Distribution and Environmental Quality

• Distribution of economic and environmental costs and benefits amongst households, businesses and regions
• Use and redistribution of government revenue, and the design of compensatory measures
• Environmental quality, health and the living environment: assessment of welfare effects not captured by market prices
• Intergenerational distribution and the interplay between climate protection, public investment and public debt
   

The research focus area ‘Distribution and Environmental Quality’ examines the distribution of economic and environmental costs and benefits. Building on previous work, the aim is to link differences between households, businesses and regions to the assessment of environmental quality and the consequences for present and future generations.

An initial focus is on the distributional effects of environmental and climate policy between households and regions. The aim is to investigate how differences in consumption and sources of income, as well as in regional economic structures, energy supply and production linkages, shape the burdens and benefits. The analysis also centres on spatial shifts in production and employment and their consequences for income and welfare. The pass-through of costs via firms and supply chains will be taken into account, as will the use and redistribution of government revenue. The analysis will examine how compensatory measures mitigate various burdens and interact with incentives for emissions reduction. To this end, household and firm-level data will be linked with spatial equilibrium and microsimulation models.

A second focus is on environmental quality and welfare effects not captured by market prices. Building on research into the external costs of fossil fuel use, the study will examine the consequences of changing environmental pressures on health and welfare. To this end, economic analyses will be linked with findings and models from environmental and health research. Of particular interest is which population groups are exposed to environmental pressures. At the local level, the aim is to examine how urban development measures affect the living environment, housing markets and the choice of residential location. Combining empirical analyses with spatial models makes it possible to link local changes in rents and quality of life to their city-wide distributional and welfare implications.

A third focus is on intergenerational distribution. The aim is to investigate how climate protection, public investment and public debt collectively influence the economic scope for action of present and future generations. To this end, a quantitative overlapping generations model is to be developed that links economic and fiscal variables with emissions and climate damage. The aim is to assess the costs of climate protection and the benefits of avoided damage across generations. The research will examine how fiscal and climate policy rules interact and what incentives they provide for long-term investment and the protection of the livelihoods of future generations.