Environmental taxes and politics: The dispute over nitrogen taxes in agriculture

Abstract:

From the late 1980s we observe an increased interest in environmental taxes. Still, such taxes do not seem to be much used. The present paper offers some explanations for this. Its empirical basis is a debate over nitrogen fertiliser taxes in Norway. The study illustrates the difficulties involved when introducing the logic of economic efficiency into environmental policy. The problems seem to be an effect of the complexity of environmental issues, the character of the interests involved and the way decisions are instituted. Thus, we found disagreement across disciplines about the effects of a tax. In turn, this influenced the policy-making process. Furthermore, we found that the way in which the decision-making process was instituted and costs of taxing were distributed among agents distinctively influenced outcomes. Finally, our study demonstrates the vulnerability of environmental policy to confrontations across sectors of responsibility and how it is exposed to lack of institutionalized continuity. Our advice to experts working with policy instruments is to engage more deeply in understanding the institutional and distributional issues as they appear in specific cases.