Perception of the Costs of Carbon Pricing in Canadian Provinces

• In Event: Politics and Tools of Climate Change in North America

Abstract

Carbon taxes hold the promise of delivering cost-effective emissions reductions, but at the steep price of significant political opposition. Indeed, citizens often oppose carbon taxes even when the revenues from these taxes, which are returned to taxpayers via tax cuts or dividends, leave them better off financially (Douenne and Fabre, Mildenberger et al). Previous work by the coauthors found that most Canadians underestimated the value of their carbon tax rebates, and that these perceptions were significantly influenced by partisanship and partisan communication (Mildenberger et al). In this paper, we turn to the cost side of the equation, and examine the impact of various factors on public support for carbon pricing policies. We analyze the effect of urban or rural residence, consumption of transportation and home heating fuels, and of partisanship, on the perceived impact by taxpayers of carbon taxes on their household budgets, and of the impact of actual and perceived costs and net costs on the public’s appetite for carbon pricing initiatives. We draw on a unique panel survey tracking support for carbon pricing over time in five Canadian provinces, as well as data on local prices for gasoline and heating fuels. We find stronger opposition to carbon pricing among those who drive to work and spend more on transportation fuels. However, Conservative party supporters overestimate the impact of carbon pricing on gas prices by more than other parties’ voters. Moreover, perceived price changes better explain carbon tax opposition than do actual changes in the price of gasoline and other fuels. These findings offer a more nuanced picture of citizens’ understanding, and misunderstanding, of a high profile climate policy in the context of partisan contestation.

Authors

• Alice Lépissier, Brown University

• Chloé Boutron, Institute for Climate Economics (I4CE)

• Erick Lachapelle, Universite de Montreal

• Matto Mildenberger, University of California Santa Barbara

• Kathryn Harrison, University of British Columbia