Discussion Paper Details

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Title: Are Climate Change Policies Politically Costly?

Author(s): Davide Furceri, Michael Ganslmeier and Jonathan D. Ostry

Publication Date: June 2021

Keyword(s): climate change, Climate change policies, political cost and Political Support

Programme Area(s): International Macroeconomics and Finance and Public Economics

Abstract: Are policies designed to avert climate change (Climate Change Policies, or CCPs) politically costly? Using data on governmental popular support and the OECD's Environmental Stringency Index, we find that CCPs are not necessarily politically costly: policy design matters. First, only market-based CCPs (such as emission taxes) generate negative effects on popular support. Second, the effects are muted in countries where non-green (dirty) energy is a relatively small input into production. Third, political costs are not significant when CCPs are implemented during periods of low oil prices, generous social insurance and low inequality.

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Bibliographic Reference

Furceri, D, Ganslmeier, M and Ostry, J. 2021. 'Are Climate Change Policies Politically Costly?'. London, Centre for Economic Policy Research.