Refunding of a climate tax on food consumption in Sweden

This paper examines the implications of imposing a climate tax on food consumption in Sweden combined with refunding revenues to farmers for selected agricultural activities enhancing ecosystem services: restoration drained peatland (carbon sequestration), maintenance grassland (biodiversity), and construction wetlands (nutrient regulation). A partial equilibrium model sector is used assess economic environmental effects. The results show that introduction corresponding existing Swedish CO2 115 euros per tonne carbon dioxide equivalent reduces total emissions from by 4.4% without any revenues. Refunding payments all ecosystems enhances sink an amount 57% CO2e consumption, net benefits refund system as whole, but regressive where regions relatively high incomes receive proportionally much benefits.