Distributional Impacts of Climate Change and Disasters

Distributional Impacts of Climate Change and Disasters

Concepts and Cases

New Horizons in Environmental Economics series

Edited by Matthias Ruth and María E. Ibarrarán

Climate change tends to increase the frequency and intensity of weather-related disasters, which puts many people at risk. Economic, social and environmental impacts further increase vulnerability to disasters and tend to set back development, destroy livelihoods, and increase disparity nationally and worldwide. This book addresses the differential vulnerability of people and places, introducing concepts and methods for analysis and illustrating the impact on local, regional, national, and global scales.

Chapter 6: Income Distribution Effects of Policies to Mitigate Greenhouse Gases: The Case of Mexico

Roy Boyd and María E. Ibarrarán

Subjects: development studies, development studies, economics and finance, environmental economics, regional economics, valuation, environment, disasters, environmental economics, valuation, urban and regional studies, regional economics


Roy Boyd and María E. Ibarrarán INTRODUCTION Much of the economic literature on energy policy and climate change concerns the relationship between them, and finding mechanisms that reduce the cost of emission reduction without losses in economic efficiency. Understanding how to lower the marginal social cost of energy production and consumption, involves discussing investment in new energy sources, pollution permit schemes, environmental taxes and trade-related energy policies. Energy and environmental policies, however, have an inequitable impact on the distribution of income. As we point out in our book Hacia el Futuro: Energy, Economics and the Environment in 21st Century Mexico (Ibarrarán and Boyd 2006), such equity issues cannot be ignored since all viable policies need to be thought of as fair and acceptable to the constituency of policy-makers. While all consumers can be expected to regard an increase in environmental quality as a positive change, the popularity of any environmental policy depends upon whether it is perceived as spreading costs equitably across income groups. This is especially true in developing countries where a large portion of the general population lives at or below the poverty line, and where environmental improvement is often at odds with economic development. Mexico is a country with severe income inequality, vast energy resources and increasing environmental problems. Historically, the distribution of income in Mexico has been highly skewed with relatively large Gini coefficients (0.52 in 1996, versus 0.41 for the United States in 1997; CIA 2002), and pockets of severe poverty. The...

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