The heterogeneous impact of rural residents' income growth on consumption carbon emissions: Based on the QUAIDS and EASI models

Abstract

Income growth has a significant effect on the upgrading of residents' consumption structure and the generation of consumption carbon emissions (CCE). However, the effects of various income growth patterns on the consumption structure and CCE in rural China across different income levels, regions, and time periods are still not well understood. Using unbalanced provincial panel data of rural areas in China from 1999 to 2020, this study examines the effects of income growth on CCE across different periods and regions for various income groups. By employing estimated income elasticities, the study predicts the impact of different income growth patterns on CCE. A comparison of all outcomes is conducted using the Quadratic Almost Ideal Demand System (QUAIDS) and the Exact Affine Stone Index Implicit Marshallian Demand System (EASI). The results reveal significant inequalities in both income and CCE among rural residents, with increased transfer payments resulting in relatively lower carbon emissions. Furthermore, static simulations tend to overestimate CCE. Our findings suggest that implementing transfer payments to low-income rural populations and guiding all rural residents to consume low-carbon products would help mitigate the rapid increase in consumption carbon emissions among rural residents.