1 Integrating the Environmental and Fiscal Benefits of Pollution Taxes Eduardo L. Giménez , Miguel Rodríguez* ‡ and Xavier Labandeira* Abstract This paper deals with the general equilibrium welfare effects of pollution taxes within the framework of green tax reforms. Some authors have recognized recently the difficulty to undertake empirical analysis of the double dividend hypothesis as long as there is not a ‘standard’ definition. The aims of this paper are to highlight misinterpretations of policy assessments in the double dividend literature, to specify which of the efficiency costs and benefits should be ascribed to each dividend, and then, to propose a definition to the first dividend and the second dividend. Finally, the paper analyze a green tax reform for the US economy to illustrate the advantages of our definitions for political implementation: current definitions in the literature overestimate the efficiency costs and, furthermore, the new definitions proposed in this paper provide information by themselves and not as a partial view of the whole picture. _________________________________________________________________ We have benefited from comments and suggestions by Fidel Castro-Rodríguez, Fuco Lores, Daniel McCoy and David W. Pearce. Financial support from the Spanish Ministry for Science and Education and ERDF (Projects BEC2002-04394-C02-02 and SEC2002-03095), and the Galician government (Project PGIDIT03PXIC30008PN) is also gratefully acknowledged. The authors remain solely responsible for any errors or omissions. * rede and Department of Applied Economics, Universidade de Vigo, As Lagoas-Marcosende s/n E-36310 Vigo, Spain rede and Department of Foundations for Economic Analysis, Universidade de Vigo ‡ Corresponding author: miguel.r@uvigo.es