JOURNAL OF COMPARATIVE POLITICS     38 
 
 
 
 
 
 
 
THE INFLUENCE OF ECOLOGICAL TAXES ON THE 
EXPOSURE OF WASTE AND CO2
 EMISSIONS IN A 
SELECTED GROUP OF EU COUNTRIES 
 
 
France KRIŽANIČ, Žan OPLOTNIK, Jože MENCINGER and Boštjan BREZOVNIK
1
  
…………………………………………………………………....……….................................……… 
    
In the continental European countries (EU Member States) an 
increase of the environmental taxes by 1% after one year leads to a 
0.13% reduction in the amount of deposited waste per capita. Across 
the entire business sector and the construction industry this effect is 
the greatest for the tax on energy used, as well as for the taxes and 
charges on pollution and the use of natural resources. An increase 
for 1% in taxes on transport yields a 0.5% reduction in emissions of 
CO
2
, and an increase in energy taxes of 1% after one year yields a 
0.13% decline in emissions of CO 2. When a technological and 
economic opportunity adapt to changed environmental tax rates, as 
is the case for the landfill tax, increased tax rates leads to sharp 
pollution reduction and thus have a limited fiscal effect. 
 
Key words: Economic Welfare; Taxation; Environmental 
Management; Tax Law; Public finance. 
 
 
 
1 INTRODUCTION 
 
Economic growth leads to the increased pollution of nature. This effect comes 
from the supply side (production of goods, provision of services) as well as from 
the demand side (household consumption, investments, state spending and 
exports). The state has the possibility and duty to limit the burden on the 
environment by direct regulation (prohibitions, etc.), by leading a specific 
approach to development policy (promoting the introduction of cleaner 
technologies) and through tax policy. In this article we analyse the effectiveness 
of its environmental tax measures based on data from continental EU Member 
States. 
 
The article starts with a short outline of economic theory on pollution and the 
role of ecological levies, followed by the presentation of the methodology, the 
data used and the estimated model of the impact of various factors on the 
                                                 
1
 France KRIŽANIČ, Ph.D., Asistant Professor, EIPF. Žan Jan OPLOTNIK, Ph.D., Professor, 
University of Maribor, Faculty of Economics and Business. Jože MENCINGER, Ph.D., Professor, 
EIPF. Boštjan BREZOVNIK, Ph.D., Associate Professor, University of Maribor, Faculty of Law. 

JOURNAL OF COMPARATIVE POLITICS     39 
 
 
 
generation of waste and CO 2 emissions. Below is the outline on how change in 
environmental taxation affects deposited waste and CO 2 emissions. In the last 
part of the article an example of the effectiveness of the landfill tax on the disposal 
of waste at landfills is specifically illustrated. The end of the article presents the 
conclusions, an indication of the literature used, data sources and the software 
used. 
 
 
2 POLLUTION, EXTERNAL DISECONOMIES AND ECOLOGICAL TAXES 
 
Economizing is a conscious human activity to reduce the required limited 
resources for meeting our needs. These resources are called goods. In the process 
of economizing, the consumers maximize their utility and the producers 
maximize their profits. One and all act in accordance with the prices of goods as 
they are established on the market in the relation between supply and demand 
(Kneese and Clifford 1994). In most cases the production and consumption of 
goods cause negative externalities or external diseconomies, which are not 
included in prices as established in the relation between the supply and demand 
of these goods.
2
 This fact represents a market failure. The first economic thinker 
to theoretically explain it was Arthur Pigou (1920), the successor to Alfred 
Marshall at Cambridge University. As a solution, he proposed the introduction of 
an ecological tax. Of course, apart from this economic incentive to limit or even 
prevent pollution, the state also operates through direct regulation and 
subsidies. An economic analysis of the effectiveness of various measures to 
reduce pollution and to eliminate external diseconomies has been in constant 
development since the 1970s (Kneese and Bower 1979). External diseconomies 
or different forms of pollution are on one side increasing with the growth of the 
production and consumption of goods, and on the other side they decrease with 
state regulation, investments in clean technologies and ecological taxes. Which of 
the instruments the regulator (the state) elects to use depends on how producers 
are able to respond to the price signals of environmental taxes. If the cost of 
reducing pollution is low, environmental taxes are effective; otherwise, direct 
bans are more effective (Weitzman 1974; Stavins 1996). When the state 
combines ecological taxes with other measures (licenses) to reduce certain 
pollution, it must also take into account the interaction effect of limiting the 
emissions of one pollutant on the emissions of other pollutants, i.e. that the goods 
associated with this pollution exist in a complementary or substitute relation 
(Ambec and Coria 2013). In models of endogenous growth (Romer 1986; Romer 
1990) environmental policy measures (including ecological taxation) influence 
the choice of technologies and the structure of the economy (Soretz 2007). 
Market power or a monopoly of polluting economic subjects increases the 
importance of tax regulation in relation to prohibitions (Heuson 2010). In North-
South international trade, however, synchronized environmental tax policy 
cannot prevent distortion in the allocation of resources (Daubanes and Grimaud 
2010). 
 
Environmental taxes, environmental contributions (charges) and environmental 
penalties all sit among environmental levies in the Pigou sense. The basis for an 
environmental tax is a physical unit (or its approximation) of something that has 
                                                 
2
 In the case of negative externalities, it is not necessary that a precisely defined person or group of 
persons is damaged by pollution of the natural environment; it can also be a deterioration of the 
state of public goods that people need collectively and for which there is no sense in 
differentiating individuals from total consumption (Samuelson 1954). Air is a typical example of 
such a good, yet the entirety of living and non-living nature, in fact, belongs here.
 

JOURNAL OF COMPARATIVE POLITICS     40 
 
 
 
a provable negative effect on the environment. Dedicated use of the resultant 
revenue collected with them, as with other taxes, is not well established; 
furthermore, the funds acquired through such taxation are not necessarily fully 
used to protect the environment. In the case of environmental contributions the 
opposite holds, where they serve to raise funds for a specific purpose. While they 
are mandatory, they can be paid into the budget or into a certain fund or 
organization to cover the costs of specific related services, such as water supply, 
cleaning or access to a natural resource. However, there is no strict distinction 
between environmental taxes and contributions; different countries use different 
definitions in their classifications (Križanič, Mencinger and Kolšek 2016). 
According to Eurostat's typology, environmental taxes are divided into energy 
taxes, transport taxes, pollution and resource taxes (Eurostat 2001). 
 
Environmental taxation has two objectives or effects: the first is the protection of 
the environment or the elimination of that external diseconomy, while the other 
is the fiscal, i.e. generating revenue for the state treasury. For the environmental 
impact of a tax or duty, it is important to reduce environmental pollution and to 
use the funds collected to eliminate the damage; the "moral" effect of benefits is 
also important in raising awareness of environmental protection (Križanič, 
Mencinger and Kolšek 2016). Some analyses show that the link between 
environmental taxes and awareness of the importance of protecting the 
environment is not linear, as environmental taxes can sometimes reduce the 
impact of ecological awareness on environmental protection (Lanz, Wurlod, 
Panzone and Swanson 2018; see also Kuokštis 2017). The fiscal effect of the 
environmental tax allows the reduction of income tax rates, in particular tax rates 
on income from work (Ekins and Barker 2001). Such a reorientation of public 
expenditure financing is called a green reform (Fullerton and Metcalf 1997; 
Hettich 1998). Fiscal revenue from environmental taxation may allow the 
financing of transfers to the population to eliminate the negative distribution 
effects of this tax – connected to the fact that people with lower incomes spend 
relatively more on polluting goods (Klenert, Schwerhoff, Edenhofer and 
Mattauch 2016), as well as on financing projects for remediation of 
environmental damages. Analyses show that the use of these funds to reduce the 
damage caused by pollution increases the political acceptability of 
environmental taxation (Carattini, Baranzini, Thalmann, Varone and Vӧhringer 
2017). 
 
 
3 METHODOLOGY 
 
We designed a model to explain various factors that influence waste generation 
and CO
2
 emissions while also assessing the link between the first differences in 
the amount of waste collected per capita (data vary among seventeen EU Member 
States) and the first differences of the variables which influence the change in the 
amount of waste collected (ecological taxes, investments in cleaner technologies, 
GDP, etc.).
3
 We estimated panel equations on annual first differences of different 
variables across different countries: 
 
[ws_? - ws_?(-1)] = f {[ [tax_? - tax_?(-1)] + [in_? - in_?(-1)] + … + u} 
                                                 
3 
Data are annual, and the first differences are calculated as the difference in the value of the given 
variable (quantities of collected waste in kilograms per capita, collected ecological taxes in 
millions of euros, etc.) in a given year and the value of this variable in the previous year. Since we 
have data for the analyzed countries from 2004 to 2012, we analyze data on the first differentials 
from 2005 to 2012.
 

JOURNAL OF COMPARATIVE POLITICS     41 
 
 
 
where: 
 
ws_?   indicates the amount of collected waste in kilograms per capita in 
the analysed group of 17 countries; these countries are designated by "?"; 
 
 
ws _? (- 1)  indicates the amount of collected waste in kilograms per capita 
(ws_?) in the previous year; 
 
tax_?   indicates the total collected ecological taxes (millions of euros) 
per country (?) in the analysed group; 
 
tax _? (- 1)  indicates tax_? in the previous year; 
 
in_?   indicates investments (millions of euros) into cleaner technology 
related to the generation or treatment of waste by country (?) in the group; 
 
in _? (- 1)  indicates in_? in the previous year; 
 
...   indicates other variables that have a statistically significant effect 
on the amount of waste (different types of ecological taxes and eco-investments, 
economic growth variables and proxy variables for the institutional framework); 
 
u   indicates the remaining unexplained factors in the regression 
analysis. 
 
The equations were estimated on annual data that were tested for Unit Root, and 
the hypothesis that the series has a single root was rejected. In the regression the 
specificities of individual countries that could introduce bias in the final result 
(heteroskedasticity) were eliminated by the introduction of weights. 
 
 
4 DATA 
 
The analysis of the impact of ecological taxation (as reported by Eurostat) and 
other variables on the amount of collected waste per capita included EU Member 
States that have provided relevant data to Eurostat. Listed in alphabetical order, 
these countries are Austria, Belgium, Czech Republic, Finland, France, Germany, 
Hungary, Italy, Lithuania, the Netherlands, Poland, Portugal, Romania, Slovenia, 
Slovakia, Spain and Sweden. The analysed group of 17 countries has almost 400 
million inhabitants (78% of the EU population before Brexit), and their national 
economies together generate a gross domestic product of 11 trillion euros (77% 
of the EU total). The analysis was carried out on Eurostat annual data for the 
period 2004 to 2012 with data on various ecological taxes (including those on 
energy consumption and transport), on waste (total and structural parts, 
depending on the nature of the waste or according to its source), CO 2 emissions, 
investment in cleaner technologies (including individual structural upgrades 
according to purpose), economic growth (GDP, wages, etc.) and institutional 
conditions (as an indicator of the state's readiness to intervene also in the 
environmental field, we assume a share of general government revenues to GDP 
or a share of the general government deficit to GDP). Data on waste are given in 
kilograms per capita and the data on CO 2 emissions are in thousands of tons. Data 
on ecological taxation are in millions of euros; these figures represent the tax rate 
or the rate of excise duties per unit of goods indirectly rather than directly.  

JOURNAL OF COMPARATIVE POLITICS     42 
 
 
 
 
Changes in the amount of ecological taxes collected can also be linked to greater 
or lesser intensity of enforcement, changes in the tax base, inclusion or exclusion 
of taxpayers, changes in tax incentives, etc. The data used in the analysis are 
collected exclusively from the Eurostat website.
4
 The data on the deposited waste 
are published every two years. Each intermediate period was calculated as the 
average of the amount of collected waste of the two adjacent years. 
 
 
5 FACTORS OF CHANGING THE AMOUNT OF WASTE AND CO 2 
EMISSIONS 
 
The equations that explain the first differences in the quantity of deposited waste 
per capita and the CO
2 emissions in the 2005–2012 period for the analysed group 
of EU Member States are presented in Tables 1 and 2. Table 1 shows the impact 
of different factors on deposited waste and CO 2 emissions for the group's 
combined, entire national economies, while Table 2 presents results separately 
for the group-wide economy and households. The results are presented for 
collected waste with or without mineral waste and just for mineral waste. The 
last lines of both tables present the determination coefficient (R
2
), indicating the 
portion of explained variance in the amount of collected waste per capita (and 
CO
2 emissions), and the results of the Durbin-Watson statistic (DW), which 
assesses first-order autoregression in the equations. The explanation for changes 
in the amount of collected waste per inhabitant (and CO 2 emissions) is good: R
2
 
ranges from 36% to 98% and results of the DW statistics are near 2. In the basic 
equation (third column of Table 1) of our model to explain the change in total 
collected waste per capita R
2
 is 95% and the DW statistic is 1.58. 
 
In Table 1 and Table 2 the dependent variables (change in the amount of collected 
waste per capita and in CO 2 emissions) are shown in columns, and the 
independent variables (change of ecological taxes, etc.) that influence the 
dependent variables are shown in rows. Here we can see the regression 
coefficient that shows the influence of each independent variable on a dependent 
variable. Annual time lag of influence is shown in the brackets next to the 
regression coefficients. In the brackets under the regression coefficients are the 
t-values showing the statistical significance of the influence of each explanatory 
variable (change in ecological taxes, etc.) on the corresponding dependent 
variable (change in the amount of collected waste or CO 2 emissions). 
 
From the equations shown in Tables 1 and 2 it can be understood that the impact 
of ecological taxes on the disposal of mineral waste is different than the influence 
of these taxes on the disposal of total waste, while the impact of economic growth 
and eco-investments is similar in both cases. The impact of energy taxes on waste 
disposal in the economy occurs faster than the impact of total ecological taxes on 
the disposal of waste in the economy without the inclusion of mineral waste. In 
this segment the influence of investments in cleaner waste management 
technologies is statistically significant. 
 
 
 
 
 
                                                 
4
 See Eurostat Data, available at http://ec.europa.eu/eurostat/data/database. 

JOURNAL OF COMPARATIVE POLITICS     43 
 
 
 
 
TABLE 1: EQUATION RESULTS EXPLAINING THE CHANGE IN COLLECTED WASTE PER 
CAPITA AND CO
2 EMISSIONS 
 
Source: Own calculations based on data published by Eurostat. 
 
Household waste is influenced by total ecological taxes (there is no data 
indicating the direct tax burden of households for the disposal of waste in this 
segment). Higher taxes reduce the amount of landfilled household waste 
(negative sign in the equation). The impact of economic growth on the disposal 
of household waste is found to be statistically significant through a change in the 
cumulative wage bill (with a positive sign) and by changes in the unemployment 
rate (with the corresponding opposite sign). A higher wage bill (sum of all 
salaries in the economy) and lower unemployment indicate a situation in which 
households increase their quantities of waste, and vice versa. 
 
TABLE 2: EQUATION RESULTS EXPLAINING THE CHANGES IN THE COLLECTED WASTE 
PER CAPITA 
 
Source: Own calculations based on data published by Eurostat. 

JOURNAL OF COMPARATIVE POLITICS     44 
 
 
 
 
6 THE IMPACT OF ENVIRONMENTAL TAXES ON THE AMOUNT OF 
WASTE 
 
Based on the results shown in Tables 1 and 2, we have simulated the impact of 
changing ecological taxation on the amount of deposited waste. The results are 
presented in Table 3. Here we can see that a 1% increase in total environmental 
taxes after one year yields a 0.13% reduction in the amount of waste per 
inhabitant. In the economy and construction industry waste reduction is mainly 
influenced by taxes on the energy used but also by taxes on pollution and on the 
use of natural resources. The impact arrives within the same year. The same is 
true for households, but the lack of direct taxation data limits this research in 
terms of taking into account total ecological taxation. 
 
TABLE 3: IMPACT OF VARIOUS ECOLOGICAL TAXES ON WASTE DISPOSAL 
 
Source: Own calculations based on data published by Eurostat.
 
 
TABLE 4: HOW TAXES ON ENERGY AND ON TRANSPORT INFLUENCE CO
2 EMISSIONS 
 
Source: Own calculations based on data published by Eurostat. 
 
In Table 4, we see that an increase in transport taxes of 1% yields a 0.5% 
reduction in CO
2 emissions, while an increase in taxes on energy of 1% after one 
year yields a 0.13% reduction in CO 2 emissions. The result is not linear and thus 
cannot be extended to any greater scale or percentages. Nonetheless, it is clear 
that ecological transport taxes are more efficient in reducing CO
2
 emissions than 
energy taxes.  
 
 
7 AN EXAMPLE OF THE EFFECTIVENESS OF LANDFILL TAXATION 
 
In certain cases, there are technological and economic opportunities for 
producers and consumers to rapidly and thoroughly adapt behaviour through 
environmental taxes. Such a situation is evident in the tax on the disposal of 
waste at landfills (landfill tax).
5
 Economic subjects can reduce this tax burden by 
shifting waste into recycling, composting or incineration. The effectiveness of the 
landfill tax in four EU Member States (Slovenia, Austria, the Netherlands and 
                                                 
5 
The results of the analysis of the efficiency of carbon tax in reducing energy intensity and 
electricity consumption in the UK showed similar effectiveness (Martin, Preux and Wagner 
2014).
 

JOURNAL OF COMPARATIVE POLITICS     45 
 
 
 
Sweden) is shown in Figures 1 to 4 (European Commission (DG ENV) 2012; 
Ministry of Finance 2015; Government of the Republic of Slovenia 2015). 
 
FIGURE 1: LANDFILL TAX AND SHARE OF LANDFILLED WASTE IN SLOVENIA 
 
Source: Ministry of Finance (2015) and Government of Republic of Slovenia (2015). 
 
FIGURE 2: LANDFILL TAX AND SHARE OF LANDFILLED WASTE IN AUSTRIA 
 
Source: European Commission (DG ENV), Bio Intelligence Service (2012, 60). 
 
FIGURE 3: LANDFILL TAX AND SHARE OF LANDFILLED WASTE IN THE NETHERLANDS 
 
Source: European Commission (DG ENV), Bio Intelligence Service (2012, 61). 
 
 
 
 
 
 
 
 

JOURNAL OF COMPARATIVE POLITICS     46 
 
 
 
 
FIGURE 4: LANDFILL TAX AND SHARE OF LANDFILLED WASTE IN SWEDEN 
 
Source: European Commission (DG ENV), Bio Intelligence Service (2012, 62). 
 
With this visual approach we are limited to an illustration, since the effect of tax 
rates cannot be separated from other influences (especially increased 
regulation). In any case, the increased tax rate is accompanied by a reduction in 
the proportion of deposited waste in the generated waste to the extent that the 
fiscal impact of the tax is significantly reduced. In this case the scope for the 
implementation of the "green reform" (increase in fiscal revenues from 
ecological taxes and the easing of labour taxation) is significantly limited. 
 
 
8 CONCLUSIONS 
 
The production and consumption of various goods often have external negative 
effects (negative externalities or external diseconomies) that are not included in 
prices set in the supply and demand relations. This is a market failure which 
requires a certain correction. One of the possibilities for such correction is the 
introduction of an ecological tax. 
 
Environmental taxes serve to eliminate or reduce pollution of the natural 
environment on the one hand and to generate revenue for the state treasury on 
the other. It is important for the environmental impact of the tax or levy that it 
reduces environmental pollution and that the funds collected represent sources 
for the elimination of the damage incurred, while the fiscal effect of the 
environmental tax allows a reduction of tax rates in other areas such as workers' 
income (green reform). 
 
In our analysis we measured ecological taxes in millions of euros, and not in tax 
rates. In this context, the change in the amount of collected ecological taxes may 
be connected to a change in the tax rate or to a greater or lesser intensity of tax 
enforcement, to changing the tax base, including or excluding taxpayers, 
changing tax incentives, etc. 
 
In the analysis, we divided the impact on the amount of collected waste and CO 2 
emissions among ecological taxation, investments in cleaner technologies, 
economic growth and an institutional framework in 17 EU Member States. 
 

JOURNAL OF COMPARATIVE POLITICS     47 
 
 
 
 
The simulation of the impact of changing ecological taxes on changing the amount 
of collected waste per capita shows that a 1% increase in total environmental 
taxes after one year yields a 0.13% reduction in the amount of waste per 
inhabitant. Ecological taxes obviously have an influence on the reduction of 
pollution, but the existing impact is not great.  
 
In reducing CO
2 emissions the impact of ecological taxes on energy is similar (-
0.13%). However, the impact of ecological taxes on transport is considerably 
higher (-0.5%). 
 
When there are technological and economic opportunities for producers and 
consumers to adapt quickly and thoroughly to environmental taxes, pollution is 
reduced to the extent that the tax is effective from the point of environmental 
protection (the external diseconomy is eliminated), but the fiscal effects are no 
longer large enough to allow green tax reform. An example of this kind is the 
landfill tax. 
 
 
REFERENCES 
 
Ambec, Stefan and Jessica Coria. 2013. “Prices vs quantities with multiple pollutants.” 
Journal of Environmental Economics and Management 66 (1): 123–140. 
Carattini, Stefano, Baranzini, Andrea, Thalmann, Philippe, Varone, Frederic and Frank 
Vӧhringer. 2017. “Green taxes in a post-Paris world: are millions of nays inevitable?” 
Environmental and Resource Economics 68 (1): 97–128. 
Daubanes, Julien and Andre Grimaud. 2010. “Taxation of a polluting non-renewable 
resource in the heterogeneous world.” Environmental and Resource Economics 47 (4): 
567–588. 
Ekins, Paul and Terry Barker. 2001. “Carbon taxes and carbon emissions trading.” Journal 
of Economic Surveys 15 (3): 325–376. 
European Commission (DG ENV), Bio Intelligence Service. 2012. Use of Economic 
Instruments and Waste Management Performances, Final Report, 10 April 2012. 
Eurostat. 2001. Eurostat Data. Available at http://ec.europa.eu/eurostat/data/database. 
Fullerton, Don and Gilbert E. Metcalf. 1997. Environmental Taxes and the Double-Dividend 
Hypothesis: Did You Really Expect Something for Nothing? Cambridge: National Bureau 
of Economic Research. 
Government of Republic of Slovenia. 2015 Osnutek programa ravnanja z odpadki in 
program preprečevanja odpadkov Republike Slovenije. Ljubljana: Government of 
Republic of Slovenia. 
Hettich, Frank. 1998. “Growth effects of a revenue-neutral environmental tax reform.” 
Journal of Economics 67 (3): 287–316. 
Heuson, Clemens. 2010. “Weitzman revisited: Emission standards versus taxes with 
uncertain abatement costs and market power of polluting firms.” Environmental and 
resource economics 47 (3): 349–369. 
Klenert, David, Schwerhoff, Gregor, Edenhofer, Otmar and Linus Mattauch. 2016. 
“Environmental Taxation, Inequality and Engel’s Law: The Double Dividend 
Redistribution.” Environmental Resource Economics 71 (3): 605–624. 
Kneese, Allen V. and Blair T. Bower. 1979. Environmental Quality and Residuals 
Management. Baltimore: John Hopkins University Press for Resources for the Future. 
Kneese, Allen V. and Russell S. Clifford. 1994. Environmental economics. In The New 
Palgrave Dictionary of Economics, volume 2, eds. Durlauf, Steven and Lawrence E. 
Blume. London: Palgrave Macmillan. 
Križanič, Franci, Mencinger, Jože and Vasja Kolšek. 2016. Strokovne podlage za 
preureditev sistema okoljskih dajatev v Republiki Sloveniji (končno poročilo). Ljubljana: 
EIPF, Ekonomski inštitut. 

JOURNAL OF COMPARATIVE POLITICS     48 
 
 
 
Kuokštis, Vytautas. 2017. “Economic Conditions and tax compliance: the mediating effect 
of trust.” Journal of Comparative Politics 10 (2): 55–69. 
Lanz, Bruno, Wurlod, Jyles-Daniel, Panzone Luca and Timothy Swanson. 2018. “The 
behavioural effect of Pigovian regulation: Evidence from a field experiment” Journal 
of Environmental Economics and Management 87: 190–205. 
Martin, Ralf, de Preux, Laure and Ulrich J. Wagner. 2014. “The impact of carbon tax on 
manufacturing: evidence from microdata.” Journal of Public Economics 117(C): 1–14. 
Ministry of Finance. 2015. Okoljska dajatev na onesnaževanje zaradi odlaganja odpadkov 
na odlagališčih. Ljubljana: Ministry of Finance. 
Pigou, Arthur Cecil. 1920. The Economics of Welfare. London: Macmillan. 
Romer, Paul M. 1986. “Increasing Returns and Long Run Growth.” Journal of Political 
Economy 94 (5): 1002–1037.  
Romer, Paul M. 1990. “Endogenous Technological Change.” Journal of Political Economy 
98 (5): 71–102. 
Samuelson, Paul A. 1954. “The pure theory of public expenditure.” Review of Economics 
and statistics 36 (4): 387–389. 
Soretz, Susanne. 2007. “Efficient Dynamic Pollution Taxation in an Uncertain 
Environment.” Environmental and Resource Economics 36 (1): 57–84. 
Stavins, Robert N. 1996. “Correlated Uncertainty and Policy Instrument Choice.” Journal 
of Environmental Economics and Management 30 (2): 218–232. 
Weitzman, Martin L. 1974. “Prices vs quantities.” Review of Economics Studies 41 (4): 
477–491. 
 
 
 
ACKNOWLEDGMENT 
The authors acknowledge the financial support from the Slovenian Research 
Agency (research core funding No. P5-0287-0541-18 and P5-0027-0585).