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Free keywords:
Scenario analysis, Multiregional input-output (MRIO), GHG emissions, Household consumption, Future environmental impact of consumption, Quadratic almost ideal demand system
(QUAIDS)
Abstract:
The scale and patterns of household consumption are important determinants of environmental impacts.Whilst
affluence has been shown to have a strong correlation with environmental impact, they do not necessarily grow
at the same rate. Given the apparent contradiction between the sustainable development goals of economic
growth and environmental protection, it is important to understand the effect of rising affluence and concurrent
changing consumption patterns on future environmental impacts. Here we develop an econometric demand
model based on the data available froma global multiregional input-output dataset.We model future household
consumption following scenarios of population and GDP growth for 49 individual regions. The greenhouse gas
(GHG) emissions resulting from the future household demand is then explored both with andwithout consideration
of the change in expenditure over time on different consumption categories. Compared to a baseline scenario
where final demand grows in line with the 2011 average consumption pattern up until 2030, we find
that changing consumer preferences with increasing affluence has a small negative effect on global cumulative
GHG emissions. The differences are more profound on both a regional and a product level. For the demand
model scenario, we find the largest decrease in GHG emissions for the BRICS and other developing countries,
while emissions in North America and the EU remain unchanged. Decreased spending and resulting emissions
on food are cancelled out by increased spending and emissions on transportation. Despite relatively small global
differences between the scenarios, the regional and sectoralwedges indicate that there is a large untapped potential
in environmental policies and lifestyle changes that can complement the technological transition towards a
low-emitting society.
