The Factors Behind CO2 Emission Reduction in Transition Economies

33 Pages Posted: 22 Jul 2008

See all articles by Natalia Zugravu-Soilita

Natalia Zugravu-Soilita

University of Versailles Saint-Quentin-en-Yvelines

Katrin Millock

Paris School of Economics (PSE); CNRS

Gerard Duchene

Université Paris I Panthéon-Sorbonne

Date Written: July 21, 2008

Abstract

The Central and Eastern European countries significantly reduced their carbon dioxide (CO2) emissions between 1995 and 2003. Was this emission reduction just the fortuitous result of the major economic transformation undergone by countries in the transition? Or is it rather a result of more stringent environmental policy? The objective of the article is to answer this question through a simultaneous equation model of the demand (emissions) and supply (environmental stringency) of pollution. The supply equation takes into account the institutional quality of the country as well as consumer preferences for environmental quality. The results indicate that, all else equal, output growth would have increased industrial CO2 emissions in the Central and Eastern European countries in our sample by 31% between 1995 and 2003, and the composition effect corresponded to an increase of 8.4% of emissions. Nevertheless, the technique effect, induced by more stringent environmental policy, reduced industrial CO2 emissions by 58%, and allowed for a final beneficial result for the environment, i.e., -18% of industrial CO2 emissions in 2003 compared to 1995. Finally, our study confirms the importance of institutional factors in the explanation and further prediction of pollution reduction in transition economies.

Keywords: Transition, CO2 Emissions, Environmental Policy, Scale, Composition and Technique Effects

JEL Classification: C33, D72, P5, P27, Q53, Q58

Suggested Citation

Zugravu-Soilita, Natalia and Millock, Katrin E. and Duchene, Gerard, The Factors Behind CO2 Emission Reduction in Transition Economies (July 21, 2008). FEEM Working Paper No. 58.2008, Available at SSRN: https://ssrn.com/abstract=1164835 or http://dx.doi.org/10.2139/ssrn.1164835

Natalia Zugravu-Soilita

University of Versailles Saint-Quentin-en-Yvelines ( email )

47 Bd Vauban
Guyancourt, 78280
France

HOME PAGE: http://sites.google.com/site/nataliazugravu

Katrin E. Millock (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

CNRS ( email )

3, rue Michel-Ange
Paris, 75794
France

Gerard Duchene

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, IL 75005
France

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