Welfare and Environmental Benefits of Electric Vehicle Tax Policies in Developing Countries : Evidence from Colombia
Developing countries face a major challenge of decarbonizing their light-duty vehicle fleet and transitioning to the broad use of electric vehicles. However, there is little evidence on which policies can most effectively facilitate that transition...
| Main Authors: | , , |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2022
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/099539404062210348/IDU0e8b4724c0dd8c0452c0a7920836a8cdd85e5 http://hdl.handle.net/10986/37286 |
| id |
okr-10986-37286 |
|---|---|
| recordtype |
oai_dc |
| spelling |
okr-10986-372862022-04-12T05:10:32Z Welfare and Environmental Benefits of Electric Vehicle Tax Policies in Developing Countries : Evidence from Colombia Callejas, Jerónimo Linn, Joshua Steinbuks, Jevgenijs DECARBONIZING ELECTRIC VEHICLES PASSENGER VEHICLE EMISSIONS HYBRID VEHICLES ENVIRONMENTAL POLICY VEHICLE TAX Developing countries face a major challenge of decarbonizing their light-duty vehicle fleet and transitioning to the broad use of electric vehicles. However, there is little evidence on which policies can most effectively facilitate that transition in these countries, distinguished by relatively low-income consumers and highly concentrated markets that distort vehicle markups. This paper analyzes existing and proposed policies aiming to reduce emissions from new passenger vehicles in Colombia, which has used preferential sales taxes and import tariffs to stimulate hybrid and electric cars sales. Using highly detailed data on vehicle purchases and attributes, the paper estimates an equilibrium model of Colombia’s market that includes a random-coefficients logit demand structure and endogenizes firms’ markups. Using the model to simulate policies, the analysis finds that Colombia’s sales tax and import tariffs have increased hybrid and electric vehicle market shares by 0.9 to 2.7 percentage points at welfare costs of $40-$48 per ton of carbon dioxide reduction. Potentially taxing carbon dioxide emissions rates of new vehicles would have roughly similar welfare costs. The high welfare costs of these policies arise from preexisting distortions caused by market power, which yields large private welfare costs of shifting from gasoline to hybrid and electric vehicles. 2022-04-11T18:47:56Z 2022-04-11T18:47:56Z 2022-04 Working Paper http://documents.worldbank.org/curated/en/099539404062210348/IDU0e8b4724c0dd8c0452c0a7920836a8cdd85e5 http://hdl.handle.net/10986/37286 English Policy Research Working Paper;10001 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Policy Research Working Paper Publications & Research Colombia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
DECARBONIZING ELECTRIC VEHICLES PASSENGER VEHICLE EMISSIONS HYBRID VEHICLES ENVIRONMENTAL POLICY VEHICLE TAX |
| spellingShingle |
DECARBONIZING ELECTRIC VEHICLES PASSENGER VEHICLE EMISSIONS HYBRID VEHICLES ENVIRONMENTAL POLICY VEHICLE TAX Callejas, Jerónimo Linn, Joshua Steinbuks, Jevgenijs Welfare and Environmental Benefits of Electric Vehicle Tax Policies in Developing Countries : Evidence from Colombia |
| geographic_facet |
Colombia |
| relation |
Policy Research Working Paper;10001 |
| description |
Developing countries face a major
challenge of decarbonizing their light-duty vehicle fleet
and transitioning to the broad use of electric vehicles.
However, there is little evidence on which policies can most
effectively facilitate that transition in these countries,
distinguished by relatively low-income consumers and highly
concentrated markets that distort vehicle markups. This
paper analyzes existing and proposed policies aiming to
reduce emissions from new passenger vehicles in Colombia,
which has used preferential sales taxes and import tariffs
to stimulate hybrid and electric cars sales. Using highly
detailed data on vehicle purchases and attributes, the paper
estimates an equilibrium model of Colombia’s market that
includes a random-coefficients logit demand structure and
endogenizes firms’ markups. Using the model to simulate
policies, the analysis finds that Colombia’s sales tax and
import tariffs have increased hybrid and electric vehicle
market shares by 0.9 to 2.7 percentage points at welfare
costs of $40-$48 per ton of carbon dioxide reduction.
Potentially taxing carbon dioxide emissions rates of new
vehicles would have roughly similar welfare costs. The high
welfare costs of these policies arise from preexisting
distortions caused by market power, which yields large
private welfare costs of shifting from gasoline to hybrid
and electric vehicles. |
| format |
Working Paper |
| author |
Callejas, Jerónimo Linn, Joshua Steinbuks, Jevgenijs |
| author_facet |
Callejas, Jerónimo Linn, Joshua Steinbuks, Jevgenijs |
| author_sort |
Callejas, Jerónimo |
| title |
Welfare and Environmental Benefits of Electric Vehicle Tax Policies in Developing Countries : Evidence from Colombia |
| title_short |
Welfare and Environmental Benefits of Electric Vehicle Tax Policies in Developing Countries : Evidence from Colombia |
| title_full |
Welfare and Environmental Benefits of Electric Vehicle Tax Policies in Developing Countries : Evidence from Colombia |
| title_fullStr |
Welfare and Environmental Benefits of Electric Vehicle Tax Policies in Developing Countries : Evidence from Colombia |
| title_full_unstemmed |
Welfare and Environmental Benefits of Electric Vehicle Tax Policies in Developing Countries : Evidence from Colombia |
| title_sort |
welfare and environmental benefits of electric vehicle tax policies in developing countries : evidence from colombia |
| publisher |
World Bank, Washington, DC |
| publishDate |
2022 |
| url |
http://documents.worldbank.org/curated/en/099539404062210348/IDU0e8b4724c0dd8c0452c0a7920836a8cdd85e5 http://hdl.handle.net/10986/37286 |
| _version_ |
1764486887446151168 |