On the acceptance of high carbon taxes in low- and middle-income countries: a conjoint survey experiment

Abstract

Changing consumption patterns from growing middle-classes with consequent rising energy use and emissions in low- and middle-income countries (LMICs) present key challenges for the energy transition and climate change mitigation. Carbon taxes are an effective policy instrument to counter these developments, yet concerns about low public acceptability hinder their introduction. Here, we seek to fill a research gap and identify publicly acceptable carbon tax designs in LMICs. We provide novel evidence from three conjoint experiments with 2,700 middle-class respondents in Ghana, Peru, and the Philippines. We show that overall, the majority in all three countries supports even high taxes of USD-PPP 75/tCO2 per year, irrespective of specific policy design features. The support for a very high tax rate is especially high if revenues are recycled for environmental purposes. Thus, governments in LMICs have political leeway to finance the transition to a low-carbon economy via carbon taxes. Moreover, revenue recycling for the poorest receives high support from important subgroups. These insights are crucial to achieving an effective, acceptable, and just carbon tax policy design.