Environmental Goods and the Distribution of Income

The paper presents a (theoretical) investigation of the distributional impacts of environmental commodities. It introduces an appropriate framework, defines concepts for measuring benefits and examines the determinants of benefit incidence within this setup. Its emphasis is on methodology and on recognizing the relevant economic variables and information. It turns out that in an equal-preference model the magnitude of the income elasticity of marginal willingness to pay for an environmental good is the crucial variable determining progressivity. It is related to a number of other elasticities which are more easily accessible to an empirical estimation.