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Searching for Triple Dividends in South Africa: Fighting CO2 Pollution and Poverty while Promoting Growth

A CGE model of South Africa is used to find the potential for a double or triple dividend if the revenues raised from an energy-related environmental tax are recycled to households and industry through lowering existing taxes. Four environmental taxes and three revenue-recycling schemes are compared. The environmental taxes are (i) a tax on greenhouse gas emissions, (ii) a fuel tax, (iii) a tax on electricity use, and (iv) an energy tax. The four taxes are constructed such that they have a comparable effect on emissions. The revenue is recycled through either (i) a direct tax break on both labour and capital, (ii) an indirect tax break to all households, or (iii) a reduction in the price of food. A triple dividend is found � decreasing emissions, increasing GDP, and decreasing poverty � when any one of the environmental taxes is recycled through a reduction in food prices.

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Energy Specializations: Energy Access – Energy Poverty and Equity; Energy and the Environment – Climate Change and Greenhouse Gases; Energy and the Environment – Policy and Regulation

JEL Codes:
Q56 - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
Q54 - Climate; Natural Disasters and Their Management; Global Warming
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Air pollution, CO2, poverty, Double-dividend, CGE, Environmental tax, South Africa

DOI: 10.5547/ISSN0195-6574-EJ-Vol27-No2-7

Published in Volume 27, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.