Extreme Inequality and Carbon Footprint of Spanish Households

Abstract

Palma’s papers (Development and Change 42:87–153, 2011, Development and Change 45:1416–1448, 2014) have shown that in most countries exist extreme inequalities in income distribution. This extreme inequality occurs because higher income population appropriates a significant part of income previously received by lower income groups without affecting middle-income group, which is relatively stable. This fact makes the gap between rich and poor wider than ever. In this chapter, we propose a measure that allows us to identify the impact that inequality in income distribution has on carbon footprint of households’ consumption. Through interdecile ratio 10/1–4 of the households’ footprint, it is assessed how social unsustainability (associated with the extreme inequality of income, which is transferred through the consumer spending) generates greater environmental unsustainability. We use a multi-regional input–output model to calculate the carbon footprint associated with households’ consumption according to different levels of income, from the highest income level to those who are below poverty line and at risk of social exclusion. An empirical application is carried out for the carbon footprint of Spanish households from 2006 to 2013. This period allows us to assess further the impact of the financial and economic crisis started in 2008. Finally, using a regression analysis, we evaluate how changes in domestic and imported household consumption and changes in consumption inequalities (measured through Gini index and Palma ratio) determine changes in household carbon footprint considering the different standard consumption units for the period 2006–2013. The databases used are the World Input–Output Database and Spanish Household Budget Survey.