Carbon emissions and income: The effects of growth and distribution

The growing consensus is that human activity influences global climate. This dissertation investigates issues of growth and distribution of global carbon dioxide emissions. A primary obstacle to a global climate change treaty is disagreement over how to share the burdens of emission reductions. First, this dissertation analyzes the distribution of historic global emissions distributions across countries. The primary analytical tool is the group decomposition by income of the Gini index. Results are: (i) overall inequality in the international distribution of emissions is high, but has declined modestly, 1960-90, (ii) groups of countries defined by per capita income consistently account for half of overall inequality, providing support for policy distinctions by income, and (iii) a future emissions allocation policy that shifts gradually from emphasizing "grandfathered" emission entitlements toward entitlements reflecting population would lower inequality while minimizing economic disruption. Second, this thesis examines the sources of emissions that contribute to overall inequality of emissions. This part of the analysis uses the Gini index to measure emissions inequality by source. Results show emissions from natural gas are distributed most unequally, and those from coal least unequally. Hence, policies that reduce emissions by fuel source present a dilemma. Reducing the highest-emitting fuel (coal) intensifies inequality, but reducing inequality calls for slashing use of the cleanest fuel (natural gas). One solution strategically combines reductions of two or more sources simultaneously to avoid increasing global inequality. Without a plan for sharing international burdens of emissions reductions, the world would follow a business-as-usual course. Chapters 4-5 use an econometric model to forecast the levels of carbon emissions by 2100 if the world were to follow this course. Not surprisingly, global emissions will continue rising. As incomes rise, marginal propensity to emit diminishes, however, faster economic growth generates higher, not lower, emissions. Even without a burden-sharing agreement, global emissions inequality will continue declining slowly as developing countries' shares of global emissions expand. Finally, the projections from this method are robust to substantial changes in the sample and the data.