Climate change and the world economy: Short-run determinants of atmospheric CO2

Abstract

Volcanic eruptions, the El Niño Southern oscillation (ENSO), world population, and the world economy are the four variables usually discussed as influencing the short-run changes in CO2 atmospheric levels through their influence on CO2 emissions and sinks. Using proper procedures of detrending, we do not find any observable relation between the short-term growth of world population and the increase of CO2 concentrations. Results suggest that the link between volcanic eruptions, ENSO activity, and CO2 concentrations may be confounded by the coincidence of the Pinatubo eruption with the breakdown of the economies of the Soviet Bloc in the early 1990s. Changes in world GDP (WGDP) have a significant effect on CO2 concentrations, so that years of above-trend WGDP are years of greater rise of CO2 concentrations. Measuring WGDP in constant US dollars of 2000, for each trillion WGDP deviates from trend, the atmospheric CO2 concentration has deviated from trend, in the same direction, about half a part per million.