Introduction to IIPF 2020 special issue in ITAX: reflections on the interactions between environmental economics and public finance

International Tax and Public Finance (2021) 28:1081–1089 https://doi.org/10.1007/s10797-021-09697-8 Introduction to IIPF 2020 special issue in ITAX: reflections on the interactions between environmental economics and public finance Mireille Chiroleu‑Assouline1 · Marco Runkel2 Accepted: 19 August 2021 / Published online: 19 October 2021 © The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2021 This special issue of International Tax and Public Finance contains selected papers presented at the 76th Annual Congress of the International Institute of Public Finance (IIPF), which was hosted by the University of Iceland on August 19–21, 2020. Due to the Covid-19 pandemic, for the first time this congress was held in an online format. The number of presentations at the congress was slightly lower than at past physical IIPF congresses despite an initially higher number of submissions (588). But with 290 papers presented in contributed sessions covering all topics within public economics, it still remarkably high, given the circumstances during the pandemic and the fact that it was the first online congress of the IIPF. The theme of the conference was “Public Finance, Natural Resources and Climate Change.” It had been chosen in 2019, long before the Covid-19 crisis erupted, and reflected the need to move forward on policies to achieve the long-term climate goals outlined in the 2016 Paris Agreement. The health crisis, however, did not undermine the need to address the climate crisis. On the contrary, the Covid-19 crisis—similar to global warming—shows the dramatic vulnerability of mankind to changes in its natural environment. Climate and health crises, together with their possible interactions, therefore represent a ‘twin crisis’ that belongs to the largest challenges of the twenty-first century. For this reason, the scientific committee of the congress decided to adhere to the overall conference theme, where possible and suitable complemented by some aspects of the Covid-19 pandemic. * Mireille Chiroleu‑Assouline http://www.parisschoolofeconomics.eu/en/chiroleu-assouline-mireille/ Marco Runkel http://www.finance.tu-berlin.de 1 Paris School of Economics & University Paris 1 Panthéon-Sorbonne, 48, boulevard Jourdan, 75014 Paris, France 2 Technische Universität Berlin, Straße des 17. Juni 135, 10623 Berlin, Germany 13 Vol.:(0123456789) 1082 M. Chiroleu‑Assouline, M. Runkel The climate issue has traditionally been the domain of environmental and natural resource economics, but the treatment of environmental quality or the habitability of the planet as global public goods, as well as that of pollution or GHG emissions as externalities, and—last but not least—the potential correction by taxes, subsidies, emission trading systems or other kinds of regulation makes public economics the parent discipline to refer to. In previous decades, both disciplines—environmental and resource economics, on the one hand, and public economics, on the other hand—have taken their own development with their own scientific associations, conferences and field journals. What does a congress of the IIPF with the climate issue as the main conference theme tell us about the way the relationship between environmental economics and public economics is evolving? Before introducing the papers published in this special issue, we will address this question by briefly discussing the keynote lectures as well as some (very) selective papers presented in the contributed sessions of the congress and not published in the special issue. 1 Keynotes and selective presentations Four inspiring keynote speakers have been invited to talk on the central conference theme: Ottmar Edenhofer (Potsdam Institute for Climate Impact Research and Technische Universität Berlin) on "Pigou in the Post-Corona Era", Karen Palmer (Resources for the Future) on "Flexible Electricity Demand and Decarbonization: Policy, Prices and Automation", Rick van der Ploeg (University of Oxford) on "Climate Policy, Natural Resources and Public Finance Post Covid-19" and Anna Alberini (University of Maryland) on "All Car Taxes are Not Created Equal: Evidence from Germany". The keynote lectures allowed both to deepen the relationship between the fields of public finance and climate policy and to provide conference participants with specific insights into aspects that are often overlooked by non-specialists.1 Ottmar Edenhofer went back to the origins by painting a comprehensive picture of the obstacles to the implementation of Pigouvian carbon taxation, but also of its successes, and his talk provided a number of stimulating avenues of research. He based his arguments on both a sound scientific basis and excellent knowledge of the scientific literature as well as comprehensive practical experiences in policy consulting, a combination that turned out to be highly fruitful. Among the implementation difficulties he mentioned was the problem of assessing the social cost of carbon, and this was precisely the issue addressed by Rick van der Ploeg. He particularly insisted on the presence of multiple sources of uncertainties and on the importance of the choice of the discount rate, a subject that gains a lot of attention in environmental and resources economics not only since the release of the Stern-Review on 1 All keynote lectures are available in video on the permanent conference website: https://www.iipf.org/ cng20.htm. 13 Introduction to IIPF 2020 special issue in ITAX: reflections… 1083 the economics of climate change2 and, at the same time, is familiar to researchers in public finance when the policy envisaged has long-term objectives. But perhaps one of the most original points for the usual IIPF conference audience was his proposed incorporation of a model of temperature variation to account for the reciprocal interactions between climate and economic activity, in line with the work of William Nordhaus, who was awarded the Bank of Sweden prize in 2018. The other two keynote lectures dealt with the power generation and passenger car sectors, which were among the first to be regulated in the EU to reduce their GHG emissions, but for which much remains to be done and effective regulation requires a thorough understanding of the underlying mechanisms. Starting from the recognition that long-term climate goals can only be met if major efforts are made to decarbonize electricity generation and electrify other energy uses, Karen Palmer focused on demonstrating the usefulness of market-specific instruments: since the integration of renewables into the energy mix poses supply–demand matching challenges, automation and innovative tariff design can help facilitate efficient demand shifting, with direct and indirect climate benefits. Finally, Anna Alberini presented a study, using German data, of the effects of an annual registration tax that increases with a vehicle’s C O2 emission rate.3 Sh (...truncated)