Welfare state's role in mitigating poverty from environmental taxes
The question of how climate transition can be implemented from a justice perspective is increasingly discussed. A recent study from Stockholm University reveals how the welfare state shields households from falling into poverty due to environmental taxes related to consumption.
The study investigates whether social policies act as a safety net for households when facing environmental taxes. The focus of the analysis is on compensation levels within the social insurance system and the size of means-tested income support (formerly social assistance).
By incorporating environmental taxes into the European Union Statistics on Income and Living Conditions (EU-SILC), the study enables an in-depth analysis of the distributional effects of countries' environmental policies. Comparative analyses of 26 European countries show that the welfare state protects households from income poverty resulting from environmental taxes.
"Our research clearly demonstrates that the welfare state plays a crucial role in protecting households from the negative effects of environmental taxes, especially in preventing poverty due to increased costs of electricity and various types of fuels," says Kenneth Nelson, Professor of Sociology at the Institute for Social Research at Stockholm University.
Environmental taxes and climate policies have long been criticized for having a regressive distributional profile and thereby risking burdening already economically vulnerable households. Without ambitious social policies, these taxes can increase the risk of poverty and create less socially sustainable societies, ultimately delaying climate transition.
"This study is an important step towards understanding how the welfare state can be used as a tool to mitigate the inequalities and injustices arising from the fight against climate change," adds Kenneth Nelson.
The study was published in the journal Global Social Policy on December 27 and is part of a research project involving Kenneth Nelson, Arvid Lindh, and Pär Dalén, all affiliated with the Institute for Social Research.
Contact information for Kenneth Nelson
Last updated: January 12, 2024
Source: Communications department