Making carbon pricing work for citizens by Cameron Hepburn, David Klenert published by VOXEU (7/2018).
Political acceptability is the biggest challenge to implementing ambitious carbon pricing schemes. This column argues that behavioural economics and political science provide new insights into the acceptability of carbon pricing which suggest that successful reforms are more likely when the revenues are recycled through lump-sum dividends to citizens. There is no ‘one size fits all’ solution, however, and revenue recycling strategies should account for different social and political contexts and will most likely be mixed in real-world carbon pricing schemes.
