Date of Award

Spring 5-18-2020

Document Type

Honors Thesis


Political Science

First Advisor

Mandie Weinandt

Second Advisor

Sebastian Wai

Third Advisor

Shane Nordyke


Carbon Tax, Carbon Leakage, Amplified Behavioral Response

Subject Categories

Econometrics | Environmental Policy


British Columbia (BC) implemented a carbon tax in 2008 at the rate of ten Canadian dollars (CAD) per metric ton of carbon dioxide equivalents (CO2e). In April of 2019, the tax was set at a rate of CAD 40 per metric ton of CO2e with a dual mandate to reduce fuel consumption while not contracting economic output. This paper attempts to estimate the effect of British Columbia’s carbon tax on per capita gasoline consumption using panel data regression. To assess the empirical evidence, provincial-level monthly data from ten Canadian provinces was collected and analyzed over the period 1991 to 2018. Results from this analysis suggest that a five-cent increase in the carbon tax was associated with a 5 to 9.3 percent reduction in gasoline consumption. In addition, the models indicated there to be an amplified behavioral response to the tax in the years immediately following its implementation. Evidence was also found suggesting the presence of carbon leakage, however, the effect leakage had on the carbon tax’s effect could not be determined.



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