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

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  • Rahel Aichele

    () (Ifo Institute Munich and CESifo)

  • Gabriel Felbermayr

    () (Ifo Institute, CESifo and LMU Munich, GEP Nottingham)

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 carbon dioxide 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 noncommitted countries by around 8% and the emission intensity of their imports by about 3%. Hence, Kyoto has indeed led to leakage. © 2015 The President and Fellows of Harvard College and the Massachusetts Institute of Technology

Suggested Citation

  • Rahel Aichele & Gabriel Felbermayr, 2015. "Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 104-115, March.
  • Handle: RePEc:tpr:restat:v:97:y:2015:i:1:p:104-115
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    More about this item

    Keywords

    Kyoto Protocol; carbon leakage; carbon dioxide; trade; domestic trade; imported trade; carbon content; sectoral bilateral trade; carbon imports;

    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
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • F18 - International Economics - - Trade - - - Trade and Environment

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