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

Rahel Aichele and Gabriel Felbermayr

The Review of Economics and Statistics, 2015, vol. 97, issue 1, 104-115

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

Keywords: Kyoto Protocol; carbon leakage; carbon dioxide; trade; domestic trade; imported trade; carbon content; sectoral bilateral trade; carbon imports (search for similar items in EconPapers)
JEL-codes: F18 Q53 Q56 R40 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (224)

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Working Paper: Kyoto and Carbon Leakage: An Empirical Analysis of the Carbon Content of Bilateral Trade (2011)
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