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Shifting Trade Patterns as a Means of Reducing Global Carbon Dioxide Emissions

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  • Anders Hammer Strømman
  • Edgar G. Hertwich
  • Faye Duchin

Abstract

This article extends and applies the world trade model with bilateral trade (WTMBT), a linear program with any number of goods, factors, and regional trade partners that determines regional production, bilateral trade patterns, and region‐specific prices on the basis of comparative advantage by minimizing factor use. The model provides a consistent analysis of the global production system, representing geographical location at a regional level, region‐specific technologies at a sector level, emissions from production, and resource constraints and costs. An illustrative analysis investigates how changes in the geographic distribution of production could contribute to reducing global carbon dioxide (CO2) emissions and at what cost. The model provides a bridge between global objectives and their determinants and consequences in specific sectors in individual regions. Multi‐objective analysis is used to construct a trade‐off curve between global factor costs and CO2 emissions. The relevance of both primal and dual solution variables is demonstrated. In particular, changes in goods prices and emissions are investigated. We conclude that the main impact of tightening carbon constraints is a substantial reduction in international trade accompanied by a shift away from regions most reliant on the combustion of coal. In addition to the analysis of the overall global trends, including the impact on prices, the implications of the global carbon constraint for one specific industry are investigated.

Suggested Citation

  • Anders Hammer Strømman & Edgar G. Hertwich & Faye Duchin, 2009. "Shifting Trade Patterns as a Means of Reducing Global Carbon Dioxide Emissions," Journal of Industrial Ecology, Yale University, vol. 13(1), pages 38-57, February.
    • Handle: RePEc:bla:inecol:v:13:y:2009:i:1:p:38-57
    DOI: 10.1111/j.1530-9290.2008.00084.x
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    Cited by:

    1. Carlos A. L�pez-Morales & Faye Duchin, 2015. "Economic Implications Of Policy Restrictions On Water Withdrawals From Surface And Underground Sources," Economic Systems Research, Taylor & Francis Journals, vol. 27(2), pages 154-171, June.
    2. Faye Duchin, 2017. "Resources for Sustainable Economic Development: A Framework for Evaluating Infrastructure System Alternatives," Sustainability, MDPI, vol. 9(11), pages 1-15, November.
    3. Wiedmann, Thomas, 2009. "A review of recent multi-region input-output models used for consumption-based emission and resource accounting," Ecological Economics, Elsevier, vol. 69(2), pages 211-222, December.
    4. Zhang, Zengkai & Zhu, Kunfu & Hewings, Geoffrey J.D., 2017. "A multi-regional input–output analysis of the pollution haven hypothesis from the perspective of global production fragmentation," Energy Economics, Elsevier, vol. 64(C), pages 13-23.
    5. Hana Nielsen & Astrid Kander, 2020. "Trade in the Carbon-Constrained Future: Exploiting the Comparative Carbon Advantage of Swedish Trade," Energies, MDPI, vol. 13(14), pages 1-25, July.
    6. Kemp-Benedict, Eric, 2014. "The inverted pyramid: A neo-Ricardian view on the economy–environment relationship," Ecological Economics, Elsevier, vol. 107(C), pages 230-241.
    7. Rocco, Matteo V. & Golinucci, Nicolò & Ronco, Stefano M. & Colombo, Emanuela, 2020. "Fighting carbon leakage through consumption-based carbon emissions policies: Empirical analysis based on the World Trade Model with Bilateral Trades," Applied Energy, Elsevier, vol. 274(C).
    8. Leslie S. Abrahams & Constantine Samaras & W. Michael Griffin & H. Scott Matthews, 2017. "Effect of crude oil carbon accounting decisions on meeting global climate budgets," Environment Systems and Decisions, Springer, vol. 37(3), pages 261-275, September.
    9. Zhu, Kunfu & Jiang, Xuemei, 2019. "Slowing down of globalization and global CO2 emissions – A causal or casual association?," Energy Economics, Elsevier, vol. 84(C).

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