Economic, environmental and distributive analysis of the taxes to global and local air pollutants in Chile Cristian Mardones * , Camilo Mena Department of Industrial Engineering, University of Concepci on, Edmundo Larenas 219, Concepci on, Chile article info Article history: Received 23 August 2019 Received in revised form 1 March 2020 Accepted 2 March 2020 Available online 5 March 2020 Handling Editor: Zhifu Mi Keywords: Environmental taxes CO 2 Local air pollutants Poverty Income distribution abstract In 2017, environmental taxes on the emissions of global (CO 2 ) and local air pollutants (SO 2 , NO x , and PM) were introduced in Chile for stationary sources with thermal power greater than or equal to 50 MWt. Therefore, this paper uses the environmental extension of the Leontief price model and micro- simulations to analyze the main economic, environmental, and distributive effects of this policy. The results show that with the current tax rates, a minimal decrease in emissions is achieved. Also, other scenarios are simulated to evaluate the impact of modifying the current tax rates. For example, it is determined that the increase in taxes on local (global) pollutants complements the reduction of emis- sions from global (local) pollutants. Finally, the results of the Leontief price model are transferred to microdata to analyze the effects on the poverty rate and income distribution. The micro-simulations show that the indicators of the income distribution are little sensitive to the environmental taxes on global and local air pollutants, but the poverty rate rises more in the case of increases in the CO 2 tax. © 2020 Elsevier Ltd. All rights reserved. 1. Introduction One of the most important challenges faced today is the compatibility of economic growth with the preservation of the environment. For this reason, in 2015 Chile signed the Paris Agreement at the XXI Conference on Climate Change (COP21), which seeks that by the end of this century the increase in the global average temperature keeps at a value of less than 2  C with respect the pre-industrial era. Specifically, Chile committed to reduce its CO 2 emissions per unit of GDP by 30% by the year 2030 compared to the level reached in 2007. On the other hand, the Strategy for Atmospheric Decontamination in Chile 2014e2018 of the Ministry of the Environment 1 established that in 2018 a total of 20 decontamination plans should be implemented throughout the country (covering 57% of the population) with the objective of implementing measures that reduce the concentration of local air pollutants and comply with the national regulations for air quality. In this context, environmental taxes were introduced to contribute to the reduction of emissions in Chile. Specifically, it was established the joint application of taxes on global (CO 2 ) and local air pollutants (SO 2 , NO X and PM), which entered into forcein 2017. These taxes are charged annually on emissions generated by fixed sources (boilers or turbines) that individually or jointly add a thermal power greater than or equal to 50 MWt (considering the upper limit of the energy value of the fuel). The CO 2 tax rate is fixed and equal to US $ 5/ton, except for fixed sources that operate with non-conventional renewable generation or biomass. On the other hand, the tax rates for local air pollutants are variable and calcu- lated with a formula that weighs environmental damage according to the geographical area where the emission is generated. This formula includes as parameters the air quality in the district where the emitting source is located (unregulated zone, latent zone, or zone saturated with pollution), an estimate of the per capita ex- ternality associated with each pollutant (US $ 0.9/ton PM; US $ 0.01/ton SO 2 ; US $ 0.025/ton NO X ), and the population exposed in each district. The governmental institutions involved in the implementation of these environmental taxes are the Superin- tendence of the Environment who is responsible for establishing the methodologies and systems to monitor, report and verify the taxable emissions; the Internal Revenue Service that receives the declaration of the fixed sources affected by environmental taxes; and the General Treasury of the Republic that receives the payment * Corresponding author. E-mail addresses: crismardones@udec.cl (C. Mardones), cammena@udec.cl (C. Mena). 1 http://airechile.mma.gob.cl/download/Plan-Descontaminacion-Atmosferica- 2014-2018.pdf. Contents lists available at ScienceDirect Journal of Cleaner Production journal homepage: www.elsevier.com/locate/jclepro https://doi.org/10.1016/j.jclepro.2020.120893 0959-6526/© 2020 Elsevier Ltd. All rights reserved. Journal of Cleaner Production 259 (2020) 120893