Healthy Climate, Healthy Bodies: Optimal Fuel Taxation and Physical Activity

67 Pages Posted: 15 Dec 2020

See all articles by Inge van den Bijgaart

Inge van den Bijgaart

University of Gothenburg

David Klenert

European Commission-Joint Research Centre

Linus Mattauch

University of Oxford

Simona Sulikova

University of Oxford - Institute for New Economic Thinking at the Oxford Martin School

Date Written: 2020

Abstract

Transport has significant externalities including carbon emissions and air pollution. Public health research has identified additional social gains from active travel, due to health benefits of physical exercise. Per mile, these benefits greatly exceed the external costs from car use. We introduce active travel into an optimal fuel taxation model and analytically characterise the optimal second-best fuel tax. We find that accounting for active travel benefits increases the optimal fuel tax by 49% in the US and 36% in the UK. Fuel taxes should be implemented jointly with other policies aimed at increasing the uptake of active travel.

JEL Classification: H230, I120, Q530, Q540, Q580, R410, R480, Z280

Suggested Citation

den Bijgaart, Inge van and Klenert, David and Mattauch, Linus and Sulikova, Simona, Healthy Climate, Healthy Bodies: Optimal Fuel Taxation and Physical Activity (2020). CESifo Working Paper No. 8762, Available at SSRN: https://ssrn.com/abstract=3748963 or http://dx.doi.org/10.2139/ssrn.3748963

Inge van Den Bijgaart (Contact Author)

University of Gothenburg ( email )

Viktoriagatan 30
Göteborg, 405 30
Sweden

David Klenert

European Commission-Joint Research Centre ( email )

Joint Research Centre, European Commission, Rue du
Brussels, Brussels 1050
Belgium

Linus Mattauch

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Simona Sulikova

University of Oxford - Institute for New Economic Thinking at the Oxford Martin School ( email )

Eagle House
Walton Well Road
Oxford, OX2 6ED
United Kingdom

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