Climate change and income inequality: An I-O analysis of the structure and intensity of the GHG emissions in Mexican households

Abstract
Household consumption is not sufficiently studied in climate change research, despite the fact that it is a variable related to GHG emissions. The objective of this paper is to assess the amount, structure, and intensity of total GHG emissions (direct and indirect) related to Mexican household consumption by income level by means of an Input-Output analysis. Our study produced the following three main findings: 1) Large carbon inequality among household income groups, with the bottom household decile emitting 2.7% of the total CO2e emissions, and the top decile emitting 26.8%. 2) Three needs are the main drivers of carbon emissions of Mexican households: transportation (39.9%), dwelling energy consumption (26.9%), and food (15.2%). The share of transportation (public and private) is higher when the households are in higher deciles (24% in the bottom decile vs 40% in the top decile). Private transportation in the top decile is of particular concern. The CO2e emissions from private transport from the richest decile represent more than 10% of the total CO2e emissions. 3) The total carbon intensity of the household expenditure is depicted in an obtuse inverted U curve as a function of income distribution. The top and the bottom deciles present the lowest carbon intensities because of the composition of their basket of consumer goods and services. In the top decile, there is a significant share of expenditure on financial and educational services (with low carbon intensity), while in the bottom decile there is a high proportion of low-carbon basic products such as food. From all these results, we concluded that, in order to be effective and sustainable from a social and economic point of view, the formulation of policy to mitigate GHG must take into account both household income inequality and the diverse quantity and structure of consumption as a function of income level.