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Richer and cleaner - at others' expense?

Pollution intensive production can be avoided domestically by increased imports and less exports of dirty products. Such trade effects may imply more emissions abroad, or pollution leakages. We study whether such leakages may contribute to the observed inverted relationship between emissions and economic growth - the Environmental Kuznets Curve (EKC). In our case, the rich, open Norwegian economy, we find little evidence for the hypothesis that pollution leakages contribute to explain the EKC. Despite an observed decoupling of emissions from economic growth over the past 20 years, there was no increase in pollution leakages over this period. Rather, emissions related to export increased far more than the foreign emissions embodied in import, implying reduced leakages. In future projections, we find a lower degree of decoupling than in the past, but no corresponding reductions in leakages. Instead, leakages increase. This conclusion is fairly invariant to assumptions about future climate policy.

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Paper provided by Statistics Norway, Research Department in its series Discussion Papers with number 477.

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Date of creation: Sep 2006
Date of revision:
Handle: RePEc:ssb:dispap:477
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  1. Susmita Dasgupta & Ashoka Mody & Subhendu Roy & David Wheeler, 2001. "Environmental Regulation and Development: A Cross-country Empirical Analysis," Oxford Development Studies, Taylor & Francis Journals, vol. 29(2), pages 173-187.
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  9. Suri, Vivek & Chapman, Duane, 1998. "Economic growth, trade and energy: implications for the environmental Kuznets curve," Ecological Economics, Elsevier, vol. 25(2), pages 195-208, May.
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  11. Muradian, Roldan & O'Connor, Martin & Martinez-Alier, Joan, 2002. "Embodied pollution in trade: estimating the 'environmental load displacement' of industrialised countries," Ecological Economics, Elsevier, vol. 41(1), pages 51-67, April.
  12. Friedl, Birgit & Getzner, Michael, 2003. "Determinants of CO2 emissions in a small open economy," Ecological Economics, Elsevier, vol. 45(1), pages 133-148, April.
  13. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
  14. Steigum, E.Jr., 1992. "Accounting for Long-Run Effects of Fiscal Policy by Means of Computable Overlapping Generations Models," Papers 05-92, Norwegian School of Economics and Business Administration-.
  15. Henry D. Jacoby & Richard S. Eckaus & A. Denny Ellerman & Ronald G. Prinn & David M. Reiner & Zili Yang, 1997. "CO2 Emissions Limits: Economic Adjustments and the Distribution of Burdens," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 31-58.
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