Working Paper: CEPR ID: DP11841
Authors: Octavio Fernández-Amador; Joseph François; Doris Oberdabernig; Patrick Tomberger
Abstract: Working with a new dataset on comparable global CO2 production and consumption inventories spanning the 1997–2011 period, we investigate the relationship between real gross domestic product (GDP) per capita and CO2 emissions per capita associated with both production and consumption activities. By including linkages between production-based emissions in one country and final consumption in another (via cross-border value chains), we focus on the entire carbon chain. We estimate polynomial and threshold models, accounting for reverse causality and identification problems. We find that the income-elasticity for both inventories is regime-dependent and reflects small carbon efficiency gains from economic development. Carbon foot- prints show larger income-elasticities, while national policy instruments targeting production can clearly be circumvented by carbon embodied in intermediate trade. This implies problems of environmental sustainability that may require consumption-based policy instruments.
Keywords: Economic Development; CO2 Emissions; Production-Based Inventories; Carbon Footprint; Income Elasticity; Environmental Kuznets Curve; Threshold Estimation
JEL Codes: F18; F64; O44; Q54; Q56
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| GDP per capita (O49) | CO2 emissions per capita (P18) |
| Income elasticity for consumption-based CO2 emissions (D12) | CO2 emissions per capita (P18) |
| Income elasticity for production-based CO2 emissions (E23) | CO2 emissions per capita (P18) |
| Income per capita (D31) | Elasticity of CO2 emissions with respect to income (H31) |
| Economic growth (O49) | CO2 emissions per capita (P18) |
| Existing regulations (L51) | CO2 emissions from consumption patterns (F62) |