Revisiting the environmental kuznets curve hypothesis: evidence from the ASEAN-5 countries with structural breaks

This paper tests if the Environmental Kuznets Curve (EKC) hypothesis exists for ASEAN-5 countries in an annual sample data that covers 1971–2013, by utilizing Auto Regressive Distributed Lag (ARDL) methodology. The empirical findings give support for the EKC hypothesis for Thailand only, after considering the structural breaks. Furthermore, the paper tests the EKC hypothesis for a panel data of the ASEAN-5 by adopting the Pooled Mean Group (PMG) methodology. The results show that the long-run estimates provide no evidence for the EKC hypothesis. Finally, the paper examines the causality between the CO₂ emissions and GDP. For individual countries, bidirectional causality was found in the case of Thailand and Malaysia, plus unidirectional causality running from GDP and squared GDP to CO₂ emissions was found for Indonesia, but a unidirectional causality running from CO₂ emissions to GDP and squared GDP was found for the Philippines, however, no causality effect was found for Singapore. Furthermore, the pairwise Dumitrescu and Hurlin Panel Causality test show a bidirectional effect between CO₂ emissions and both GDP in addition to squared GDP.     

Economic growth and carbon emissions: evidence from CIVETS countries

ABSTRACT

This paper examines whether a long-run relationship exists between CO₂ emissions and selected variables: real gross domestic product per capita, inward stock of foreign direct investments, gross fixed capital formation, industry, value added and energy use per capita for Colombia, Indonesia, Viet Nam, Egypt, Turkey and South Africa countries in the period of 1989–2016. We used panel unit root testing, followed by panel cointegration tests and panel causality. The results clearly prove the existence of a bidirectional long-run causal relationship between all the variables except between CO₂ emissions and GDP and CO₂ emissions and GFCF. Major finding of the short-run causality analysis is that CO₂ emission in the short run does not result in changes of other variables. On the other hand, all variables except foreign direct investments (FDI) cause the changes in the CO₂ emissions, and there is a positive bidirectional causal relationship between GDP and FDI, between GFCF and FDI, and between GFCF and IVA. Finally, positive unidirectional causal relationship also exists, running from GDP to IVA, GDP to ENUSE, IVA to FDI and ENUSE to FDI.     

Questioning the empirical basis of the environmental Kuznets curve for CO2: New evidence from a panel stationarity test robust to multiple breaks and cross-dependence

This paper investigates the time series properties of per capita CO₂ emissions and per capita GDP levels for a sample of 86 countries over the period 1960-2000. For that purpose, we employ a state-of-the-art panel stationarity test which incorporates multiple shifts in level and slope, thereby controlling for cross-sectional dependence through bootstrap methods. Our analysis renders clear-cut evidence that per capita GDP levels are nonstationary for the world as a whole while per capita CO₂ is found to be regime-wise trend stationary. The analysis of country-groups shows that for Africa and Asia, per capita CO₂ is best described as nonstationary, while per capita GDP appears stationary around a broken trend. In addition, we find evidence of regime-wise trend stationarity in both variables for the country-groups consisting of America, Europe and Oceania. The results of our analysis carry important implications for the statistical modelling of the Environmental Kuznets curve for CO₂, since the differing order of integration in both variables for the world as a whole and for Africa and Asia calls into question the validity of panel cointegration techniques which assume that both variables are nonstationary and cointegrated with one another. Cointegration techniques would not be appropriate either for the case of America, Europe and Oceania which are characterised by per capita GDP and CO₂ emissions being stationary around a broken trend. Similar conclusions are reached when we analyse country-groups based on levels of development. Failure to properly characterise the time series properties of the data by not controlling for an unknown number of structural breaks and for cross-sectional dependence could be responsible for the fragility and lack of robustness surrounding the estimation of environmental Kuznets curves.     

Carbon dioxide emissions and interregional economic convergence in China

This paper examines the effect of carbon dioxide (CO₂) emissions on economic convergence among Chinese provinces from 1998 to 2012 using the framework of environmental total factor productivity (ETFP). We modify the standard β-convergence model to incorporate undesirable outputs such as CO₂ emissions. The bootstrap method is subsequently applied to estimate the values of ETFP, and the system generalized method of moments (GMM) estimator is employed to test for convergence. The results indicate that there is imperfect interregional economic convergence in China, which is supported by gross domestic product (GDP) and CO₂ emissions. However, the convergence process is inefficient due to the ‘catching up’ convergence trend of per capita CO₂ emissions in China. This paper also finds that the variation in the capital stock and labour does not support the hypothesis that all of the provinces can converge to a steady state.     

A panel data heterogeneous Bayesian estimation of environmental Kuznets curves for CO2 emissions

This article investigates the Environmental Kuznets Curves (EKC) for CO₂ emissions in a panel of 109 countries during the period 1959 to 2001. The length of the series makes the application of a heterogeneous estimator suitable from an econometric point of view. The results, based on the hierarchical Bayes estimator, show that different EKC dynamics are associated with the different sub-samples of countries considered. On average, more industrialized countries show evidence of EKC in quadratic specifications, which nevertheless are probably evolving into an N-shape based on their cubic specification. Nevertheless, it is worth noting that the EU, and not the Umbrella Group led by US, has been driving currently observed EKC-like shapes. The latter is associated to monotonic income–CO₂ dynamics. The EU shows a clear EKC shape. Evidence for less-developed countries consistently shows that CO₂ emissions rise positively with income, though there are some signs of an EKC. Analyses of future performance, nevertheless, favour quadratic specifications, thus supporting EKC evidence for wealthier countries and non-EKC shapes for industrializing regions.     

A decomposition analysis of CO2 emissions in the United States

This article decomposes the growth in US CO₂ emissions by state. Using the Logarithmic Mean Divisia Index (LMDI) method, we account for CO₂ emissions change in each state between 1990 and 2004. The change is decomposed into five effects: (a) emissions per unit of fossil fuel; (b) share of fossil fuel in total energy consumption; (c) energy intensity; (d) gross state product per capita and (e) population. Results show that for the past 15 years gains in the efficiency of energy use in the economy, the lowering share of fossil fuels in total energy consumption and lowering of emissions intensity of fuels all contributed to offsetting the effect of Gross Domestic Product (GDP) per capita and the population growth in carbon emission across the US.     

Empirical study on the determinants of CO2 emissions: evidence from OECD countries

This article empirically investigates the Environmental Kuznets Curve (EKC) for CO₂ emissions in the cases of 11 OECD countries by taking into account the role of nuclear energy in electricity production. The autoregressive distributed lag approach to cointegration is employed as the estimation method. Our results indicate that energy consumption has a positive impact on CO₂ emissions in most countries in the study. However, the impact of trade is not statistically significant. The results provide evidence for the role of nuclear power in reducing CO₂ emissions only in some countries. Additionally, although the estimated long-run coefficients of income and its square satisfy the EKC hypothesis in Finland, Japan, Korea and Spain, only Finland's EKC turning point is inside the sample period of the study, providing poor evidence in support of the EKC hypothesis.     

环境约束下地区全要素生产率增长及影响因素研究——基于马姆奎斯特生产率指数和环境库兹涅茨曲线分析

采用非参数马姆奎斯特(Malmquist)指数估算我国2000～2009年29个省、直辖市和自治区的全要素生产率(TFP),并分析了人均GDP、人口密度、教育水平、城镇化率对全要素生产率的影响。研究发现:在给定资源投入情况下,东部的生产率增加值大于中部、西部,同时污染排放还小于中部、西部;人均GDP与TFP呈倒U型曲线,即环境要素生产率与人均GDP之间存在环境库兹涅茨(EKC)曲线关系;教育水平与环境要素生产率正相关,城镇化率和人口密度与TFP负相关。     

Does Ecological Footprint Impede Economic Growth? An Empirical Analysis Based on the Environmental Kuznets Curve Hypothesis

This paper examines the relationship between income and environmental quality using environmental Kuznets curve (EKC) hypothesis. The hypothesised link is tested using time‐series analysis of 22 countries over the period 1961–2011. The degree of environmental impacts of economic activity is measured using ecological footprint (EF) per capita as explanatory variable, while real gross domestic product (GDP) per capita and its quadratic and cubic forms are used as predictor variables in these countries. First, the EKC hypothesis is tested through examining the relationship between EF and GDP using linear, quadratic and cubic functions. Further, the long‐run relationship between EF and GDP is investigated using a vector error correction model. It was found that there is a cointegrated relationship between the variables in almost all countries, which was statistically significant, and EKC supported in 10 countries. Additionally, almost all error correction terms are correct in sign and are significant, which implies that some percentage of disequilibria in EF in the previous year adjusts back to the long‐run equilibrium in the current year. Therefore, an efficient trade‐off between environmental protection and economic benefits should be taken, and EF should be reduced through changing consumption patterns, improving the efficiency of use of resources and cleaner technology choices.     

收入分配视角下经济增长与环境质量的关系

利用2003—2010年中国省级面板数据,将城乡收入差距的基尼系数作为衡量收入差距的指标,并将该指标作为主要的解释变量引入线性计量模型,使用主成分分析方法设计反映环境质量的综合指标,探讨了中国经济增长与环境质量之间的关系。研究结果显示:收入分配不公并不必然带来环境质量恶化,城乡收入差距与环境质量之间存在显著的负向关系;随着人均产出的上升,环境质量逐渐得到改善,"倒U型"的环境库兹涅茨曲线并不存在;地方政府对环境保护的重视程度会显著影响一个地区的环境质量。     

Is the Green Solow Model Valid for $$\hbox {CO}_{2}$$ Emissions in the European Union?

This paper addresses the \(\hbox {CO}_{2}\) emission patterns of the European Union from 1950 to 2010, and examines the validity of the Green Solow model, which simulates \(\hbox {CO}_{2}\) emissions growth by including only Solow forces and assuming emission intensity growth to be exogenous and constant. This study verifies that an environmental Kuznets curve (EKC) trajectory exists for per capita \(\hbox {CO}_{2}\) emissions in the European Union, that emission intensity growth is decreasing over time, and that the decreasing intensity growth reflects variations of the dependent variable in the specifications of the Green Solow model. The critique by Stefanski (On the mechanics of the Green Solow model. OxCarre Research Paper 47, OxCarre & Laval University, Oxford, 2013) of the Green Solow model assumption of exogenous and constant intensity growth is validated. The EKC is defined as the emissions plotted against income and emission intensity is defined as the ratio of emissions to income. The EKC and emission intensity share identical definitions and similar transition trajectories over time. The transition of the EKC trajectory and decline in emission intensity growth began before worldwide attention was focused on global warming.     

Air Pollution and ‘Dirty’ Industries: How and Why Does the Composition of Manufacturing Output Change with Economic Development?

This paper examines the impact on air pollution ofchanges in the composition of manufacturing output indeveloped and developing countries. Pollutionemissions from manufacturing output are estimated ina manner which holds constant the effect of technologyand regulations allowing the impact of compositional changes alone on pollution to beestimated. The paper has three main findings; (1) theinverted-U estimated between per capita income and thepollution intensity of GDP arises due to both thecomposition of manufacturing becoming cleaner and theshare of manufacturing output in GDP falling.Compositional changes alone are not responsible forthe inverted-U between per capita income and percapita emissions; (2) changes to the composition ofmanufacturing output are consistent with the pollutionhaven hypothesis, however there is clear evidence thatrising per capita incomes are associated with afalling income elasticity of demand for `dirty'products. This fact may explain the compositionalchanges that occur with development; (3) in additionto the income elasticity effect, the analysis suggeststhat land prices and to a lesser extent the prices oflabour and capital, determine the proportion of dirtyindustry within a country's manufacturing sector.     

Can innovation shocks determine CO2 emissions (CO2e) in the OECD economies? A new perspective

ABSTRACT

This study has attempted to address prior knowledge gaps in the environmental economics literature by integrating the innovation shocks into the Environment Kuznets Curve (EKC) equation for twenty-six OECD economies using data from 1990 to 2014. Foreign direct investment (FDI), exports (EXP), renewable energy consumption (REC), and GDP per capita were included as control variables. The results from multiple empirical analyses indicated that positive shocks to innovation improve, but the negative shocks disrupt environmental quality. Data analyses also showed that a positive correlation exists between income per capita of OECD economies. From the negative coefficient of income per capita (squared) and the existence of a negative nexus between FDI and CO2e, both the EKC and the Pollution Halo Hypothesis (PHH) were confirmed in sampled economies, respectively. The paper offers empirical support for the favourable impacts of REC on the quality of the environment and calls for the adoption of innovation shocks as a policy instrument to formulate better environmental policies for a sustainable future.     

Does economic growth and energy consumption drive environmental degradation in China’s 31 provinces? New evidence from a spatial econometric perspective

The panel data analysis points to economic and social factors contributing to NO_x, PM_2.5, PM₁₀, SO₂, and VOCs in China’s 31 provinces. The spatial correlation analysis using Global and Local Moran’s I values indicates the existence of a significant and positive spatial autocorrelation with respect to environment, economy and energy, and the high spatial correlation is evident in the eastern region, covering the northern part of Yangtze River Delta, Huaihai Economic Zone, and the lower reaches of the Yellow River Economic Belt. The empirical estimation is performed through spatial lag and spatial Durbin models. All emitted air pollutants in 31 provinces have significant spatial dependence and strong spillover effects. There is an inverted U-shaped relationship between emitted air pollutants (NO_x, PM₁₀, VOCs, and PM_2.5) and per capita GDP, which follows the EKC hypothesis. The relationship between SO₂ and per capita GDP does not follow the EKC hypothesis. There is a positive relationship between pollutant emissions and coal consumption, which is consistent with current studies for various countries like Canada, Denmark, UK and US and regions like New York State. However, the effects of science and technology investment on air pollutants are mostly positive, which is not as policy expected.     

Stochastic convergence of per capita carbon dioxide emissions and multiple structural breaks in OECD countries

This research applies an innovative panel data stationarity testing procedure developed by Carrion-i-Silvestre et al. [Carrion-i-Silvestre, J.L., Barrio-Castro, T.D. and Lopez-Bazo, E., 2005. Breaking the panels: An application to the GDP per capita, Econometrics Journal 8, 159–175.], which has the advantage of recognizing multiple structural breaks and the presence of cross-section dependence in order to re-investigate the hypothesis that per capita carbon dioxide (CO₂) emissions stochastically converge for 21 OECD countries from 1950 to 2002. Remarkably, the evidence clearly indicates that the panel dataset of relative per capita CO₂ emissions is stationary after the structural breaks and cross-sectional dependence are introduced into the model. These findings offer strong policy implications for governments, regardless of whether they are in “convergent group” or “divergent group” countries. We also find that the structural breaks in the 1960s and over the 1970–1982 period are associated with time periods of fossil fuel becoming the main source of productivity, higher oil prices, and the development of nuclear power.     

Carbon dioxide emission and income: A temporal analysis of cross-country distributional patterns

This paper explores the relationship between the inter-country income inequality and CO₂ emission and temporal shifts in such a relationship. It also examines how the mean per capita CO₂ emission and its distributional inequality are related to the corresponding mean and the distributional inequality of income. The analysis is based on a cross-country panel data set at the level of country-group. Here environmental damage is treated as a private good and the technique of Lorenz and specific concentration curve analysis have been used as the basic analytical framework to argue that distributional inequality of income should be an explanatory variable in the Environmental Kuznets Curve relationship, along with the mean income level. In the empirical exercise, Johansen's cointegration analysis technique is used to explore existence of statistically significant cointegrating vector(s) relating mean emission and Specific Concentration Ratio of emission to mean income level and Lorenz Ratio of income, using a set of country-group specific time series data set which covers four country-groups (viz., Africa, America, Asia and Europe) and the World as a whole. The empirical results confirm that the inter-country income inequality has significant effect on the mean emission level and inter-country inequality of emission level for most of the country-groups considered.     

二氧化碳排放与经济增长关系的EKC检验——对我国东、中、西部地区的一项比较

根据环境库兹涅茨曲线理论,本文选用1996—2008年中国省域面板数据,研究了东、中、西部地区人均碳排放EKC的存在性。研究结果表明：第一,东、中部地区存在人均碳排放EKC,而西部地区入均碳排放与经济增长呈线性关系。第二,东、中部地区人均碳排放EKC拐点到达的时间不同,东部地区较晚而中部地区较早,并且碳排放强度下降会促使拐点提前到达。第三,东、中、西部地区人均碳排放均存在较强的排放惯性,当期经济增长会对未来几年的环境质量产生影响。     

中国CO_2排放与经济增长间关系的实证分析——基于双向分量回归模型

采用双向分量回归法探讨1985—2009年中国CO2排放与经济增长的关系,并且在模型中引入共同边界技术效率比,以解决一般固定效应模型无法捕捉不随时间变动的因素对两者间内在关系的影响这一问题。结果显示:经济发展水平越低的地区,人均GDP对人均CO2排放量的弹性系数越大;随着经济发展水平的提高,人均CO2排放量与人均GDP的关系曲线逐渐平缓,低、中收入地区的EKC不呈倒U型,高收入地区的EKC呈不明显的倒U型。     

The Stochastic Convergence of CO<Subscript>2</Subscript> Emissions: A Long Memory Approach

In response to equity concerns surrounding the spatial distribution of CO₂ emissions and assumptions of CO₂ convergence within some climate models, this paper examines the convergence of CO₂ emissions within the OECD over the period 1870–2004. More specifically, using the Local Whittle estimator and its variants we examine whether relative per capita CO₂ emissions are fractionally integrated, that is they are long memory processes which, although highly persistant, may revert to the mean/trend in the long run. Our results suggest that CO₂ emissions within 13 out of 18 OECD countries are indeed fractionally integrated implying that they converge over time, albeit slowly. Interestingly though, the countries whose emissions are not found to be fractionally integrated are some of the highest polluters within the OECD, at least in per capita terms. Our results have implications both for future studies of CO₂ convergence and for climate policy.     

Causality between income and emission: a country group-specific econometric analysis

Empirical studies of the Environmental Kuznets Curve (EKC) examine the presence or otherwise of an inverted U-shaped relationship between the level of pollution and the level of income. Customarily, in the diagram of EKC the level of income is shown on the horizontal axis and that of pollution on the vertical axis. Thus, it is presumed that the relationship between income and pollution is one of unidirectional causality with income causing environmental changes and not vice versa. The validity of this presumption is now being questioned. It is being asserted that the nature and direction of causality may vary from one country to the other. In this paper, we present the results of a study of income–CO₂ emission causality based on a Granger causality test to cross-country panel data on per capita income and the corresponding per capita CO₂ emission data. Briefly, our results indicate three different types of causality relationship holding for different country groups. For the developed country groups of North America and Western Europe (and also for Eastern Europe) the causality is found to run from emission to income. For the country groups of Central and South America, Oceania and Japan causality from income to emission is obtained. Finally, for the country groups of Asia and Africa the causality is found to be bi-directional. The regression equations estimated as part of the Granger causality test further suggest that for the country groups of North America and Western Europe the growth rate of emission has become stationary around a zero mean, and a shock in the growth rate of emission tends to generate a corresponding shock in the growth rate of income. In contrast, for the country groups of Central and South America, Oceania and Japan a shock in the income growth rate is likely to result in a corresponding shock in the growth rate of emission. Finally, causality being bi-directional for the country groups of Asia and Africa, the income and the emission growth rates seemed to reinforce each other.