Who is taking smaller bites out of climate stability?

By Corey Allan, Research Analyst, Motu Economic and Public Policy Research

How should we compare efforts to reduce greenhouse gas emissions across countries? The Kyoto Protocol focuses on production emissions, which are the emissions resulting from the production of goods and services. But what is the point of production? Would we produce goods if there was no one to consume them? In a globalised world, production will move from one country to another if there is still sufficient demand for the output. So is a country really contributing to the reduction of greenhouse gas emissions as much as it appears if their production emissions are falling, but their consumption of emissions-intensive goods remains unchanged?

Researchers at Motu, and a student intern from Stanford, have just released a preliminary analysis of the emissions associated with household consumption in New Zealand.  The analysis shows that the composition of consumption emissions can differ significantly from the composition of production emissions.  The difference is particularly salient for food emissions, as you can see from the two charts below:

Emission shares in an average New Zealand household’s consumption bundle in 2007

New Zealand’s ‘production’ emissions profile 2012

While non-CO₂ greenhouse gas emissions from agriculture comprise 46% of NZ’s total emissions when calculated under a production-based approach, food accounts for only 32% of emissions from consumption even when emissions from energy use throughout the value chain are included.  While ‘agriculture’ and ‘food’ differ in the emissions attributed to each sector, the difference in share can largely be attributed to the fact that New Zealand exports the majority of its agricultural production.

In general, households with higher levels of expenditure have higher levels of emissions.  While it matters how much we spend, more careful choices of what we spend our money on will be an important first step to reducing our consumption emissions.  Maybe we could spend less money travelling and spend more on recreational or cultural activities.  Within the consumption bundle, as well as food choices, where and how you travel is a critical area – the share of emissions from travel rise rapidly with income.  Food (red meat and dairy products), travel and electricity use not only contribute most emissions, but they are also the most emissions intensive per dollar spent so if you are looking to make small changes in your consumption patterns to help the climate, these are the places to look.

Production and consumption emissions are complementary measures of contribution to reducing global GHG emissions.  More detailed analysis of each measure will also reveal different mitigation opportunities.  A wide range of actors, from managers making decisions about production processes and fuels, to consumers shifting consumption patterns, are needed for New Zealand to move successfully to a low emissions future.  The more we know about how our actions impact the environment, the more likely we will be to make more climate-friendly choices.