Economic inequalities potentially affect climate change through two main channels: consumption and policy-making. Existing empirical research primarily identifies a direct, positive relationship between income inequality reduction and CO2 emissions from fossil fuels – largely driven by adverse consumption effects. However, these studies neglect the role of political processes, which introduce temporal lags in decarbonization outcomes. This paper addresses this gap by explicitly accounting for political mechanisms in two novel ways. First, it uses wealth (rather than income) inequality as a proxy for political power. Second, it considers CO2 emissions from land use change (rather than from fossil fuels), as a directly politically-driven and non-temporally delayed environmental outcome. Using a two-stage least squares estimator for a panel of 165 countries from 2000 to 2023, it shows that lower wealth inequality decreases land use change emissions. The effect is most pronounced when inequality is measured by the top 10% wealth share and in developing countries, where land use change emissions constitute the majority of total emissions. The findings indicate that inequality reduction and climate change mitigation are not contradictory goals and underscore the importance of integrating political channels into empirical analyses of the inequality-environment nexus.
