Working Paper: CEPR ID: DP6522
Authors: Jaime de Melo; Jean-Marie Grether; Nicole Andra Mathys
Abstract: Combining unique data bases on emissions with sectoral output and employment data, we study the sources of the fall in world-wide SO2 emissions and estimate the impact of trade on emissions. Contrarily to concerns raised by environmentalists, an emission-decomposition exercise shows that scale effects are dominated by technique effects working towards a reduction in emissions. A second exercise comparing the actual trade situation with an autarky benchmark estimates that trade, by allowing clean countries to become net importers of emissions, leads to a 10% increase in world emissions with respect to autarky in 1990, a figure that shrinks to 3.5% in 2000. Additionally, back-of-the-envelope calculations suggest that emissions related to transport are of smaller magnitude, roughly 3% in both periods. In a third exercise, we use linear programming to simulate extreme situations where world emissions are either maximal or minimal. It turns out that effective emissions correspond to a 90% reduction with respect to the worst case, but that another 80% reduction could be reached if emissions were minimal.
Keywords: decomposition; embodied emissions in trade; environment; growth; trade; transport
JEL Codes: F11; Q56
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Technique effect (C90) | Lower SO2 emissions (Q52) |
| Increase in manufacturing activity (L60) | Lower SO2 emissions (Q52) |
| Trade (F19) | Increase in global SO2 emissions (F64) |
| Cleaner production techniques (Q55) | Reduction in emission intensity (Q52) |
| Trade patterns shifting production (F12) | Higher emission intensities (L94) |