Publication: Carbon Pricing and Transit Accessibility to Jobs: Impacts on Inequality in Rio de Janeiro and Kinshasa
Loading...
Date
2023-03
ISSN
Published
2023-03
Author(s)
Editor(s)
Abstract
Urban transport is a major driver of global carbon dioxide emissions. Without strong mitigation policies, rapid urbanization, especially in developing countries, is expected to exacerbate the problem. There is a growing consensus on the fundamental role of carbon pricing for achieving reductions in carbon dioxide emissions. However, carbon pricing policies are frequently criticized and resisted for having adverse distributional impacts, which could hinder their implementation, particularly when implemented as a fuel levy—which would impact private vehicle usage but may also affect transit services such as buses. Currently, there is a lack of evidence that quantifies these negative impacts, especially on people’s ability to reach economic opportunities and services. To this end, this paper studies the impact of a uniform carbon price, as one of the most commonly discussed climate policies, on access to employment opportunities via transit services in Kinshasa and Rio de Janeiro. Reduced access to jobs would contribute to fragmented urban labor markets and thus lead to negative social outcomes. Unlike most previous studies, this study defines access as being constrained by both travel time and travel budget. The results indicate that fuel price increases (simulating increases induced by a carbon tax) reduce accessibility, but the effect is lower in more compact and walkable cities as well as in cities that have green transit options. The paper also shows that fuel price increases have spatially and socially disparate outcomes, with the lowest income communities not necessarily being the most affected, in part because even in the absence of carbon pricing, they are found to be priced out of using transit services. The results demonstrate the importance of strategies and investments, such as land use planning and decarbonized transit services, but also possibly complementary social protection programs (such as targeted subsidies, or even cash transfers), to mitigate the negative distributional consequences of carbon pricing policies.
Link to Data Set
Citation
“Nell, Andrew; Herszenhut, Daniel; Nakamura, Shohei; Saraiva, Marcus; Avner, Paolo; Knudsen, Camilla. 2023. Carbon Pricing and Transit Accessibility to Jobs: Impacts on Inequality in Rio de Janeiro and Kinshasa. Policy Research Working Papers; 10341. © World Bank. http://hdl.handle.net/10986/39514 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Carbon Price Efficiency : Lock-in and Path Dependence in Urban Forms and Transport Infrastructure(World Bank, Washington, DC, 2014-06)This paper investigates the effect of carbon or gasoline taxes on commuting-related CO2 emissions in an urban context. To assess the impact of public transport on the efficiency of the tax, the paper investigates two exogenous scenarios using a dynamic urban model (NEDUM-2D) calibrated for the urban area of Paris: (i) a scenario with the current dense public transport infrastructure, and (ii) a scenario without. It is shown that the price elasticity of CO2 emissions is twice as high in the short run if public transport options exist. Reducing commuting-related emissions thus requires lower (and more acceptable) tax levels in the presence of dense public transportation. If the goal of a carbon or gasoline tax is to change behaviors and reduce energy consumption and CO2 emissions (not to raise revenues), then there is an incentive to increase the price elasticity through complementary policies such as public transport development. The emission elasticity also depends on the baseline scenario and is larger when population growth and income growth are high. In the longer run, elasticities are higher and similar in the scenarios with and without public transport, because of larger urban reconfiguration in the latter scenario. These results are policy relevant, especially for fast-growing cities in developing countries. Even for cities where emission reductions are not a priority today, there is an option value attached to a dense public transport network, since it makes it possible to reduce emissions at a lower cost in the future.Publication Low-Carbon Development for Mexico(Washington, DC, 2010-05)Publication The Low Carbon City Development Program Guidebook(World Bank, Washington, DC, 2014)According to the United Nations population fund, the world is undergoing the largest wave of urban growth in history, with more people now living in cities than in rural areas. Cities are also responsible for a high proportion of global carbon emissions, which are the main driver of anthropogenic climate change. By taking the lead on low carbon development, cities have the opportunity to engage in an important dialogue about sustainable development, directly address local issues, and contribute to the reduction of greenhouse gas (GHG) emissions. Low carbon development strategies allow cities to position themselves as major players in climate change mitigation, as well as set an example for the development of national emission reduction policies. The systematic approach offered by a low carbon city development program (LCCDP) enables a city to overcome the barriers faced in single project implementation and pursue an integrated low carbon pathway. It provides a common framework to identify, implement, and measure low carbon interventions that will not only contribute to lower emissions, but will also address urban development needs. The LCCDP guidebook helps orient cities to design and implement an LCCDP that complies with the LCCDP assessment protocol, which is a new protocol based on existing, internationally recognized standards for systems design, and GHG accounting. The LCCDP assessment protocol consists of a set of standardized requirements developed to ensure that LCCDPs will achieve their targets and objectives when implemented. Thus the guidebook aims to assist the reader through the process of designing and implementing an LCCDP.Publication Impacts of Carbon Pricing in Reducing the Carbon Intensity of China's GDP(World Bank, Washington, DC, 2016-06)In contributing to global climate change mitigation efforts as agreed in Paris in 2015, China has set a target of reducing the carbon dioxide intensity of gross domestic product by 60-65 percent in 2030 compared with 2005 levels. Using a dynamic computable general equilibrium model of China, this study analyzes the economic and greenhouse gas impacts of meeting those targets through carbon pricing. The study finds that the trajectory of carbon prices to achieve the target depends on several factors, including how the carbon price changes over time and how carbon revenue is recycled to the economy. The study finds that carbon pricing that starts at a lower rate and gradually rises until it achieves the intensity target would be more efficient than a carbon price that remains constant over time. Using carbon revenue to cut existing distortionary taxes reduces the impact on the growth of gross domestic product relative to lump-sum redistribution. Recycling carbon revenue through subsidies to renewables and other low-carbon energy sources also can meet the targets, but the impact on the growth of gross domestic product is larger than with the other policies considered.Publication A City-Wide Approach to Carbon Finance(Washington, DC, 2010)Urbanization and climate change will define much of the 21st century. Urbanization leads to improvement in standards of living, and through the increased density and service delivery efficiency of cities, higher growth can be achieved with lower greenhouse gas emissions. Cities and urban agglomerations house more than 50 percent of the global population and contribute more than 70 percent of Global greenhouse (GHG) emissions. As the share of urban population grows, sustainable urban development emerges as an essential component in addressing climate change. Mitigation often comes at a significant cost. Carbon finance has an important role to play in reducing these costs. Carbon finance is accessible through regulated mechanisms, such as the Clean Development Mechanism (CDM) and Joint Implementation (JI) under the Kyoto Protocol, and through voluntary markets, using the voluntary carbon standard and climate exchanges. City authorities, however, have not been able to fully access market mechanisms for carbon credits.
Users also downloaded
Showing related downloaded files
Publication The Effect of Carbon Taxes on Aggregate Productivity(Washington, DC: World Bank, 2024-10-15)This paper examines the impact of implementing a carbon tax on aggregate total factor productivity in the Dominican Republic through the resource allocation channel. It incorporates energy inputs—electricity and fuel—into firms’ production functions, allowing predictions of potential changes in resource allocation due to the carbon tax. The theoretical implications of the model indicate that the carbon tax has a heterogeneous effect on firms’ input choices, contingent on the level of firms’ existing input market distortions. Moreover, the model suggests that in economies in which more productive firms are less distorted, the carbon tax can decrease aggregate total factor productivity. In contrast, when more productive firms are more distorted, the carbon tax can increase or decrease aggregate total factor productivity. Utilizing detailed firm-level data from 2009 to 2018, covering up to 118,000 firms, this paper finds that a carbon tax is more effective when levied on fuels rather than electricity. For the majority of sectors in the sample, the paper finds that existing distortions in energy consumption are positively correlated with firm-level productivity. Moreover, the quantitative results show that the introduction of the carbon tax shifts the burden of market distortions from high productivity firms to low productivity ones, generating aggregate total factor productivity gains for most sectors in the Dominican Republic. Overall, this study underscores the importance of considering existing input market distortions when analyzing the impact of environmental taxes.Publication Carbon Pricing for Climate Action(World Bank, Washington, DC, 2021-07-28)Carbon prices are needed to incorporate climate change costs into economic decision making. Carbon pricing should be included as part of a broader arsenal of tools to achieve domestic climate targets, but it is not a silver bullet: other policy instruments and investments (for example, public transport, power transmission infrastructure) are needed to complement carbon pricing and to enable consumers to respond to higher prices by switching to lower emission alternatives. A carbon tax can be effective in smaller economies with human capacity constraints and in jurisdictions with well-established and transparent tax frameworks. Emission trading systems may be chosen by larger, more established, and market-linked economies with political economy barriers to tax reform. Successful carbon pricing reforms require integrating many stakeholders’ considerations and increasing the capacity of governments and domestic businesses. The World Bank Group, through its climate change action plan, is well positioned to leverage its convening power, knowledge and research, and country program support to help countries make informed decisions on carbon pricing policies, their design, and implementation.Publication Quasi-Experimental Evidence on Carbon Pricing(Published by Oxford University Press on behalf of the World Bank, 2023-03-29)A growing literature suggests that carbon emissions are most efficiently reduced by carbon pricing. The evidence base on the effectiveness of market-based mechanisms, however, faces three key limitations: studies often (a) predict, rather than evaluate effects, (b) show large difference in findings, and (c) cannot always infer causal relations. Quasi-experimental studies can address these challenges by using variation in policies over time, space, or entities. This paper systematically reviews this new literature, outlines the benefits and caveats of quasi-experimental methodologies, and verifies the reliability and value of quasi-experimental estimates. The overall evidence base documents a causal effect between carbon pricing and emission reductions, with ambiguous effects on economic outcomes, and there are important gaps and inconsistencies. This review underscores that estimates should be interpreted with care because of: (a) inappropriate choice of method, (b) incorrect implementation of empirical analysis (e.g., violate identifying assumptions), and (c) data limitations. More cross-learning across studies and use of novel empirical strategies is needed to improve the empirical evidence base going forward.Publication Greening Construction(International Finance Corporation, Washington, DC, 2019)This report examines how to design effective carbon pricing mechanisms (CPMs) for the construction industry. As the world’s largest consumer of raw materials, it accounts for a significant proportion of final energy demand and is responsible for 25 percent to 40 percent of global carbon-related emissions. Demographic trends underline the need for the construction industry to do more to address its contribution to climate change. The world’s population is predicted to reach nearly 10 billion by 2050, with the majority expected to live in urban areas. This will increase demand for buildings and infrastructure; some estimates suggest that 75 percent of the infrastructure needed by 2050 must still be built.Publication Total Carbon Pricing for Energy Consumption(Washington, DC: World Bank, 2024-05-13)Faced with the urgency of climate change mitigation, many governments around the world are considering and deploying different approaches to pricing greenhouse gas emissions. The efforts to put a price on carbon, aiming to reflect the social and environmental costs resulting from these emissions, have traditionally focused on carbon taxes and emissions trading systems. Governments use a broader set of energy, climate, and fiscal policy instruments that affect the price signal on carbon emissions, even when sending such a signal is not stated as an explicit objective. In addition to decisions related to emissions trading or carbon taxes, governments take actions that influence the prices of the fuels that generate those emissions, whether by directly setting retail prices, providing energy consumption subsidies, or levying energy taxes. Carbon price signals resulting from the combination of multiple policy instruments at one time are often unclear. Building on this observation, this report asks, how do different energy, climate, and fiscal policy instruments that affect the price of carbon interact And what overall price signal do these direct and indirect ways of pricing carbon send to the economy To answer these questions, the report adopts the concept of the total carbon price (TCP), introduced in Agnolucci et al. (2023a; 2023b), to estimate the net carbon price signal resulting from the most deployed energy, climate, and fiscal policy instruments that affect the price of carbon emissions. To show how the concept of TCP can be applied to understanding the interaction of these different policy instruments, this report carries out illustrative calculations using best-available multicountry data sets, with a special focus on energy subsidies.