Eco-Fiscal Tools and Municipal Finance: Current Practices and Opportunities
The growing climate crisis continues to pose threats to communities across Canada and around the world from forest fires, flooding, and more. Although national and provincial governments have reduced their efforts to address climate change, municipalities are playing an increasingly important role through the use of eco-fiscal tools. These tools, which include taxes, fees, and charges, influence behaviour in ways that impact the environment.
In a new paper for the Institute on Municipal Finance and Governance (IMFG), Jean-Philippe Meloche and Fanny Tremblay-Racicot explain the advantages of eco-fiscal tools and explore the range of such mechanisms implemented by various Canadian municipalities. They argue that fiscal tools, such as water charges, waste collection fees, and congestion pricing, are not only a source of revenue for municipalities, but also a means to incentivize climate-efficient behaviour. The authors conclude by proposing innovative eco-fiscal tools that could be implemented by municipalities in the future.