ABSTRACT

In an open international economy trade occurs in both intermediate and final products, which results in carbon leakage. The net emissions embodied in trade can be measured from either a consumption- or a production-based perspective, but alternative perspectives can lead to different outcomes and thus possibly distorted mitigation responsibilities for each trading partner. Using the multiregional input-output model and statistics from the World Input-Output Database, this chapter estimates the carbon leakage induced by wood products trade from 2000 to 2014 for one major international trading nation, China. The production-based CO2 emissions of China’s forest products industry remained far larger than the consumption-based emissions—114.51Mt in 2014. A further decomposition of the carbon flows embodied in China’s forest products trade during 2000–2014 highlighted that its top three destinations of CO2 emission leakage were the United States, Japan, and Korea. A direct implication of this study is that major international trading partners, as well as international organizations, should consider adopting a unified framework of carbon accounting and leakage determination. Moreover, they should also address the issue of border tax adjustments accordingly.