A Multi-Actor Multi Criteria Analysis of Carbon Tax Design:Case Study of Peru

Abstract: Carbon taxes have gained popularity during the last decade, but still very few developing countries have adopted the policy. A carbon tax could prove fruitful in improving Peru’s Nationally Determined Contributions, declared during the COP21 in Paris. It could also help them in pursuing other objectives such as a membership in the OECD and several domestic goals set by the government. The study applies a Multi-Actor Multi Criteria Analysis (MAMCA) to gain understanding of which carbon tax attributes are considered desirable by stakeholders in Peru. In doing so, their priorities were established which can be used to determine the optimal carbon tax design for Peru. The MAMCA is a method that uses the opinions of stakeholders to evaluate different policy alternatives. To collect information regarding the opinions of stakeholders interviews were made along with an online survey. The study found that the overall preference of the stakeholders resulted in a high and extensive carbon tax or no carbon tax at all. However, when examining the results more closely, the Basic and Medium were better suited for the Peruvian context. The study also found that a carbon tax implementation would not be feasible without revenue recycling. The acceptance of the population depends very much on the design of the carbon tax and how the revenues would be reinvested.