Investigating the Carbon Leakage Effect on the Environmental Kuznets Curve Using Luminosity Data
Economics Department Working Paper Series, No. 15
38 Pages Posted: 27 Jan 2016
Date Written: January 6, 2016
This paper studies the effect of carbon leakage on the environmental Kuznets curve (EKC) using satellite nighttime light data. I show 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. I find 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.
Keywords: Carbon Leakage Nighttime Lighting, Environmental Kuznets Curve
JEL Classification: F18, F64, Q50
Suggested Citation: Suggested Citation