So far there have only been scattered analyses of distributional effects of environmental policies and their social compatibility in Germany. Moreover, these analyses often concentrate burdens for incomes and effects on employment that result from environmental charges, e.g.. In the public discourse, the impression prevails that environmental measures lead to additional burdens and undesirable distributional effects. However, this narrow perspective does not reflect possible positive distributional effects. It overlooks that environmental policies do not just have direct income effects but may also have impacts on other levels of distributional effects. Environmental policies may, for example, result in positive environmental or health impacts or positive employment effects. Hence, there is a need of a comprehensive analysis of distributional effects of environmental instruments that also take into account the benefits of environmental policies.

The project will develop methodological approaches towards analyzing distributional effects of environmental policies that considers qualitative as well as quantitative income and employment effects. For this purpose a micro-simulation (IZAΨMOD) will be developed further and a manual for analyzing distributional effects will be elaborated that can be used in the conduction of policy impact assessments. These methods are applied to specific environmental instruments. Moreover, options will be developed how to reduce undesirable distributional effects.