Carbon Taxation as An Instrument to Promote Wildfire Prevention and Avoid Biodiversity Loss in Portugal: An Order of Magnitude Analysis

Abstract

Climate change is one of the main challenges of the current century. Emissions taxes are one of the proposed ways to help in addressing this issue. In this sense, Portugal has introduced an Addition Tax on Carbon Emissions through Law N. 82-D/2014. One of the most notorious impacts of climate change in the country is the wildfires increasing in frequency and intensity. Forests provide various ecosystem services not valued by traditional markets, such as carbon sequestration. Recently, Portugal has created new environmental policies that deal with fire prevention and biodiversity conservation through payment for ecosystem services schemes. In this context, the objective of this work was to perform an order of magnitude analysis of the revenue from the Addition Tax on Carbon Emissions (Law N. 82-D/2014) and contrast it with the investment costs of RCM N. 121/2019 (Payment for Ecosystem Services) and of RCM N. 59/2017 (Prescribed Burning Program). The results indicated that the Addition Tax revenue was much greater than the costs of the other two policies combined, even if expanding the use of prescribed burning in the country. This suggested that these policies can work synergistically, as development agendas recommend, such as the Sustainable Development Goals. This analysis framework might be helpful for other countries, especially in the Mediterranean Basin.