Environmental Taxation

Beatriz Theodoro Sartori

1. Introduction

As the global community seeks effective tools to combat climate change, carbon taxation has emerged as a relevant instrument in aligning market behavior with environmental objectives. By placing a monetary value on greenhouse gas (GHG) emissions, carbon taxes aim to internalize the external cost of pollution thereby incentivizing cleaner production and consumption patterns. However, the practical implementation of such taxes, particularly in developing countries, faces inS. 424stitutional and economic constraints, among others, that challenge their effectiveness and sustainability.

This thesis explores the Chilean carbon tax as a case study to assess the effectiveness of carbon pricing in the context of a developing economy. The selection of Chile is not incidental. Among Latin American nations, Chile stands out for having introduced one of the most technically structured carbon tax systems in the region embedded within a comprehensive fiscal reform. The country was the first in Latin America to formally adopt a carbon tax mechanism as part of its general tax code rather than through isolated environmental regulation - a feature that enhances its fis...