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Impact of household expenditures on CO2 emissions in China: Income-determined or lifestyle-driven?

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Abstract

The aim of this paper is to analyze the relationship between household expenditure and CO2 emissions among different income groups of urban and rural households in China. Having employed the 2007 Social Accounting Matrix of China, this study examines the direct and indirect CO2 emissions caused by household demand. The results show that within both urban and rural households, the higher the income level is, the higher the per capita emissions are; the CO2 emissions per unit expenditure due to savings and taxes are generally much larger than those from consumption of goods and services; and these emissions per unit consumption expenditures mainly come from indirect emissions. To deeply explore the relationships between consumption patterns and CO2 emissions, two scenarios are established to eliminate the differences in income level and consumption propensity among different groups step by step. Main results indicate that (1) the income gap is the primary cause of the significant differences in emission levels among each group; (2) the difference in consumption propensity is also a notable reason; and (3) the rural higher income groups spend a larger share of their income on those carbon-intensive goods (e.g., electricity, transportation, energy products), thus making their consumption patterns more carbon-intensive, while for the urban, the consumption patterns of lower income groups are more carbon-intensive. Finally, policy recommendations on the reduction of household emissions are also made.

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Notes

  1. As explained above, the methodology in this paper is cited from the benchmark literatures (Duarte et al. 2010, 2012); thus, the descriptions of the model and the meaning of its parameters in Sect. 2.1 all refer to these studies, which will not be cited individually hereinafter.

  2. The first three quadrants of SAM are the same as those of the IO, which include the intermediate input, final demand, and value added. The fourth quadrant of SAM includes the income, savings, and taxes of households and enterprises, as well as the income of the government and the rest of world, etc. Therefore, compared with IO, a SAM can provide all detailed expenditure items of households and thus would be more suitable for a study on households.

  3. This study calculates the indirect emissions associated with all household savings and taxes. Here, we need to explain that the savings, especially the household savings in this study, only refer to the capital flowing into the economy. This is because the row-sum and column-sum equality rule in the SAM follows the basic principle of micro- and macro-economy, resulting in an equation in which total investment always equals total savings. The total investment only consists of fixed-asset investment and inventory change and does not include the holding cash (either in the household’s pocket or in a bank reserve). Hence, the household savings all circulate in the economy. The tax payment can be understood as the expenditure on public services offered by the government, such as infrastructure, roads, and national defense security.

  4. This study defined the consumption propensity as the ratio of total household consumption expenditure to their total income.

  5. In line with the Rural Survey and Urban Yearbook, this study remained five groups in rural areas and seven groups in urban areas.

  6. Following the study of Su and Ang (2013), the competitive import assumption means treating the imported products the same as those produced domestically for intermediate consumption.

  7. The word “scale effect” refers to Duarte et al. (2010).

  8. We have set the income levels of all groups under S1 to be the same, so the income level here refers to the income level under BAU, similarly hereinafter.

  9. The proportion of coal in the electricity mix is 83.3 % in 2007 (ECCPY 2008), 78.5 % in 2013, and 74.9 % in 2014 (NBS 2014, 2015).

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Acknowledgments

The authors gratefully acknowledge financial support from the National Natural Science Foundation of China under Grant Nos. 71422011, 71461137006, and 71001007, the National Science and Technology Support Program under the Grant No. 2012BAC20B01, and the Program for New Century Excellent Talents in University under Grant No. NCET-12-0039. We also would like to thank the anonymous referees for their helpful suggestions and corrections on the earlier draft of our paper according to which we improved the content. It is grateful for the data and suggestions provided by the members from CEEP.

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Authors and Affiliations

  1. Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing, 100081, China

    Qian Wang, Qiao-Mei Liang & Bing Wang

  2. School of Management and Economics, Beijing Institute of Technology (BIT), 5 South Zhongguancun Street, Haidian District, Beijing, 100081, China

    Qian Wang, Qiao-Mei Liang & Bing Wang

  3. Collaborative Innovation Center of Electric Vehicles in Beijing, Beijing, 100081, China

    Qian Wang, Qiao-Mei Liang & Bing Wang

  4. Department of Mechanical and Automation Engineering, The Chinese University of Hong Kong, Shatin, Hong Kong, China

    Fang-Xun Zhong

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  1. Qian Wang
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Corresponding author

Correspondence to Qiao-Mei Liang.

Appendix

Appendix

See Tables 9, 10, 11, and 12.

Table 9 Relationship between SAM sectors and the sector codes of the IO Table 2007 (DNANBS 2009a)
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Table 10 Disaggregating procedures of two groups (urban and rural) into more groups
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Table 11 Consumption propensity of different income groups in rural and urban areas
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Table 12 Production emission values of 10 categories of production sectors (metric tons CO2/10,000 Yuan)
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Wang, Q., Liang, QM., Wang, B. et al. Impact of household expenditures on CO2 emissions in China: Income-determined or lifestyle-driven?. Nat Hazards 84 (Suppl 1), 353–379 (2016). https://doi.org/10.1007/s11069-015-2067-1

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