Consumption-based carbon emissions, trade, and globalization: an empirical study of Bolivia.

Abstract

The consequences of global trade on carbon dioxide emissions have been mainly investigated in several empirical papers; however, the consumption-based carbon emissions adjusted for international trade have been lacking in the literature. This empirical research seeks to address this gap by using consumption-based carbon emissions adjusted for trade in the case of Bolivia. Research over the years shows that Bolivia has had a consistent negative trade deficit which suggests that there might be a rise in consumption-based emission in this area in the present and the future. It also indicates that considerable emissions are attributable to the consumption of commodities and services transferred to Bolivia, which is beyond its control. Many studies, however, have delved into the production-based carbon emission for Bolivia. However, the consumption-based carbon emission adjusted for international trade has been missing in the case of Bolivia. Meanwhile, failure to recognize these emissions related to international trade produces an incomplete picture of the emissions triggers and the effectiveness of action to lessen emissions in this area. Hence, this study attempts to fill the gap. The impact of exports and imports are analyzed separately for 1970 to 2018. The empirical analysis confirms a negative effect of exports and GDP on consumption-based carbon emissions. In comparison, imports and globalization demonstrate a favorable impact on consumption-based carbon emissions and show their statistical significance. This study suggests that the Bolivia government should be cautious on policies targeted at increasing growth as this could be harmful to the sustainability of the environment.