Economic Development and CO2 Emission: Economy-Environment Relation and Policy Approach to Choice of Emission Standard for Climate Control

Ramprasad Sengupta

Boston University - Institute for Economic Development from Boston University, Institute for Economic Development

Abstract: The integrated assessment of Climate Change at global level due to anthropogenic emissions has its gaps and problems of uncertainties. The conventional approach of such assessment begins with the postulate that the growth of population and GDP of nations are destabilising factors for the equilibrium of the climate system. Some development economists consider this to be an overstatement. We have examined in this paper whether the process of economic growth brings with it such technical changes which would stabilise or cause decline in the total industrial CO2-emissions at a certain level of per capita income and beyond. The econometric analysis of the macro-economic and the CO2-emission data shows that the total CO2-emission (or that from the solid or liquid fuel sources) initially increases with the rise in per capita income and reaches a peak which is followed by a decline. This CO2-emission peaking per capita income is estimated to be $8740 (in PPP $ 1985) approximately for the total CO2-emission. However, such stabilisation of CO2-emission does not permit complacence regarding cimate stabilisation in view of the likely trend of the CO2-emission of the fast growing populous developing countries like China and India. It would, in fact, be too late for the global climate to be controlled for stabilisation if the developing countries are allowed to grow and their CO2-emissions to stabilise or decline in their own due course as induced by the dynamics of indusrial capitalism. This points to the necessity of addressing the problem of setting the CO2-emission standard both at the global and the national level so that the stage of CO2-emission peaking is preponed in terms of income and real time and the level of the peaking CO2-emission is also lowered. For the scientific and equitable setting ot such standard, the climate research needs to remove certain gaps and ambiguities and the country level economic modelling needs to be carried out to provide better information regarding the relative costs of abatement of emissions across the countries. The problem has to be finally solved as one of political economy for global cost sharing for the CO2-emission abatement which would call for international cooperation and understanding.

Date: 1996-11
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