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Journal Article

On the emission and distributional effects of a CO2eq-tax on agricultural goods—The case of Germany

Authors
/persons/resource/julian.schaper

Schaper,  Julian
Potsdam Institute for Climate Impact Research;
Submitting Corresponding Author, Potsdam Institute for Climate Impact Research;

/persons/resource/franks

Franks,  R. Maximilian
Potsdam Institute for Climate Impact Research;

/persons/resource/koch.nicolas

Koch,  Nicolas
Potsdam Institute for Climate Impact Research;

/persons/resource/Charlotte.Plinke

Plinke,  Charlotte
Potsdam Institute for Climate Impact Research;

/persons/resource/Michael.Sureth

Sureth,  Michael
Potsdam Institute for Climate Impact Research;

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1-s2.0-S0306919224002057-main.pdf
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Citation

Schaper, J., Franks, R. M., Koch, N., Plinke, C., Sureth, M. (2025): On the emission and distributional effects of a CO2eq-tax on agricultural goods—The case of Germany. - Food Policy, 130, 102794.
https://doi.org/10.1016/j.foodpol.2024.102794


Cite as: https://publications.pik-potsdam.de/pubman/item/item_31706
Abstract
We analyze how a potential CO2eq-tax on the most emission-intensive agricultural goods in Germany affects CO2eq-emissions and the income distribution.Based on data from the German survey of income and expenditure, we use a linear approximated Exact Affine Stone Index demand system to estimate own-price and cross-price elasticities for meat, dairy goods and eggs. These elasticities allow us to obtain demand changes and thus emission reductions following the introduction of a CO2eq-weighted carbon tax based on the social cost of carbon. We find that it can reduce annual agricultural emissions in Germany by more than 15.3 MtCO2eq or about 22.5%. The tax generates an annual revenue of more than 8.2 billion EUR. Since the carbon tax is regressive, we consider the distributional effects of a per capita lump-sum compensation scheme. We show that this “fee and dividend” approach has a slightly progressive effect on the distribution of income.