Growth, Carbon Dioxide Emissions, Climate and Wellbeing

Abstract

The five essays of this dissertation combine topics from development and environmental economics. All essays treat the overall topic on how to influence and regulate the production of CO2 emissions. The green house gas CO2 is one of the biggest externalities from human development during the last century. The essays give insight on how changes in local climate conditions affect human wellbeing and what are the potential monetary loses from a rise in average temperature in Latin America. They further analyze the major drivers of CO2 emissions at the household as well as national level and assess how current international climate policy has contributed to reduce CO2 emissions. The last essay gives an overview on how unequal emissions are globally distributed and what will be the future distribution of CO2 emissions when taking different policy scenarios into account. The first essay analyzes how changes in local climatic conditions affect the level of welfare in Latin America. Self reported wellbeing levels are used as a proxy for individual welfare. Subjective wellbeing does not only account for changes in individual income but also for changes in other areas, which determine overall welfare, such as the access to health care or schooling. The study finds that a temperature up to 22 degrees Celsius and rainfall up to 247mm are beneficial for human wellbeing. Higher temperatures or rainfall go in line with welfare loses. A global average warming of 2 degrees Celsius would go in line with welfare loses in Latin America. The second essay analyzes household emissions from consumption, the so-called carbon footprint, in India. The study focuses on the effect of changes in income and the socio- economic composition of the household. A higher household income leads to higher consumption but at the same time the goods, which are consumed change towards lower carbon intensive goods. Still the change in the consumption pattern does not offset the higher carbon footprint due to overall higher consumption rates with rising income. The third essay evaluates how current international climate policy did influence CO2 emissions. Countries with obligations from the Kyoto Protocol did indeed emit on average 6.5% less CO2 than comparable countries with similar income and population growth but without any commitments from Kyoto Protocol. The fourth essay analyzes the main determinant of rising CO2 emissions, namely income. The focus is not on changes in income but on changes in the income distribution within a country and its effect on CO2 emissions. The relationship between carbon dioxide emissions per capita and income inequality is U-shaped: for countries characterized by high income inequality, reductions in income inequality are associated with lower per capita emissions. For less unequal societies, reductions in income inequality are associated with increases in carbon emissions per capita. The fifth essay studies the global distribution of per capita CO2 emissions. The focus is on the effect the energy mix and the sectoral composition have on emission inequality. The decline of heavy manufacturing in OECD countries and the rise of using coal in non- OECD countries led to a decline of global inequality in per capita CO2 emissions. In the long run there is the possibility that emission inequality will rise again. Each essay contributes to the literature in its specific field. They analyze how economic activities (mostly consumption) influence CO2 emissions, which are considered responsible for changes in climatic conditions. At the same time those changes in climatic conditions affect human wellbeing and go in line with monetary loses. National policies such as redistributive policies can have an influence on national CO2 emissions in both directions and have to be well planned. Policies to influence consumption habits towards less CO2 intensive goods could be efficient to regulate CO2 emissions but might only be feasible in richer countries. International climate policies have shown an impact on CO2 emissions among participating countries. International policies can help to get national policies to reduce CO2 emissions on the way.