Individual Paper: Trade-Offs between Social Equity and Reduced Biosphere Use
Can the two be achieved together?
Two of the greatest challenges that societies face today are the rapid deterioration of the natural environment as well as high levels of economic inequality in many societies. Correspondingly reductions of inequality and pollution levels are core components of policy agendas worldwide, implemented by a diverse set of policies. However, the policies addressing these two challenges are often designed independent of each other, neglecting their interconnected nature. Consequently, policies are likely fail to account for potential trade-offs between their respective targets. Designing better policies requires the establishment of profound knowledge on this potential trade-off. Until now, however, the characteristics of this trade-off remain unclear as little research is available. This paper fills this gap by firstly describing the trade-off through a macro economic model and secondly estimating it empirically. Two transmission channels of inequality on biosphere use are modelled: the ‘income-effect’ refers to the non-linear, decreasing impact of rising incomes on consumption spending after subsistence needs are fulfilled. Second is the often ignored effect of ‘conspicuous consumption’. The latter can reverse the impact of redistribution on increasing pollution levels. That means that increasing biosphere use can theoretically be explained by both high inequality – due to conspicuous consumption – and low inequality – due to the income effect of redistribution. These hypotheses are tested empirically using the newly developed Group Fixed Effects estimator based on panel data of 152 countries over 20 years. Biosphere use is proxied by different disaggregated measures and also combined to the Ecological Footprint. Results indicate that in richer countries the income effect prevails, i.e. that there is indeed a trade-off between reducing inequality and biosphere usage. In poorer countries this trade-off does not exist, indicating that policies directed to reduce biosphere use also has a positive effect on inequality reduction and vice versa.
Start time: 11:00
Room: ABF (210)
Track: Climate Change, Climate and Environmental Justice