Abstract
In force since 1994, the North American Free Trade Agreement (NAFTA) is still the most comprehensive agreement ever developed, conforming to the world’s largest trade market. However, the environmental impacts cannot be neglected, particularly greenhouse gas emissions. The environmental Kuznets curve (EKC) hypothesis is revisited, studying Canada, Mexico, and the U.S.A. in relation to carbon dioxide (CO2) emissions, gross domestic product (GDP), energy, and exergy consumption. Ordinary least squares, vector autoregression, and Granger causality tests are conducted. Additionally, exergy indicators and the human development index (HDI) are proposed. Results for Mexico and the U.S.A. describe similar and interesting outcomes. In the search of the environmental Kuznets curve (EKC), the EKC hypothesis is confirmed for Mexico and the U.S.A. However, for Canada, the EKC hypothesis does not stand. The Granger causality test displays the existence of a uni-directional causality running from CO2 emissions to economic growth; a similar behavior was observed while testing the for the exergetic control variables. The most intriguing Granger causal results are those from the U.S.A. A bidirectional relation was observed between exergy intensity and CO2 emissions. Moreover, the EKC curve was plotted by both variables. Furthermore, Mexico’s outcomes reveal that increasing renewable exergy share will decrease CO2 emissions. On the contrary, increasing HDI will grow CO2 emissions. Policy implications arise for NAFTA countries to minimize CO2 emissions by means of the growing renewable energy share. Exergy tools offer an appealing insight into energetic and environmental strategies.
Highlights
In force since 1994, the North American Free Trade Agreement (NAFTA) is still the most comprehensive agreement ever developed, conforming to the world’s largest trade market for goods and services
An energy and exergy analysis was developed to construct a dataset of a selected panel of developed and developing countries previously reported by Arango and colleagues [30]; a subset of data was extracted and extended to properly analyze NAFTA countries, and utilize some of them as control variables
The most interesting curve is depicted by CO2 emissions; a growing trend but mostly steady in the long run, rather erratic for the U.S.A
Summary
In force since 1994, the North American Free Trade Agreement (NAFTA) is still the most comprehensive agreement ever developed, conforming to the world’s largest trade market for goods and services. Due to its inherent complexity, the agreement needs to evolve, and since 2017 efforts to improve it have taken place Those culminated in a new version of the agreement, currently not yet implemented, in a new trilateral United States–Mexico–Canada trade agreement (USMCA). Future implications to the NAFTA or USMCA, are expected to modify specific industrial activities such as the automobile, steel, aluminum, textile, and apparel industries, as well as influence labor and updating financial services, among other topics. This new agreement brings the opportunity to improve the trade relationship between Mexico and Canada to face the challenges imposed by the U.S.A. during these negotiations [1]. With rich reserves in fossil fuels, like oil, gas, and coal, NAFTA countries’ economies during the past 26 years have been running on fossil fuels
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