The Effect of NAFTA on Energy and Environmental Efficiency in Mexico
Prior 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.
|Date of creation:||Nov 2005|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.economics.rpi.edu/|
More information through EDIRC
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.:
- 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.
- repec:cup:etheor:v:10:y:1994:i:5:p:917-36 is not listed on IDEAS
- Quah, Danny T., 1996. "Empirics for economic growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1353-1375, June.
- 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.
- Grossman, G.M & Krueger, A.B., 1991.
"Environmental Impacts of a North American Free Trade Agreement,"
158, Princeton, Woodrow Wilson School - Public and International Affairs.
- 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.
- 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.
- 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.
- Brian R. Copeland & M. Scott Taylor, 2004.
"Trade, Growth, and the Environment,"
Journal of Economic Literature,
American Economic Association, vol. 42(1), pages 7-71, 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.
- 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, 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.
- Steven N. Durlauf & Danny T. Quah, 1998.
"The New Empirics of Economic Growth,"
NBER Working Papers
6422, National Bureau of Economic Research, Inc.
- S Durlauf & Danny Quah, 1998. "The New Empirics of Economic Growth," CEP Discussion Papers dp0384, Centre for Economic Performance, LSE.
- Steven N. Durlauf & Danny T. Quah, 1998. "The New Empirics of Economic Growth," Working Papers 98-01-012, Santa Fe Institute.
- Durlauf,S.N. & Quah,D.T., 1998. "The new empirics of economic growth," Working papers 3, Wisconsin Madison - Social Systems.
- 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.
- Perron, P, 1988.
"The Great Crash, The Oil Price Shock And The Unit Root Hypothesis,"
338, Princeton, Department of Economics - Econometric Research Program.
- Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
- World Bank, 2005. "World Development Indicators 2005," World Bank Publications, The World Bank, number 12425, April.
- 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, 2002. "Multiple-Output Production With Undesirable Outputs: An Application to Nitrogen Surplus in Agriculture," Econometrics 0201001, EconWPA, revised 06 Jan 2002.
- 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.
- 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.
- 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.
- Stephen L. Parente & Edward C. Prescott, 2002. "Barriers to Riches," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661306, June.
- 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.
- 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.
- 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.
- repec:wbk:wbpubs:12426 is not listed on IDEAS
- 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.
- 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.
- 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 Elsevier.
- 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.
- 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.
- Gene M. Grossman & Alan B. Krueger, 1994.
"Economic Growth and the Environment,"
NBER Working Papers
4634, National Bureau of Economic Research, Inc.
- Francisco Alvarez & Gustavo A. Marrero & Luis A. Puch, . "Air pollution and the macroeconomy across European countries," Working Papers 2005-10, FEDEA.
- Stephen L. Parente & Edward C. Prescott, 1997.
"Monopoly rights: a barrier to riches,"
236, Federal Reserve Bank of Minneapolis.
- 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.
- 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.
When requesting a correction, please mention this item's handle: RePEc:rpi:rpiwpe:0511. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shawn Kantor)
If references are entirely missing, you can add them using this form.