Distributional Effects of Distance-Based Road Pricing: A Behavioral Microsimulation Study for the Brussels-Capital Region
At the intersection of transport economics and public finance, this research contributes to the empirical literature on transport pricing as a policy tool for addressing the externalities of vehicle use. In line with recent technological developments and ongoing policy debates, it provides an ex-ante evaluation of a distance-based road pricing scheme that varies by time (peak and off-peak), location (congested and non-congested zones), and vehicle characteristics. While such systems are widely recognized as efficient, as they better align driving costs with externalities, their implementation in passenger transport remains limited. This absence is largely driven by concerns about distributional effects, highlighting the need for robust empirical evidence on equity implications as a key input for policy feasibility.
Read MoreEnvironmental Engel Curves over four decades – The case of the Republic of Ireland
The relationship between income and carbon dioxide (CO₂) emissions has been debated in the environmental economics literature, primarily through two complementary but conceptually distinct frameworks. At the macro level, the Environmental Kuznets Curve (EKC) hypothesis posits a non-linear relationship between economic development and emissions, whereby emissions initially increase with income growth before stabilising or declining at higher income levels. At the micro level, Environmental Engel Curves (EECs) describe how household-level emissions vary with income within a given country, reflecting differences in consumption patterns, energy use, and access to carbon-intensive goods and services. These two literatures typically developed separately, leaving a gap: we have limited evidence on how the within-country income-emissions relationship evolves as an economy moves along its development path. To our knowledge, only one study examine temporal changes in the distribution of household CO₂ emissions within a single country, notably Sager (2019) for the United States. This paper studies the evolution of Environmental Engel Curves over time using six waves of the Irish Household Budget Survey (HBS) from the early 1980s to 2015, a period during which Ireland experienced exceptionally rapid income growth and major changes in consumption opportunities and energy use. We estimate income-emissions relationship for multiple points along Ireland’s development trajectory and ask: How does the shape of the EEC change as a country transitions from lower- to higher-income status? In doing so, we explicitly separate two mechanisms that are easily confounded in cross-sectional work: (i) changes in the carbon content of given consumption categories (i.e. carbon intensity of heating) and (ii) changes in the prevalence of carbon-intensive durables (i.e. personal vehicles) across the income distribution (extensive margin). We focus, in particular, on direct household energy use, focusing on residential heating fuels and private transport (vehicle ownership), which are plausible channels through which development alters EEC shape. These categories are where diffusion, infrastructure constraints, and policy-induced technology change are most likely to generate non-linearities. By documenting how EECs shift and re-shape across three decades of development within a single country, the paper complements cross-country evidence on heterogeneous distributional incidence (Dorband et al., 2019) and time-series evidence for the United States (Sager, 2019). We show that the EKC can be understood as the outcome of changing Environmental Engel Curves over the development process, driven by the diffusion and saturation of carbon-intensive household technologies. References Dorband, I. I., Jakob, M., Kalkuhl, M., & Steckel, J. C. (2019). Poverty and distributional effects of carbon pricing in low- and middle-income countries – A global comparative analysis. World Development, 115, 246–257. https://doi.org/10.1016/j.worlddev.2018.11.015 Sager, L. (2019). Income inequality and carbon consumption: Evidence from Environmental Engel curves. Energy Economics, 84, 104507. https://doi.org/10.1016/j.eneco.2019.104507
Read MoreHousehold Demand Responses to Carbon Pricing by Energy Poverty Status: Evidence from Belgium
This paper develops a behavioral microsimulation framework to analyse how carbon pricing affects energy vulnerable households in Belgium. We focus on two groups: energy poor (EP) households, who devote a large share of their income to energy, and hidden energy poor (hEP) households, who spend little on energy as they severely restrict their consumption. Using eleven cross-sections of the Belgian Household Budget Survey (2003–2016), we first document structural differences between EP and hEP households with logistic regressions. We then estimate a demographically specified Quadratic Almost Ideal Demand System (Banks et al., 1997) and develop a two-stage residual inclusion procedure to address the endogeneity of energy poverty statuses. The resulting price and income elasticities by vulnerability profiles are used to simulate responses and welfare impacts of a carbon price on heating and transport fuels, consistent with the forthcoming EU ETS 2. Behavioral adjustments are highly heterogeneous: lower-income and energy vulnerable households show higher fuel price elasticities than wealthier groups, with hEP households responding most strongly to price increases. Consequently, EP households face substantial carbon costs but comparatively smaller welfare losses, whereas hEP households suffer disproportionately large welfare losses despite their low expenditure exposure. These results reveal horizontal equity concerns that are invisible in income-based metrics alone and highlight the need to integrate detailed energy vulnerability profiles into carbon pricing design.
Read MoreIncorporating the Prebound Effect in Retrofit Policy Analysis: Distributional Results for Belgium
This paper compares the distributional incidence of three decarbonization instruments in the Belgian residential sector: EPC‑based minimum standards, carbon pricing with an equal per‑household dividend, and renovation subsidies financed by a uniform lump‑sum tax. Using Woonsurvey 2018 and a dwelling‑level microsimulation model that evaluates renovation profitability on observed energy use, we quantify household monetary impacts, renovation take‑up, and equity (across and within income groups) for budget neutral policies calibrated to common C02 targets. Three results stand out. First, EPC standards concentrate burdens on low‑income and low‑use households and generate high dispersion because they compel renovations where realized savings are small. Second, universal subsidies are costly on average and distribute benefits unevenly, with sizable transfers to infra‑marginal projects. Third, carbon pricing with revenue recycling yields the lowest and most evenly distributed household burdens, largely because it triggers heat‑pump adoption in dwellings with the highest energy consumption. We further show that combining a modest carbon price with targeted heat‑pump support can meet the same emissions target at lower cost and with a smaller variance of household impacts than under the carbon dividend. Results are robust to rebound, landlord–tenant limits, and reasonable variations in discounting, horizons, and costs.
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