry. Initial research on this topic suggests there are striking and important differences between the economic performance of alternative instruments when they are evaluated in the context of preexisting distortionary taxes. The results of this research project should advance the understanding of the economic cost of environmental regulation, and especially the design of policies to minimize that cost.