The Effect of NAFTA on Energy and Environmental Efficiency in Mexico
AbstractPrior to Mexico's entry to NAFTA predictions of the consequent impact on the environment in that country ranged from the dire to the very optimistic. This paper investigates NAFTA's outcomes in terms of energy use and the emission of atmospheric pollutants. Specifically, has entry into NAFTA led to a convergence or divergence in indicators of emissions, environmental efficiency, and emissions specific technology in Mexico, the United States, and Canada? Four emissions variables are considered: energy, carbon, sulfur, and NOx. Three different indicators of emissions and environmental efficiency are computed and tested for both convergence and the presence of a structural break associated with the introduction of NAFTA: energy or emissions per capita; energy or emissions intensity of GDP; and the state of technology in sulfur abatement and energy efficiency derived from a production frontier model estimated using the Kalman filter. Three convergence tests test for beta-convergence, sigma-convergence, and cointegration of the trends and the effect of NAFTA on these measures. I also test whether NAFTA induced a structural break in the trend of the various indicators. The results show that the extreme predictions of the outcomes of NAFTA have not materialized. Rather, trends that were already present before the introduction of NAFTA continue and in some cases improve post-NAFTA, but not yet in a dramatic way. There is strong evidence of convergence for all four intensity indicators across the three countries towards a lower intensity level. Though intensity is rising initially in some cases in Mexico, it eventually begins to fall post-NAFTA. Per capita measures for the two criteria pollutants also show convergence, but this is not the case for energy and carbon and the latter variables also drift moderately upwards. The state of technology in energy efficiency and sulfur abatement is improving in all countries, though there is little if any sign of convergence and NAFTA has no effect on the rate of technology diffusion. However, total energy use and carbon emissions increase both pre- and post- NAFTA and total NOx emissions increase in Mexico. Only total sulfur emissions are stable and falling in all three NAFTA partners.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Rensselaer Polytechnic Institute, Department of Economics in its series Rensselaer Working Papers in Economics with number 0511.
Date of creation: Nov 2005
Date of revision:
Find related papers by JEL classification:
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-12 (All new papers)
- NEP-ENE-2005-11-12 (Energy Economics)
- NEP-ENV-2005-11-12 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Steven N. Durlauf & Danny T. Quah, 1998.
"The New Empirics of Economic Growth,"
98-01-012, Santa Fe Institute.
- S Durlauf & Danny Quah, 1998. "The New Empirics of Economic Growth," CEP Discussion Papers dp0384, Centre for Economic Performance, LSE.
- Durlauf,S.N. & Quah,D.T., 1998. "The new empirics of economic growth," Working papers 3, Wisconsin Madison - Social Systems.
- Steven N. Durlauf & Danny T. Quah, 1998. "The New Empirics of Economic Growth," NBER Working Papers 6422, National Bureau of Economic Research, Inc.
- Stern, David I. & Common, Michael S. & Barbier, Edward B., 1996. "Economic growth and environmental degradation: The environmental Kuznets curve and sustainable development," World Development, Elsevier, vol. 24(7), pages 1151-1160, July.
- Fernandez C. & Koop G. & Steel M.F.J., 2002.
"Multiple-Output Production With Undesirable Outputs: An Application to Nitrogen Surplus in Agriculture,"
Journal of the American Statistical Association,
American Statistical Association, vol. 97, pages 432-442, June.
- Carmen Fernandez & Gary Koop & Mark F J Steel, 2004. "Multiple-output production with undesirable output: An application to nitrogen surplus in agriculture," ESE Discussion Papers 34, Edinburgh School of Economics, University of Edinburgh.
- Carmen Fernandez & Gary Koop & Mark F.J. Steel, 2002. "Multiple-Output Production With Undesirable Outputs: An Application to Nitrogen Surplus in Agriculture," Econometrics 0201001, EconWPA, revised 06 Jan 2002.
- Copeland,B.R. & Scott Taylor,M., 2003.
"Trade, growth and the environment,"
10, Wisconsin Madison - Social Systems.
- Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, January.
- Taylor M. Scott, 2005. "Unbundling the Pollution Haven Hypothesis," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-28, June.
- Carlino, Gerald A. & Mills, Leonard O., 1993. "Are U.S. regional incomes converging? : A time series analysis," Journal of Monetary Economics, Elsevier, vol. 32(2), pages 335-346, November.
- Junsoo Lee & John List, 2004. "Examining Trends of Criteria Air Pollutants: Are the Effects of Governmental Intervention Transitory?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 29(1), pages 21-37, September.
- Robert K. Kaufmann & Peter Pauly & Julie Sweitzer, 1993. "The Effects of NAFTA on the Environment," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 217-240.
- World Bank, 2005. "World Development Indicators 2005," World Bank Publications, The World Bank, number 12426, March.
- Mark Strazicich & John List, 2003. "Are CO 2 Emission Levels Converging Among Industrial Countries?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 24(3), pages 263-271, March.
- Chimeli, Ariaster B. & Braden, John B., 2005. "Total factor productivity and the environmental Kuznets curve," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 366-380, March.
- Grossman, Gene & Krueger, Alan B, 1992.
"Environmental Impacts of a North American Free Trade Agreement,"
CEPR Discussion Papers
644, C.E.P.R. Discussion Papers.
- Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
- Gene M. Grossman & Alan B. Krueger, 1991. "Environmental Impacts of a North American Free Trade Agreement," NBER Working Papers 3914, National Bureau of Economic Research, Inc.
- Perron, Pierre, 1989.
"The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis,"
Econometric Society, vol. 57(6), pages 1361-1401, November.
- Perron, P, 1988. "The Great Crash, The Oil Price Shock And The Unit Root Hypothesis," Papers 338, Princeton, Department of Economics - Econometric Research Program.
- Lindmark, Magnus, 2004. "Patterns of historical CO2 intensity transitions among high and low-income countries," Explorations in Economic History, Elsevier, vol. 41(4), pages 426-447, October.
- repec:cup:etheor:v:10:y:1994:i:5:p:917-36 is not listed on IDEAS
- Stern, David I. & Common, Michael S., 2001.
"Is There an Environmental Kuznets Curve for Sulfur?,"
Journal of Environmental Economics and Management,
Elsevier, vol. 41(2), pages 162-178, March.
- David I. Stern & Tony Auld & Michael S. Common & Kali K. Sanyal, 1998. "Is there an environmental Kuznets curve for sulfur?," Working Papers in Ecological Economics 9804, Australian National University, Centre for Resource and Environmental Studies, Ecological Economics Program.
- Susmita Dasgupta & Benoit Laplante & Hua Wang & David Wheeler, 2002. "Confronting the Environmental Kuznets Curve," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 147-168, Winter.
- Gene M. Grossman & Alan B. Krueger, 1994.
"Economic Growth and the Environment,"
NBER Working Papers
4634, National Bureau of Economic Research, Inc.
- Stephen L. Parente & Edward C. Prescott, 1997.
"Monopoly rights: a barrier to riches,"
236, Federal Reserve Bank of Minneapolis.
- Stern, David I., 2002. "Explaining changes in global sulfur emissions: an econometric decomposition approach," Ecological Economics, Elsevier, vol. 42(1-2), pages 201-220, August.
- Brock, William A. & Taylor, M. Scott, 2005.
"Economic Growth and the Environment: A Review of Theory and Empirics,"
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 28, pages 1749-1821
- William A. Brock & M. Scott Taylor, 2004. "Economic Growth and the Environment: A Review of Theory and Empirics," NBER Working Papers 10854, National Bureau of Economic Research, Inc.
- Quah, Danny T., 1996. "Empirics for economic growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1353-1375, June.
- Park, Joon Y. & Sung, Jaewhan, 1994. "Testing for Unit Roots in Models with Structural Change," Econometric Theory, Cambridge University Press, vol. 10(05), pages 917-936, December.
- Aguayo, Francisco & Gallagher, Kevin P., 2005. "Economic reform, energy, and development: the case of Mexican manufacturing," Energy Policy, Elsevier, vol. 33(7), pages 829-837, May.
- Francisco Alvarez & Gustavo A. Marrero & Luis A. Puch, . "Air pollution and the macroeconomy across European countries," Working Papers 2005-10, FEDEA.
- David I. Stern, 2003.
"The Rise and Fall of the Environmental Kuznets Curve,"
Rensselaer Working Papers in Economics
0302, Rensselaer Polytechnic Institute, Department of Economics.
- Stern, David I., 2004. "The Rise and Fall of the Environmental Kuznets Curve," World Development, Elsevier, vol. 32(8), pages 1419-1439, August.
- Warwick J. McKibbin & Alison Stegman, 2005. "Convergence And Per Capita Carbon Emissions," CAMA Working Papers 2005-10, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- David I. Stern, 2004. "Diffusion of Emissions Abating Technology," Rensselaer Working Papers in Economics 0420, Rensselaer Polytechnic Institute, Department of Economics.
- A. Reinert, Kenneth & W. Roland-Holst, David, 2001. "NAFTA and Industrial Pollution: Some General Equilibrium Results," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 16, pages 165-179.
- Viviana Fern�ndez & Ali M. Kutan, 2005.
"Do Regional Integration Agreements Increase Business-Cycle Convergence? Evidence from Apec and Nafta,"
Documentos de Trabajo
202, Centro de Economía Aplicada, Universidad de Chile.
- Viviana Fernandez & Ali M. Kutan, 2005. "Do Regional Integration Agreements Increase Business-Cycle Convergence? Evidence From APEC and NAFTA," William Davidson Institute Working Papers Series wp765, William Davidson Institute at the University of Michigan.
- Stijn Reinhard & C.A. Knox Lovell & Geert Thijssen, 1999. "Econometric Estimation of Technical and Environmental Efficiency: An Application to Dutch Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 44-60.
- Le Pen, Yannick & Sévi, Benoît, 2010.
"On the non-convergence of energy intensities: Evidence from a pair-wise econometric approach,"
Elsevier, vol. 69(3), pages 641-650, January.
- Le Pen, Yannick & Sévi, Benoît, 2010. "On the non-convergence of energy intensities: Evidence from a pair-wise econometric approach," Economics Papers from University Paris Dauphine 123456789/6801, Paris Dauphine University.
- Richard T. Carson, 2010. "The Environmental Kuznets Curve: Seeking Empirical Regularity and Theoretical Structure," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(1), pages 3-23, Winter.
- Carson, Richard T, 2009. "Searching for Empirical Regularity and Theoretical Structure: The Environmental Kuznets Curve," University of California at San Diego, Economics Working Paper Series qt4m6263c2, Department of Economics, UC San Diego.
- David I. Stern, 2010.
"Between Estimates of the Environmental Kuznets Curve,"
CAMA Working Papers
2010-04, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- David I.Stern, 2009. "Between estimates of the environmental Kuznets curve," Environmental Economics Research Hub Research Reports 0934, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
- Stern, David I., 2009. "Between Estimates of the Environmental Kuznets Curve," Research Reports 94883, Australian National University, Environmental Economics Research Hub.
- William Brock & M. Taylor, 2010.
"The Green Solow model,"
Journal of Economic Growth,
Springer, vol. 15(2), pages 127-153, June.
- Stern, David I., 2010. "Between estimates of the emissions-income elasticity," Ecological Economics, Elsevier, vol. 69(11), pages 2173-2182, September.
- Arbex, Marcelo & Perobelli, Fernando S., 2010. "Solow meets Leontief: Economic growth and energy consumption," Energy Economics, Elsevier, vol. 32(1), pages 43-53, January.
- Chintrakarn, Pandej & Millimet, Daniel, 2006. "Subnational Trade Flows and State-Level Energy Intensity," Departmental Working Papers 0601, Southern Methodist University, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John Heim) The email address of this maintainer does not seem to be valid anymore. Please ask John Heim to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.