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Choice experiments and environmental taxation: An application to the Italian hydropower sector

Author

Listed:
  • Federico Pontoni
  • Daniel Vecchiato
  • Francesco Marangon
  • Tiziano Tempesta
  • Stefania Troiano
Abstract
This paper represents the first attempt to simulate the introduction of an incentive-based environmental tax to the hydropower sector. As hydropower can negatively affect fluvial ecosystems, the paper shows how to design and determine per unit tax values for a taxation system that would then be able to provide producers with incentives to opt for more environmentally friendly solutions. The simulation is carried out in the Province of Sondrio (home to 20% of the Italian hydropower production). First, the paper determines the monetary value of the fluvial ecosystem by means of a Discrete Choice Experiment (DCE); then, it compares the models estimated in WTP and preference spaces in order to opt for the most effective punctual values to be used as inputs in a newly designed incentive-based environmental tax; finally, it simulates the effects of the introduction of such a tax to a real case. According to our results, the magnitude of the environmental tax is such that it would certainly stimulate environmentally friendly production, without hindering operators? profitability.

Suggested Citation

  • Federico Pontoni & Daniel Vecchiato & Francesco Marangon & Tiziano Tempesta & Stefania Troiano, 2016. "Choice experiments and environmental taxation: An application to the Italian hydropower sector," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2016(3), pages 99-118.
    • Handle: RePEc:fan:efeefe:v:html10.3280/efe2016-003009
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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