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The modest environmental relief resulting from the transition to a service economy

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  • Henriques, Sofia Teives
  • Kander, Astrid

Abstract

A service transition is supposed to lead to the decline of energy intensity (energy/GDP). We argue that this interpretation is overly optimistic because the shift to a service economy is somewhat of an illusion in terms of real production. Several recent studies of structural effects on energy intensity have made the error of using sector shares in current prices, combined with GDP in constant prices, which is inconsistent and ignores the different behaviour of prices across sectors. We use the more correct method of sector shares in constant prices, and make an attempt to single out the effect from the real service transition by using two complementary methods: shift share analyses in current and constant prices, and Logarithmic Mean Divisia Index (LMDI) for 10 developed and 3 emerging economies. A service transition is rather modest in real terms. The major driver of the decline in energy intensity rests within the manufacturing sector. Meanwhile, the transition to a service sector had a small downward impact on energy intensity in 7 of the developed countries (and no impact in the others). For emerging economies like Brazil, Mexico and India, it is the residential sector that drives energy intensity down because of the declining share of this sector as the formal economy grows, and as a consequence of switching to more efficient fuels.

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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 70 (2010)
Issue (Month): 2 (December)
Pages: 271-282

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Handle: RePEc:eee:ecolec:v:70:y:2010:i:2:p:271-282

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Web page: http://www.elsevier.com/locate/ecolecon

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Keywords: Structural change Environmental Kuznets curve Service transition Energy intensity Baumol's disease Decomposition;

References

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  1. Choi, Ki-Hong & Ang, B. W., 2003. "Decomposition of aggregate energy intensity changes in two measures: ratio and difference," Energy Economics, Elsevier, vol. 25(6), pages 615-624, November.
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  11. Schipper, Lee & Figueroa, Maria J. & Price, Lynn & Espey, Molly, 1993. "Mind the Gap: The Vicious Circle of Measuring Automobile Fuel Use," University of California Transportation Center, Working Papers qt06n8g4x9, University of California Transportation Center.
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  1. Recent Papers of Interest in Ecological Economics:
    by David Stern in Stochastic Trend on 2010-11-16 09:58:00
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Cited by:
  1. Stern, David, 2014. "Rethinking the Emissions-Income Relationship in Terms of Growth Rates," 2014 Conference (58th), February 4-7, 2014, Port Maquarie, Australia 165877, Australian Agricultural and Resource Economics Society.
  2. Gross, Christian, 2012. "Explaining the (non-) causality between energy and economic growth in the U.S.—A multivariate sectoral analysis," Energy Economics, Elsevier, vol. 34(2), pages 489-499.
  3. Stephan B. Bruns & Christian Gross, 2012. "Can Declining Energy Intensity Mitigate Climate Change? Decomposition and Meta-Regression Results," Papers on Economics and Evolution 2012-11, Philipps University Marburg, Department of Geography.
  4. Christian Gross & Ulrich Witt, 2012. "The Energy Paradox of Sectoral Change and the Future Prospects of the Service Economy," Papers on Economics and Evolution 2012-09, Philipps University Marburg, Department of Geography.
  5. Zeba Anjum & Paul J. Burke & Reyer Gerlagh & David I. Stern, 2014. "Modeling the Emissions-Income Relationship Using Long-Run Growth Rates," CCEP Working Papers 1403, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  6. Sophie BOUTILLIER & Blandine LAPERCHE & Fabienne PICARD, 2013. "L’économie de la fonctionnalité : perspective historique et illustration empirique The economy of functionality: historical perspective and empirical illustration," Working Papers 35, Réseau de Recherche sur l’Innovation. / Research Network on Innovation.
  7. David I. Stern & Frank Jotzo & Leo Dobes, 2013. "The Economics of Global Climate Change: A Historical Literature Review," CCEP Working Papers 1307, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.

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