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16.01.2023

The Impact of Climate Risks on Social Inequality

Published 

16 January, 2023

> 10 minutes
16.01.2023
The Impact of Climate Risks on Social Inequality
Published 

16 January, 2023

> 10 minutes

Abstract


Reducing social inequality and protecting the environment are two distinct objectives that can both complement and contradict each other. In this study, we examine the impact of climate risks on social inequality and demonstrate a potential trade-off between environmental and social improvements. The first part is dedicated to the incorporation of the social risk (intergenerational, interregional and intraregional inequalities) into climate economic modeling. We notice that taking social inequalities into account changes substantially the optimal price of the carbon tax and its efficiency. In a second part, we empirically study social inequality in the context of the transition risk in France. We show that the effort rate of the poorest 10% of households is 2.8 times higher than the richest 10% for a 100 euros per ton of CO2e carbon tax. If the regressive nature of the tax can be mitigated by redistribution policies, compensation may induce some potential backfire effects. It follows that implementing a carbon tax is challenging and its theoretical benefits may be lower in practice.


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This website is solely for informational purposes.
 
This website does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or any other product or service. Any securities, products, or services referenced may not be registered for sale with the relevant authority in your jurisdiction and may not be regulated or supervised by any governmental or similar authority in your jurisdiction.
 
Furthermore, nothing in this website is intended to provide tax, legal, or investment advice and nothing in this website should be construed as a recommendation to buy, sell, or hold any investment or security or to engage in any investment strategy or transaction. There is no guarantee that any targeted performance or forecast will be achieved.

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