Project concludes that putting costs on pollution and unhealthy consumption enables major tax reform.
The cost to citizens in Germany from external environmental and health effects like climate change and pollution is around 13-19% of GDP, or 455-671 billion euros per year, an alliance of 18 climate researchers in the “Ariadne” research project, including Hertie School Professor of Sustainability Christian Flachsland, estimated in a report released in May 2021.
The research, “Reform options for a sustainable tax and levy system,” was led by Matthias Kalkuhl and Christina Roolfs of the Mercator Research Institute on Global Commons and Climate Change, with which Flachsland is also affiliated. It is part of the ongoing 30-million-euro Kopernikus Project, Ariadne, supported by the German research and education ministry
Key findings are that reforming environmental and consumer taxes and levies would make polluters pay and significantly reduce these adverse effects. The paper offers a comprehensive overview of the available economic assessments of environmental and related health and economic costs in Germany
The researchers conclude that implementing reforms such as a higher CO2 prices or the expansion of toll road systems could yield revenues to the tune of around 348-564 billion euros a year. These revenues can be used to ensure equitable outcomes of such sustainability policy reforms.
The Kopernikus projects make up one of the largest research initiatives in Germany focused on the energy transition and on reaching carbon neutrality by 2050. Ariadne is one of four Kopernikus projects, along with ENSURE, P2X and SynErgy. It is led by the Potsdam Institute for Climate Impact Research (PIK) and the Mercator Research Institute on Global Commons and Climate Change (MCC).
The Hertie School, alongside other European research institutions, provides policy advice and governance options to contribute to the European energy transition and help make Germany climate-neutral by 2050. Supported by the German research ministry (BMBF), the School is receiving 1.3 million euros over three years as part of the initiative.
Find the paper here (in German).
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