Size of government and willingness-to-pay for environmental policy: Evidence from a cross-country survey

Abstract

Citizen support is an important precursor to climate change mitigation polices. Public opinion can shape public policy and vice versa. This paper uses the 2010 International Social Survey Programme (ISSP) Environment Module to investigate cross-national differences in support for climate policy. We introduce size of government, measured by government revenues as a share of GDP, as a new country-level factor. Our sample includes 31,511 responses from 33 countries. We use multilevel models to estimate the relationship between country-level factors and environmental policy support, conditional on a series of individual factors. Increasing the size of government by one standard deviation reduces support for environmental policy by 0.13 points on a 5-point scale. For comparison, a one standard deviation increase in GDP per capita leads to a 0.24 increase in support and a one standard deviation increase in air pollution leads to a 0.13 point increase. The implication for environmental policy is that high tax countries have an aversion to price and tax increases aimed at protecting the environment. We conclude that use of taxes for environmental policy must include clear expectations for how revenues will be recycled or how other taxes will be lowered if they are to gain widespread support.