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Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade

Author

Listed:
  • Rahel Aichele
  • Gabriel Felbermayr
  • Gabriel J. Felbermayr

Abstract

Has the Kyoto Protocol induced carbon leakage? We conduct the first empirical ex-post evaluation of the Protocol. We derive a theoretical gravity equation for the CO2 content of trade, which accounts for intermediate inputs, both domestic and imported. The structure of our new panel database of the carbon content of sectoral bilateral trade flows allows controlling for the endogenous selection of countries into the Kyoto Protocol. Binding commitments under Kyoto have increased committed countries’ embodied carbon imports from non-committed countries by around 8% and the emission intensity of their imports by about 3%. Hence, Kyoto has indeed led to leakage.

Suggested Citation

  • Rahel Aichele & Gabriel Felbermayr & Gabriel J. Felbermayr, 2011. "Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade," CESifo Working Paper Series 3661, CESifo.
  • Handle: RePEc:ces:ceswps:_3661
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    References listed on IDEAS

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    More about this item

    Keywords

    carbon leakage; CO2 content of trade; gravity equation; Kyoto Protocol;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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