Affluence and emission tradeoffs: evidence from Indonesian households' carbon footprint

This study estimates Indonesian households’ carbon emissions that are attributed to their expenditures in 2005 and 2009 to analyze the pattern, distribution and drivers of their carbon footprint. Employing an input-output-emission-expenditure framework, the authors find a significant difference in household carbon emissions between different affluence levels, regions and educational levels. They also find that, while many household characteristics influence emissions, total expenditure is by far the most important determinant of household emissions, both across households and over time. Consequently, emissions inequality is very similar to expenditure inequality across households. The decomposition analysis confirms that changes in emissions are predominantly due to rising expenditures between the two periods, while expenditure elasticities analysis suggests that the rise in household emissions is mainly caused by the overall rise in total household expenditure, and not by shifting consumption shares among consumption categories. The paper discusses policy options for Indonesia to reduce this very strong expenditure–emissions link.