Skip to main content

Environmental taxation for reducing greenhouse gases emissions in Chile: an input–output analysis


This study uses an environmental extension of the Leontief price model to analyse various tax rates on the carbon dioxide (CO2) and other greenhouse gases (GHGs) emissions that are generated by the most polluting sectors of the Chilean economy. By using this methodology, it is possible to obtain a counterfactual scenario for the prices, levels of production and emissions of each economic sector, as well as, for tax collection, consumer spending and the consumer price index. This analysis is important because Chile is internationally committed to reducing its emissions by 30% by 2030. According to the results, to meet the target CO2 emissions only using tax policies, tax should be approximately 20 times higher than their current levels in the electricity sector. Alternatively, a lower tax of US $30/ton of CO2 and other GHGs applied to all sectors of the economy could reduce CO2 and other GHGs emissions by up to 25.7% with less of a negative impact on the economy.

This is a preview of subscription content, access via your institution.

Fig. 1

Source: own elaboration

Fig. 2

Source: own elaboration


  1. 1.

    This tax on CO2 emissions took effect in 2017.

  2. 2.

    This concept refers to any action to reduce developing country emissions related to business as usual emissions by 2020. NAMAs are supported and facilitated by international funding destined to technology, financing and capacity creation.

  3. 3.

    In order to have a tax of US $5/ton CO2, it can be mentioned that for each liter of diesel, 0.00263 tons of CO2 are emitted; therefore, using one liter of diesel will be equivalent to US $0.01315 tax. In Chile the price of diesel in January 2017 was US $0.7325 per liter, then it can be concluded that the tax will be equivalent to 1.79% of the price of this fuel.

  4. 4.

  5. 5.

    However, it would have been better if the aggregation occurred after the calculations.

  6. 6.

  7. 7.

    Negative direct emissions from the forest sector come from trees CO2 capture (see Table 1) but not from input–output analysis developed later.

  8. 8.

    See World Bank (2016).


  1. Alcántara, V., & Padilla, E. (2008). Input–output subsystems and pollution: An application to the service sector and CO2 emissions in Spain. Ecological Economics, 68, 905–914.

    Article  Google Scholar 

  2. Andrew, R., & Forgie, V. (2008). A three-perspective view of greenhouse gas emission responsibilities in New Zealand. Ecological Economics, 68, 194–204.

    Article  Google Scholar 

  3. Choi, J., Bakshi, B., & Haab, T. (2010). Effects of a carbon price in the U.S. on economic sectors, resource use, and emissions: An input–output approach. Energy Policy, 38(7), 3527–3536.

    Article  Google Scholar 

  4. Choi, J., Bakshi, B., Hubacek, K., & Nader, J. (2016). A sequential input–output framework to analyze the economic and environmental implications of energy policies: Gas taxes and fuel subsidies. Applied Energy, 184(15), 830–839.

    Article  Google Scholar 

  5. Dessus, S., & O’Connor, D. (2003). Climate policy without tears CGE-based ancillary benefits estimates for Chile. Environmental & Resource Economics, 25(3), 287–317.

    Article  Google Scholar 

  6. EPA. (2014). Emission factors for greenhouse gas inventories.

  7. FAO. (2014). Agriculture, forestry and other land use emissions by sources and removals by sinks. FAO Statistics Division. Working Paper Series ESS/14-02.

  8. Fay, M., Hallegatte, S., Vogt-Schilb, A., Rozenberg, J., Narloch, U., & Kerr, T. (2015). Decarbonizing development: Three steps to a zero-carbon future. Overview booklet. Washington, DC: World Bank.

    Book  Google Scholar 

  9. Ferreira, J., Barata, E., Nogueira, P., & Cruz, L. (2014). Economic, social, energy and environmental assessment of inter-municipality commuting: The case of Portugal. Energy Policy, 66, 411–418.

    Article  Google Scholar 

  10. Gallardo, A., & Mardones, C. (2013). Environmentally extended social accounting matrix for Chile. Environment, Development and Sustainability, 15(4), 1099–1127.

    Article  Google Scholar 

  11. García-Benavente, J. M. (2016). Impact of a carbon tax on the Chilean economy: A computable general equilibrium analysis. Energy Economics, 57, 106–127.

    Article  Google Scholar 

  12. Gemechu, E., Butnar, I., Llop, M., & Castells, F. (2014). Economic and environmental effects of the CO2 taxation: An input–output analysis for Spain. Journal of Environmental Planning and Management, 57, 751–768.

    Article  Google Scholar 

  13. Government of Chile. (2015). Ministry of Environment. Intended nationally determined contribution of Chile towards the climate agreement of Paris 2015.

  14. Limmeechokchai, B., & Suksuntornsiri, P. (2007). Embedded energy and total greenhouse gas emissions in final consumptions within Thailand. Renewable and Sustainable Energy Reviews, 11, 259–281.

    CAS  Article  Google Scholar 

  15. Llop, M. (2008). Economic impact of alternative water policy scenarios in the Spanish production system: An input–output analysis. Ecological Economics, 68, 288–294.

    Article  Google Scholar 

  16. Llop, M., & Manresa, A. (2004). Influencia de los precios de los factores y de las importaciones en la economía catalana (1994). Investigaciones Regionales, 4, 115–129.

    Google Scholar 

  17. Llop, M., & Pié, L. (2008). Input–output analysis of alternative policies implemented on the energy activities: An application for Catalonia. Energy Policy, 36, 1642–1648.

    Article  Google Scholar 

  18. Manresa, A., Polo, C., & Sancho, F. (1988). Una Evaluación de los Efectos del IVA Mediante un Modelo de Producción y Gasto de Coeficientes Fijos. Revista Española de Economía, 5, 45–64.

    Google Scholar 

  19. Mardones, C., & Flores, B. (2016). Evaluation of a CO2 tax in Chile: Emissions reduction or design problems? Latin American Research Review, 52(2) (in press).

  20. McKean, J., & Taylor, G. (1991). Sensitivity of the Pakistan economy to changes in import prices and profits, taxes or subsidies. Economics Systems Research, 3, 183–203.

    Article  Google Scholar 

  21. Ministry of Agriculture. (2010). Complements and updating of the greenhouse gases inventory (GHG) for Chile in the sectors of agriculture, land use, land use change and forestry, and anthropogenic waste. Final report prepared by Agricultural Research Institute INIA, Santiago, Chile.

  22. Muñoz, T., & Mardones, C. (2016). Simulation of a CO2e tax to mitigate impacts from Chilean agricultural and livestock sectors on climate change. Agrociencia, 50(3), 271–285.

    Google Scholar 

  23. National Institute of Statistics. (2014). Livestock production. Period 2008–2013 and first semester 2014.

  24. Peters, G., & Hertwich, E. (2007). CO2 embodied in international trade with implications for global climate policy. Environmental Science and Technology, 42, 1401–1407.

    Article  Google Scholar 

  25. Rodriguez-Serrano, I., Caldés, N., de la Rua, C., Lechón, Y., & Garrido, A. (2016). Socioeconomic, environmental and social impacts of a concentrated solar power energy project in Northern Chile. Renewable Energy and Environmental Sustainability, 1, 5.

    Article  Google Scholar 

  26. Rozenberg, J., Vogt-Schilb, A., & Hallegatte, S. (2014). Transition to clean capital, irreversible investment and stranded assets. Policy research working paper 6859. Washington, DC: World Bank.

    Book  Google Scholar 

  27. United Nations Convention Framework on Climate Change. (2014).

  28. Varela-Vázquez, P., & Sánchez-Carreira, M. (2015). Socioeconomic impact of wind energy on peripheral regions. Renewable and Sustainable Energy Reviews, 50, 982–990.

    Article  Google Scholar 

  29. Vera, S., & Sauma, E. (2015). Does a carbon tax make sense in countries with still a high potential for energy efficiency? Comparison between the reducing-emissions effects of carbon tax and energy efficiency measures in the Chilean case. Energy, 88, 478–488.

    Article  Google Scholar 

  30. Weber, C., Peters, G., Guan, D., & Hubacek, K. (2008). The contribution of Chinese exports to climate change. Energy Policy, 36, 3572–3577.

    Article  Google Scholar 

  31. World Bank. (2016). State and trends of carbon pricing 2016. Washington, DC: World Bank.

    Google Scholar 

  32. World Bank, IFC, & MIGA. (2016). World Bank Group Climate Change Action Plan 2016–2020. Washington DC: World Bank.

    Google Scholar 

Download references

Author information



Corresponding author

Correspondence to Cristian Mardones.



See Tables 5 and 6.

Table 5 Emission factors for greenhouse gas inventories.
Table 6 Global warming potential of greenhouse gases.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Mardones, C., Muñoz, T. Environmental taxation for reducing greenhouse gases emissions in Chile: an input–output analysis. Environ Dev Sustain 20, 2545–2563 (2018).

Download citation


  • Leontief price model
  • Environmental taxes
  • CO2
  • GHGs