Have environmental taxes been effective in reducing pollution in Latin America? This question motivated the scientific study “Have Green Taxes Worked Since Paris: Evidence from Latin American Countries,” a research project involving Marlon Manya-Orellana, professor in Auditing and Management Control program at the Faculty of Social Sciences and Humanities (FCSH) of the Escuela Superior Politécnica del Litoral (ESPOL) and specialist in taxation issues, together with academics Segundo Vilema, Luisa Salazar, and Juan C. Lata García.
The study examines whether so-called green taxes have contributed to reducing carbon dioxide (CO₂) emissions in Latin America following the signing of the Paris Agreement, one of the most important international commitments to addressing climate change.
The Context: What Is the Paris Agreement?
Adopted in 2015 by 196 countries, the Paris Agreement aims to limit the rise in global temperatures and reduce the effects of climate change through concrete actions to decrease greenhouse gas emissions.
To achieve these goals, governments have implemented various public policy instruments. One of these is environmental taxation, commonly known as green taxes, which are designed to make polluting activities more costly and encourage more sustainable practices among both businesses and consumers.
However, there has been limited evidence regarding the actual effectiveness of these mechanisms in Latin America, a region particularly vulnerable to climate-related challenges such as droughts, floods, biodiversity loss, and extreme weather events.
An Analysis Covering More Than Two Decades
The research analyzed data from 13 Latin American countries between 2000 and 2021. The authors employed panel data econometric models, a methodology that allows researchers to study the evolution of multiple countries over time and assess the impact of economic and environmental variables.
The analysis included indicators related to CO₂ emissions, tax burden, renewable energy use, economic growth, foreign investment, and other relevant factors. The data were obtained from the Economic Commission for Latin America and the Caribbean (ECLAC) and the Inter-American Center of Tax Administrations (CIAT).
What Did the Researchers Find?
The results show that, during the period analyzed, green taxes alone did not have a statistically significant effect on reducing CO₂ emissions in Latin America.
Furthermore, the study concludes that the implementation of the Paris Agreement did not, on average, strengthen the ability of these taxes to reduce emissions across the region. In other words, after 2015, there was no clear improvement in the effectiveness of environmental taxes as a mitigation tool.
The researchers suggest that this outcome may be associated with factors such as relatively low levels of environmental taxation, limited tax coverage, differences in policy design, and challenges related to implementation and enforcement.
The Key Role of Renewable Energy
One of the study’s most significant findings was the relationship between renewable energy use and lower emissions levels.
The research found that countries with a higher share of renewable sources in their energy mix tend to exhibit lower CO₂ emissions. This result reinforces the importance of promoting the transition toward clean energy as part of broader climate change mitigation strategies.
The authors conclude that green taxes could achieve better results when complemented by public policies aimed at expanding renewable energy development, strengthening environmental governance, and implementing effective monitoring and compliance mechanisms.
Research of this kind contributes to strengthening academic debate and evidence-based policymaking by providing valuable information for the development of more effective strategies to address the environmental challenges facing Latin America.
The full study can be accessed at the following link:
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