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Greenhouse gas emissions, non-renewable energy consumption, and output in South America: the role of the productive structure

Abstract:

Most of the countries of South America depend heavily on mining and agriculture, which develops through the destruction of the forest. The expansion of the agricultural frontier is more visible in countries with proximity to the Amazon. Otherwise, the increase in urban primacy and real income per capita has led to an increase in the use of non-renewable energy in recent decades. The interest in quantifying greenhouse gas emissions has increased, oriented towards the search for mechanisms that mitigate the irreversible effects of climate change. In this context, the objective of this research is to examine the causal link among non-renewable energy consumption and real GDP per capita in greenhouse gas emissions in ten countries of South America during 1971–2014. In addition, we group the countries according to their productive structure and we incorporate the structural changes of each country in the econometric estimations, allowing to significantly improve the understanding of the sources of greenhouse gases. We use cointegration and causality techniques for time series data, and we found that there is a relationship of short- and long-term equilibrium between the three variables in all countries. The causality test indicates that in Bolivia, Peru, and Uruguay, there is causality from the consumption of non-renewable energy to greenhouse gas emissions. Likewise, in Venezuela and the agricultural countries, GDP causes greenhouse gas emissions. An implication of the public policy derived from this research is that most of the countries of South America can promote a change in the energy matrix to contribute to the mitigation of greenhouse gas emissions without limiting economic growth.