Economic Growth and Climate Change: A Cross-National Analysis of Territorial and Consumption-Based Carbon Emissions in High-Income Countries

Abstract

An important question in the literature on climate change and sustainability is the relation between economic growth and greenhouse gas emissions. While the “green growth” paradigm dominates in the policy arena, a growing number of scholars in wealthy countries are questioning the feasibility of achieving required emissions reductions with continued economic growth. This paper explores the relationship between economic growth and carbon dioxide emissions over the period 1991–2008 with a balanced data set of 29 high-income countries. We present a variety of models, with particular attention to the difference between territorial emissions and consumption-based (or carbon footprint) emissions, which include the impact of international trade. The effect of economic growth is greater for consumption-based emissions than territorial emissions. We also find that over this period there is some evidence of decoupling between economic growth and territorial emissions, but no evidence of decoupling for consumption-based emissions.