Carbon pricing and household welfare: evidence from Uganda
Policymakers frequently voice concerns that carbon pricing could impair economic development in the short run, especially in low-income countries such as Uganda. Using a consumer demand system for energy and food items, this analysis examines how households’ welfare, and demand for food and energy, would respond to a carbon price of USD40/tCO2. Findings indicate welfare losses of 0.2–12 per cent of household expenditure on food and fuel, due to the carbon price.