Distributional impact of carbon taxation on household energy consumtion in Thailand
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2018
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2561
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eng
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141 leaves
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b205842
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Supawan Saelim (2018). Distributional impact of carbon taxation on household energy consumtion in Thailand. Retrieved from: https://repository.nida.ac.th/handle/662723737/6464.
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Distributional impact of carbon taxation on household energy consumtion in Thailand
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Abstract
Distributional impact of a carbon tax on household demand can be relevant in
terms of securing public acceptance of a carbon tax and clarifying the implications for
policy design. Despite the growing literature about the impact of a carbon tax on the
economy and environment, in-depth studies of distributional impact on the welfare of
households are relatively scarce in Thailand. Although the distributional impact on
households is only a part of the carbon tax story, it is very important for policy analysis,
both in terms of securing public acceptance and policy design. Such policy design
includes appropriate revenue-recycling options to reduce adverse effects on lowincome households and social objectives such as income inequality and poverty
incidence.
This study aims to estimate the distributional effects on households from
changes in energy prices induced by a carbon tax, and explore the impact of the policy
on social development indicators such as income inequality and poverty incidence in
Thailand. The study simulates carbon tax scenarios and estimates distributional effects
of the tax on household welfare, income inequality, and poverty rates based on
household consumption. The study employs a microsimulation model incorporating the
economy-wide effects of the tax on prices (through an input-output model) and
consumers’ behavioral responses to changes in prices (through demand system
estimations). The methods applied in this study include household energy demand
estimation using the Quadratic Almost Ideal Demand system (QUAIDS) model to
understand energy consumption behavior. In addition, the study also empirically examines the relationship between per capita welfare losses and a range of socioeconomic factors using multivariate regression analysis. The study utilizes monthly
cross-sectional data of the national Household Socio-economic Survey (SES) for the
years 2009, 2011 and 2013, and monthly consumer price indices for demand system
estimation.
The demand estimation results indicate that the pricing policy in the energy
sector (e.g. through taxation) is likely to be ineffective in reducing energy consumption
in the residential sector as the energy demand is inelastic. However, households are
more responsive to reducing their consumption of transport fuels than electricity
consumption when prices change. The results of the study also have useful implications
for predicting behavioral responses and the welfare impact on households from changes
in energy prices induced by other fuel taxes and energy-related policies aimed to
sustainably incentivize the use of cleaner energy in the long run. In addition, socioeconomic factors, such as geographic region, labor market status, household structure
and education, are significantly associated with individual welfare losses across energy
and non-energy consumption types even after controlling for income.
The results of a carbon tax simulation indicate that a carbon tax is progressive
in Thailand under revenue-recycling scenarios of expanding social transfer programs.
When carbon tax revenues are recycled through elderly pensions, the carbon tax could
reduce the poverty rate and improve the welfare of households in the lowest quintile.
The results imply that the distributional impacts of environmental taxes could result in
favorable outcomes for income inequality and poverty reduction in developing
countries. The study concludes that the concerns about the negative impact of
environmental taxes on social objectives such as income inequality and poverty
incidence in Thailand tend to be minimal, and less than what one might expect based
on empirical results from developed countries. Lump-sum transfers of only a partial
amount of carbon tax revenues to households can offset the negative effects on income
inequality and poor households.
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Thesis (Ph.D. (Economics))--National Institute of Development Administration, 2018