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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.

Suggested Citation

  • Henriques, Sofia Teives & Kander, Astrid, 2010. "The modest environmental relief resulting from the transition to a service economy," Ecological Economics, Elsevier, vol. 70(2), pages 271-282, December.
  • Handle: RePEc:eee:ecolec:v:70:y:2010:i:2:p:271-282
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    References listed on IDEAS

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    Blog mentions

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    1. Recent Papers of Interest in Ecological Economics:
      by David Stern in Stochastic Trend on 2010-11-16 15:58:00

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    Cited by:

    1. Henriques, Sofia Teives & Borowiecki, Karol J., 2017. "The drivers of long-run CO2 emissions in Europe, North America and Japan since 1800," Energy Policy, Elsevier, vol. 101(C), pages 537-549.
    2. Ruta Gentvilaite & Astrid Kander & Paul Warde, 2014. "The Role of Energy Quality in Shaping Long-Term Energy Intensity in Europe," Energies, MDPI, Open Access Journal, vol. 8(1), pages 1-21, December.
    3. Dobes Leo & Jotzo Frank & Stern David I., 2014. "The Economics of Global Climate Change: A Historical Literature Review," Review of Economics, De Gruyter, vol. 65(3), pages 281-320, December.
    4. Sofia Teives Henriques & Karol J. Borowiecki, 2014. "The Drivers of Long-run CO2 Emissions: A Global Perspective since 1800," Working Papers 0062, European Historical Economics Society (EHES).
    5. Meng, Ming & Niu, Dongxiao, 2012. "Three-dimensional decomposition models for carbon productivity," Energy, Elsevier, vol. 46(1), pages 179-187.
    6. Stern, David I. & Gerlagh, Reyer & Burke, Paul J., 2017. "Modeling the emissions–income relationship using long-run growth rates," Environment and Development Economics, Cambridge University Press, vol. 22(06), pages 699-724, December.
    7. 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.
    8. Serrenho, André Cabrera & Sousa, Tânia & Warr, Benjamin & Ayres, Robert U. & Domingos, Tiago, 2014. "Decomposition of useful work intensity: The EU (European Union)-15 countries from 1960 to 2009," Energy, Elsevier, vol. 76(C), pages 704-715.
    9. Warr, Benjamin & Ayres, Robert U., 2012. "Useful work and information as drivers of economic growth," Ecological Economics, Elsevier, vol. 73(C), pages 93-102.
    10. Zsuzsanna Csereklyei, M. d. Mar Rubio-Varas, and David I. Stern, 2016. "Energy and Economic Growth: The Stylized Facts," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    11. 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.
    12. Lima, Fátima & Nunes, Manuel Lopes & Cunha, Jorge & Lucena, André F.P., 2016. "A cross-country assessment of energy-related CO2 emissions: An extended Kaya Index Decomposition Approach," Energy, Elsevier, vol. 115(P2), pages 1361-1374.
    13. 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.
    14. 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.
    15. repec:eee:ecolec:v:139:y:2017:i:c:p:33-44 is not listed on IDEAS
    16. Lima, Fátima & Nunes, Manuel Lopes & Cunha, Jorge & Lucena, André F.P., 2017. "Driving forces for aggregate energy consumption: A cross-country approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P2), pages 1033-1050.
    17. 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.

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