Jaroslaw Kantorowicz, Marion Collewet, Matthew Digiuseppe, and Hendrik Vrijburg are examining ways to persuade voters to support financing green investments. The transition to a green economy can be an expensive prospect requiring substantial investments as several technologies that support it are still maturing. As government expenses increase, policymakers face the choice of raising taxes or cutting spending. Neither option is particularly popular politically when it comes to getting re-elected.
The authors conducted a survey to gain a better understanding of voters’ preferences for financing green investments. Participants in Italy and Netherlands are asked to select the most suitable method of financing from government debt, taxes or reduced public spending in other areas. Both countries showed greater support for financing green investments through public debt rather than broad-based taxes. Borrowing allows the government to pass on the burden of paying for investments to future generations. However, greater awareness for the well-being of future generations also correlated with reducing dependence on current debt in survey responses. Respondents also expressed support for targeted wealth or carbon taxes.
Public communication on cost of investment, scale and future benefits can be significant to influence preferences of voters regarding investments into green economy. The article also advocates that international cooperation makes implementation easier in the face of high fiscal mobility in the two countries that were surveyed. The latter is particularly crucial as countries with easy access to affordable credit can lead the way in financing green investment and provide financial support to others who do not enjoy the same financial flexibility.
How to finance green investments? The role of public debt (sciencedirectassets.com)
