Cash Transfers for Pro-poor Carbon Taxes in Latin America and the Caribbean
Carbon taxes are advocated as efficient fiscal and environmental policies, but they have proven difficult to implement. One reason is that carbon taxes can aggravate poverty by increasing prices of basic goods and services such as food, heating, and commuting. Meanwhile, cash transfer programs have been established as some of the most efficient poverty-reducing policies used in developing countries. Here, we quantify how governments can mitigate negative social consequences of carbon taxes by expanding the beneficiary base or the amounts disbursed with existing cash transfer programs.