More or better? A model for changes in household greenhouse gas emissions due to higher income Bastien Girod and Peter de Haan Institute for environmental decisions (IED), ETH Zurich

Bastien Girod / Environmental Decisions (IED) / 2 Structure of presentation  Relevance  Method  Estimate of GHG emissions of consumption  How to allocate GHG emissions to consumption  How to measure affluence  Results  Conclusion

Bastien Girod / Environmental Decisions (IED) / Relevance of analyzing marginal consumption  Challenge for the future development  (Most) households want to increase their affluence  Greenhouse gas emissions should be reduced  How does consumption and GHG emissions change with increasing affluence? 3 RelevanceMethodResultsConclusion Marginal consumption GHG emissions functional units Measure affluence Allocation of GHGe Increasing prices GHGe elasticity Food: Bigger portions? Future consumption Impact of quality

Bastien Girod / Environmental Decisions (IED) / Method for bottom-up estimate 1. Household consumption data (N=13’558)  Surveys 2002 to 2005; all purchases of one month  450 consumption categories  Additional data: Durable goods & household characteristics 2. Derive functional unit of consumption  Example: kg food, pkm car, m 2 shelter, hr service 3. Connect with LCA process  GHG emissions 4 RelevanceMethodResultsConclusion Marginal consumption GHG emissions functional units Measure affluence Allocation of GHGe Increasing prices GHGe elasticity Food: Bigger portions? Future consumption Impact of quality

Bastien Girod / Environmental Decisions (IED) / Derive functional (physical) units 5 Accounting of functional units Share of total GHG emissions Consumption categories Physical data [kg, liter]40%Food, beverage, gasoline (Ø efficiency  pkm) Additional data [m 2 ]29%Living - Expenditure [€]/ price [MJ/€]25% - Energy use Purchases [n] x “portion size” [(kg, liters, km, hr )/ n] 27%Food, goods, transport services Expenditure [€]4%Services  Resulting GHG estimates comparable to studies using EIO data and expenditure survey or top-town data RelevanceMethodResultsConclusion Marginal consumption GHG emissions functional units Measure affluence Allocation of GHGe Increasing prices GHGe elasticity Food: Bigger portions? Future consumption Impact of quality

Bastien Girod / Environmental Decisions (IED) / Measure increasing affluence  OECD Scale  Scale: 1 to first household member, 0.5 to additional adult, 0.3 to children  Consideration of decreasing consumption with additional household members  Constant household types  Household types: Single, two adults, small family, large family 6 RelevanceMethodResultsConclusion Marginal consumption GHG emissions functional units Measure affluence Allocation of GHGe Increasing prices GHGe elasticity Food: Bigger portions? Future consumption Impact of quality

Bastien Girod / Environmental Decisions (IED) / Allocation of GHG emission: functional units versus expenditure  Allocation to functional units  Same impact for products with higher price per functional unit  Allocation to expenditure  Half the price leads to half the impact  Studies of Vringer and Blok (NL)  Truth is between both concepts  However they use only the allocation to expenditure 7 RelevanceMethodResultsConclusion Marginal consumption GHG emissions functional units Measure affluence Allocation of GHGe Increasing prices GHGe elasticity Food: Bigger portions? Future consumption Impact of quality

Bastien Girod / Environmental Decisions (IED) / Higher income group pay higher prices Consumption category Price of fu Number of purchases Mean price [€/fu]price difference 1 significant subcategories 2 Foodkg 1’958t 7.0***13%88 of 108 Beverageskg 147t 1.8***29%12 of 19 Eating outkg 481t 26.3**5%3 of 9 Tobaccokg 39t %0 of 4 Livingm2m2 58t 8.5***17%1 of 1 ElectricityMJ 14t 0.033*0%0 of 4 Furnishingskg 151t 8.9***22%15 of 33 Clotheskg 70t 88.6***41%32 of 43 Other goodskg 87t 25.5**5%3 of 5 Books/newskg 107t 19.2***18%6 of 8 Pers. hygienekg 122t 59.6***47%20 of 42 Carpkm 102t %1 of 1 Public trans.pkm 40t 0.90**87%3 of 7 Airplanepkm 0.30t 0.064%0 of 1 Bicyclekg 0.19t 11.8***149%1 of 1 Services(t)hr 101t 5.0***12%10 of 24 Holidayshr 5.01t 4.7***42%1 of 5 Educationhr 2.91t 1.1***66%4 of 7 Oth. services€210t 1.0**0%0 of 41 Total 3‘695t 21% of 322 otes: 1 Price difference of upper/lower income group. Significance indicated for two-sided t-test comparing upper to lower income group of different household types. 2 Consumption categories on 4 th COICOP level with significance of price increase at 0.05 level. 3 Total price change is summarized by weighting the prices with the expenditure of the corresponding main consumption category. upper/lower income group 8 RelevanceMethodResultsConclusion Marginal consumption GHG emissions functional units Measure affluence Allocation of GHGe Increasing prices GHGe elasticity Food: Bigger portions? Future consumption Impact of quality

Bastien Girod / Environmental Decisions (IED) / Elasticity of GHG and total expenditure Consumption categoriesElasticity of GHG emissions with expenditure Household structure: New OECD scaleNo correction Assignment of GHG emissions: fus s Food [kg] Beverages [kg] Eating out [kg] Living [m2] Electricity [MJ] Goods [kg] Mobility [kg] Services(t) [kg] Services(s) [kg] Tax & transfer [kg] (0.94) (1.17) Total [€] Note: fu=functional units; s=expenditure (spending). Tax & transfer not included in total expenditure for calculating elasticities. 9 RelevanceMethodResultsConclusion Marginal consumption GHG emissions functional units Measure affluence Allocation of GHGe Increasing prices GHGe elasticity Food: Bigger portions? Future consumption Impact of quality

Bastien Girod / Environmental Decisions (IED) / Subanalysis for food 10 Food subcategoryPurchases [n] Mean price [€ /kg] Change from lower to upper income group: Price 1 [€ /kg] Portion 1 [kg /n] Bread & cereals ***17% ***-11% Beef ***19% -4% Meat mixed ***20% **-11% Pork ***16% **-10% Poultry ***17% ***-14% Fish ***18% -5% Cheese ***7% **-3% Milk products **3% ***-12% Butter ***10% ***-10% Fruits ***14% ***-12% Vegetables ***22% ***-19% Coffee ***14% *6% Drinks ***10% **-8% Wine ***32% *10% Total ***17% **-5% Notes: Only food subcategories with more than 5000 purchases. Swiss franc (CHF) is translated into Euros (€) with the exchange rate (2005): 1.5 CHF = 1 €. 1 Significance indicated for two-sided t-test comparing upper to lower income group of two adult and single households. Significance level: ***for 0.001; **for 0.01; * for Includes tea and cocoa. 4 Includes mineral water, soft drinks, fruit and vegetable juices. RelevanceMethodResultsConclusion Marginal consumption GHG emissions functional units Measure affluence Allocation of GHGe Increasing prices GHGe elasticity Food: Bigger portions? Future consumption Impact of quality

Bastien Girod / Environmental Decisions (IED) / Conclusions for the future  If future consumption patterns evolve towards marginal consumption  Shifting relevance of consumption categories -The relevance of eating out, goods, services and mobility will increase (high elasticity)  Better and more: facilitates decoupling from material use -Mobility is key challenge for sustainable consumption -Policy: avoid increasing impact of quality -Research: focus more on the environmental impact of quality 11 RelevanceMethodResultsConclusion Marginal consumption GHG emissions functional units Measure affluence Allocation of GHGe Increasing prices GHGe elasticity Food: Bigger portions? Future consumption Impact of quality

Bastien Girod / Environmental Decisions (IED) / RelevanceMethodResultsConclusion Marginal consumption GHG emissions functional units Measure affluence Allocation of GHGe Increasing prices GHGe elasticity Food: Bigger portions? Future consumption Impact of quality What is the impact of quality?  We found that the elasticity of household GHG emissions and expenditure for Swiss households is reduced from 1.06 to 0.53  But: higher quality goods might also lead to higher impact  Use of more exclusive materials, processing, less economy of scales  Also the opposite can be true  Organic food, longer life time, regional production (transport, energy mix, environmental standards) 12

Bastien Girod / Environmental Decisions (IED) / Thank you for questions and comments 13