Carbon Dioxide Emissions and Economic Growth: An Assessment Based on Production and Consumption Emission Inventories

Journal article by Octavio Fernández-Amador, Joseph F. Francois, Doris A. Oberdabernig and Patrick Tomberger in Ecological Economics, Volume 135, May 2017, pp 269–279

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 footprints 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.