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Higher taxes may not curb some CO2 emissions

By dmunger on February 1, 2007.
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Getting travelers to stay at home isn't really the intention of a carbon tax on air travel. Rather, it increases the cost of air travel, providing competitive incentives to produce more efficient fuels, engines, etc. That rich folks aren't stopped is pretty irrelevant: if total emissions are capped, a carbon trading system could extract extra monies from them up to the actual value of the travel.

However, the UK's Gordon Brown's plan of lumping on extra tax on a per-passenger basis doesn't create an incentive, so it's just gouging.

The article misrepresents the study. The study didn't actually evalute the statement about the impacts of "moderate" fuel tax increases - it simply mentions in passing that it would be expected that the wealthy would likely have a more inelastic demand for air travel, but that it has not been empirically validated. There is actually a footnote attached to the quote in the BBC article saying "The underlying assumption is that the wealthy air traveller is less price elastic than the less wealthy. This is a reasonable assumption; however, the hard evidence is missing in the literature." I'd argue that the assumption may not be that reasonable, since it doesn't factor in business vs personal travel and socially obligated travel (eg visiting family during the holidays) vs purely recreational travel (eg ski trips) - elasticity in air travel demand probably isn't monotonically decreasing with wealth. The study itself only actually examines the demographic distribution of emissions. And as Barry points out, decreasing travel is neither the only nor most desirable mechanism of impact of a fuel tax on emissions.

Actual papers are here http://www.tsu.ox.ac.uk/research/oxontravel/reports/reports.php.

Thanks for the clarification, MattXIV and Barry.

I think the take-home message may be that a combination of measures will be required to reduce CO2 emissions. There are some who tout the idea of a "carbon tax" as the only way to reduce CO2, but in fact in certain circumstances, given the population we're talking about, human behavior isn't directly related to economic incentives.