The Environmental Kuznets Curve for CO 2 Emissions and the Impact of International Climate Agreements
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1 The Envronmenal Kuznes Curve for CO 2 Emssons and he Impac of Inernaonal Clmae Agreemens Ncole Grunewald Deparmen of Economcs, Unversy of Göngen, Germany
2 1. Movaon 2. Leraure Overvew 3. Theorecal Framework 4. Emprcal Model and Man Resuls 5. Conclusons 2
3 Emprcally esed he drvng facors of CO 2 emssons among 123 counres grouped by ncome Invesgaed a possble non-lneares beween CO 2 emssons and ncome Looked ou for possble effecs from Kyoo Proocol and s Clean Developmen Mechansm (CDM) Found consanly ncreasng CO 2 emssons wh ncome 3
4 1. Movaon Why esng he Envronmenal Kuznes Curve (EKC ) for CO 2 emssons? Source: Leb (2003), 2. Kyoo Proocol ams o reduce greenhouse gas (GHG) emssons by 5.3% compared o her levels n
5 1. Movaon Wha are he poenal sources of he EKC? Demand for envronmenal qualy Technologcal progress Subsuon beween polluans Srucural change Mgraon of dry ndusres 5
6 1. Movaon Fgure 1: Annual CO 2 Emssons Carbon Doxde (k) All Counres year Carbon Doxde (k) Carbon Doxde (k) Hgh Income year Lower-Mddle Income year Carbon Doxde (k) Carbon Doxde (k) Upper-Mddle Income year Low Income year Source: Auhor s Esmaons. 6
7 1. Movaon There are dfferences n he exhaus of CO 2 emssons beween hgh- and low-ncome counres Hence, he drvng forces of CO 2 emssons dffer as well Therefore mgaon effors should ake hose dfferences no accoun 7
8 2. Leraure Overvew Auhors Turnng Pons EKC Counres Shafk and Bandyopasdhyay (1992) $7 Mllon No Holz-Eakn and Selden (1995) $35428 (level) - $8 Mllon (logs) Yes 108 Tucker (1995) Decreasng over Tme In 11 Years 137 Sengupa (1996) $8740 Yes 16 Developed and Developng Cole Rayner and Baes (1997) $25100 (levels) - $62700 (logs) Yes 7 World Regons Moomav and Unruh (1997) $12813 N-Shaped 16 Developed Robers and Grmes 1997) $ $10000 Yes, afer he 70s Developed and Developng Schmalensee, Soker and Judson (1998) whn sample Yes 141 Agras and Chapman (1999) $13630 No 34 Galeo and Lanza (1999) $ $21757 Yes 110 Panayoou, Peerson and Sachs (2000) $ $40906 ( ) Yes for Developed 17 Developed Heernk e al. (2001) $68871 Yes Roca e al. (2001) GDP non sg No Span Baocch and d Falco (2001) GDP non sg No 160 Bengochea e al. (2001) $ $73170 For some Counres UE Djkgraaf and Vollebergh (2001) $20647 Yes 5 Rch Counres 24 OECD Marínez-Zarzoso and Bengochea-Morancho (2004) $ $18364 N-Shaped 22 OECD Source: Marínez-Zarzoso e al (2007), p.508, f. 8
9 3. Theorecal Framework Ehrlch and Holdren (1970) developed he IPAT model: Envronmenal Impac = Populaon + Affluence + Technology Dez and Rosa (1997) reformulaed he model no a sochasc equaon STRIPAT: I = αp b A c T The varable I s he envronmenal mpac The exponens b, c and d are he coeffcens whch wll be esmaed by he model (hey laer pon ou he mpac of each varable n he model) The error erm, whch represens all he unexplaned varance of he model, s denoed by e Fnally sands for he observed ndvdual and ndcaes ha he quanes of A, P, T and e vary across ndvduals d ε 9
10 3. Theorecal Framework York e al. (2003) exended he model and nroduced T as anoher esmaor log I = α + b(log P ) + c(log A ) + d(logt ) + ε They furher esed he use of dummy varables and he nroducon of non-lneares Therefore he paper represens he framework for our analyss Cramer (1998) and Cramer and Cheney (2000) esed he elascy of populaon Cole and Neumeyer (2004) nroduced he percenage of urban populaon n he model and dvded beween developng and developed counres Fnally Marínez-Zarzoso (2008) analysed he model by groupng counres over ncome 10
11 4. Emp. Model and Resuls We apply a panel wh daa of annual CO 2 emssons n k and GDP per capa of 123 counres from 1975 unl 2004 The daa s from he World Bank WDI 2008 daa CD, he UNFCCC and he UNEP Rsoe Cener To measure he effec form Kyoo Proocol we creaed wo varables: KyooOb, whch s a dummy and urns o one when he counry dd rafy he Proocol and faces emsson reducon oblgaons CDM, whch represens he annual number of all CDM projecs appled 11
12 4. Emp. Model and Resuls Apply a dynamc and a sac approach: ln CO2, + β + β 4 8 = α + β ln GDP, KyooOb, 1 + β + ln 5 β Pop, ln GDP 9 CDM + 2,, β + 2 β + µ ln 6 PopUrb ln + λ EI, + ν +,, β + 7 β ln 3 ln IA, PopUrb 2, Energy Effcency EI (GDP per un of energy use n consan 2005 PPP US Dollars per kg of ol equvalen) and Indusral Acvy AI (share of he manufacurng ndusry n oal GDP) represen he echnologcal componens To measure non-lneares we nroduce squared erms of GDP and he percenage of urban populaon Furher we conrol for he effec of he economes n ranson EIT by nroducng a dummy 12
13 4. Emp. Model and Resuls Table 1: Resuls from he Sac Model FGLS PSAR1 OLS RE FE RE FGLS AR1 FGLS he he lnpop 1.07*** 1.05*** 1.24*** 1.05*** 1.07*** 1.06*** 1.08*** lnpopurb 1.65*** 2.28*** 2.61*** 2.27*** 1.78*** 2.08*** 1.64*** lnpopurb *** -0.27*** -0.34*** *** -0.27*** -0.20*** lngdp 4.60*** 2.96*** 2.53*** 2.97*** 3.90*** 4.76*** 4.00*** lngdp *** -0.10*** -0.09*** *** -0.20*** -0.16*** lnei *** -0.70*** *** -1.16*** -1.04*** lnia KyooOb -0.14*** KyooOb KyooOb Year D. sg no sg sg sg sg sg CDM ** EIT -0.07** *** Consan *** *** *** *** *** *** *** Observaons R-squared Counres Noe: Dependen varable s CO2 (k) and *, **, *** denoe sgnfcance a he 10, 5 and 1% level, respecvely. Source: Auhor s Esmaons. 13
14 4. Emp. Model and Resuls Table 2: Resuls from he Sac Model Grouped by Income FGLS he & PSAR1 All Hgh Upper Mddle Lower Mddle Low lnpop 1.079*** 1.029*** 1.094*** 1.175*** 1.207*** lnpopurb 1.636*** *** 4.432*** *** lnpopurb *** 0.13*** *** *** lngdp 3.999*** * 2.706*** lngdp *** *** * lnei *** *** *** *** *** lnia *** *** CDM EIT *** * *** KyooOb KyooOb Tme Dum. sg sg sg sg sg Consan *** ** *** ** *** Observaons No. Counres Noe: Dependen varable s CO2 (k) and *, **, *** denoe sgnfcance a he 10, 5 and 1% level, respecvely. Source: Auhor s Esmaons. 14
15 4. Emp. Model and Resuls Table 3: Resuls from he Dynamc Model Grouped by Income 2SLS RE IV All Hgh Upper-mddle Lower-mddle Low lnco *** 0.953*** 0.838*** 0.881*** 0.958*** lnpop 0.072*** 0.046** 0.171*** 0.13*** 0.059*** lnpopurb lnpopurb ** * lngdp 0.385*** ** lngdp *** ** lnei *** ** *** *** lnia ** KyooOb KyooOb CDM EIT *** *** Tme Dummes sg Sg no sg no sg sg Consan *** *** ** Observaons No. Counres Noe: Dependen varable s CO2 (k) and *, **, *** denoe sgnfcance a he 10, 5 and 1% level, respecvely. The Source: Envronmenal Auhor s Esmaons. Kuznes Curve for Carbon Doxde Emssons and he Impac of Inernaonal Clmae Agreemens 15
16 4. Emp. Model and Resuls Resuls: The mpac of populaon s no uny (1.08) and has s sronges mpac among low ncome counres (1.2) The varable Urbanzaon conrbues posvely o emssons, bu leads o a declne n emssons among hgh ncome counres (-0.93) A rse n GDP leads o rse n emssons and shows s sronges mpac among low ncome counres (2.71) There was evdence for a non-lnear relaonshp beween GDP and CO 2 emssons bu here was no EKC ype relaonshp 16
17 4. Emp. Model and Resuls Fgure 2: Scaer Plo CO 2 and Income grouped by Income (S. Model) Hgh Income Upper-Mddle Income Carbon Doxde (log) Carbon Doxde (log) GDP (log) GDP (log) Fed values Fed values Fed values Fed values Carbon Doxde (log) GDP (log) Fed values Lower Mddle Income Fed values Carbon Doxde (log) GDP (log) Fed values Low Income Fed values Source: Auhor s Esmaons. 17
18 4. Emp. Model and Resuls Resuls connued: An ncrease n Energy Effcency leads o a declne n CO 2 emssons and has he sronges mpac among upper-mddle ncome (-1.13) and lower-mddle counres Hence n mddle ncome counres are poenal emsson reducons n he secor of energy effcency Indusral Acvy s no sgnfcan when ncludng all counres, bu can conrbue o declnng emssons among hgh and upper-mddle ncome counres Afer all, here s no evdence ha he Kyoo varables KyooOb and CDM do conrbue o emsson reducons 18
19 4. Concluson We could no proof a Kuznes-ype relaonshp beween ncome and CO 2, herefore emssons are consanly on he rse So far here s now evdence for a declne n CO 2 emssons drven by he Kyoo Proocol Sll, here s a hgh poenal o reduce emssons n mddle ncome counres by nroducng new echnologes The CDM offers a possble ool o ransfer echnology Furher projecs on urbanzaon could conrbue o a declne n emssons 19
20 Thank you for your aenon! 20
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