Research Paper: "SO2 and Trade, Technique and Composition Effects"

A new research paper looking at the role of trade, technique and composition effects on the fall in world-wide SO2 emissions between 1990 and 2000.

The key is the role of technological advances being sufficient to offset the scale effect from China and other rapidly growing countries.

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"Trade, Technique and Composition Effects: What is Behind the Fall in World-Wide SO2 Emissions 1990-2000?"
FEEM Working Paper No. 93.2007


Contact: JEAN-MARIE GRETHER
University of Neuchatel - Institute for Economic
and Regional Research (IRER)
Email: Jean-Marie.Grether@unine.ch
Auth-Page: http://ssrn.com/author=75792

Co-Author: NICOLE A. MATHYS
University of Lausanne
Email: Nicole.Mathys@unil.ch
Auth-Page: http://ssrn.com/author=677332

Co-Author: JAIME DE MELO
University of Geneva - Department of Political
Economics, Centre for Economic Policy Research
(CEPR), World Bank
Email: demelo@ecopo.unige.ch
Auth-Page: http://ssrn.com/author=36893

Full Text: http://ssrn.com/abstract=1018444

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.

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