Climate change, inequality, and environmental tax policies

UNU-WIDER convenes a group of researchers and experts to review work in progress and chart a path forward on global research into climate change and inequality in Global South countries. The one-day workshop aims to unite research agendas on the effects of climate change and mitigation policies in lower income countries. Through presentations of frontier research, those attending will gain insight on the current state of the art in the literature, identify major gaps, and propose potential areas for research advancement.

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Lower income countries—with economies reliant on agriculture, forestry, and fishing—are particularly vulnerable to the impacts of climate change. Extreme weather events often create large economic losses which disproportionately affect vulnerable populations and cause substantial job destruction. For example, prolonged droughts in sub-Saharan Africa have devastated crop yields, fueled food insecurity, and displaced agricultural workers. 

The unequal distribution of climate impacts further deepens regional and socioeconomic inequalities. Marginalized groups—including women, indigenous communities, and low-income households—often have limited access to resources and insurance against climate-induced disruptions. Yet, there is limited consensus in the existing literature about the causal impacts of climate change on labour markets, welfare outcomes, or national inequality levels.

Ensuring a just transition to net-zero emissions also requires that the global shift towards a green economy provide opportunities for growth and adaptation to lower income countries. While a green economy offers the potential for job creation in new industries—such as renewable energy sectors, sustainable agriculture, and green infrastructure—participation in it requires substantial investments in education, skills training, and infrastructure which lower income countries may struggle to afford. 

Reducing carbon emissions is critical to combating climate change. While emissions are concentrated in upper-middle income countries and high-income countries, environmental taxation may offer unique opportunities to some lower-middle-income and low-income countries to reduce emissions, secure climate finance, generate additional revenue, and address existing inequalities. Among the available policy tools to reduce emissions are carbon and other environmental tax policies. More analysis of these policies in lower income contexts are needed to fill knowledge gaps on this topic.