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Investigating the effect of carbon leakage on the environmental Kuznets curve using luminosity data

Published online by Cambridge University Press:  03 July 2017

Arne Steinkraus Open the ORCID record for Arne Steinkraus [Opens in a new window]
Arne Steinkraus*
Affiliation:
Institute of Economics, TU Braunschweig, Spielmannstraße 9, 38106 Braunschweig, Germany. Tel: +0049 531 391 2567. E-mail: [email protected]
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Abstract

This paper studies the effect of carbon leakage on the environmental Kuznets curve (EKC) using satellite nighttime light data. It shows that nighttime lighting is an important variable for estimating carbon dioxide emissions that is superior to other existing indicators and covers all countries in the world, finding evidence of an inverted-U shaped relationship between light and, thus, greenhouse gas emissions and income, with a turning point at approximately US$50,000. However, the relationship is primarily driven by changes in the structure of international trade, implying strong carbon leakage effects. Consequently, environmental regulations that become operative in only one part of the world may fail without global coordination.

Type
Research Article
Information
Environment and Development Economics , Volume 22 , Special Issue 6: Recent Advances in Empirical Analysis on Growth and Environment , December 2017 , pp. 747 - 770
Copyright
Copyright © Cambridge University Press 2017 

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