Are Climate Change Policies Fair to Vulnerable Communities? The Impact of British Columbia's Carbon Tax and Australia's Carbon Pricing Proposal on Indigenous Communities

This paper examines the question of fairness in the design of much needed carbon pricing policies. We evaluate the impact of the B.C. carbon tax and the proposed Australian carbon pricing proposal on indigenous communities, and offer a comparative analysis of carbon taxes and emissions trading regimes as they relate to fairness. As already well established in the literature, regressivity of carbon pricing instruments is a critical part of any fairness assessment. However, we have argued that there are a number of socio-economic and cultural factors characteristic of certain groups, such as indigenous communities, that may lead to a double burden of regressivity. In other words, the impact of carbon pricing policies is affected by more than income levels. We conclude that carbon pricing policies have the potential to be designed in a way that is fair to indigenous communities, but that -- not surprisingly -- the devil is in the details. Both emissions-trading schemes and carbon taxes have cost implications for disadvantaged groups such as indigenous peoples, but they can both be designed in a way that compensates fairly for these impacts, using revenues from within or outside the pricing policy. Ultimately, it is a political choice