Convergence in Sulphur Dioxide (SO2) Emissions Since 1850 in OECD Countries: Evidence from a New Panel Unit Root Test

Abstract

The convergence of air pollution is a key assumption in several environmental impact assessment models and one of the major ingredients for multilateral climate agreements and allocation of emission rights. In this paper, the sulphur dioxide (SO2) emissions’ convergence among 32 OECD countries is examined using the panel stationarity test of Nazlioglu and Karul [1] that provides for smooth breaks, cross-sectional dependency and heterogeneity across the cross-sectional units. For robustness sake, we have also used a panel stationarity test that accounts for sharp breaks. Overall, the findings reveal that there is convergence of SO2 emissions among the OECD countries. The results imply that adjusting the mean value of the relative SO2 emissions trend path should be a key concern of the OECD nations. Moreover, the findings signify that instead of following independent paths in pollution control, the OECD countries are gravitating towards a similar standard of environmental performance. Moreover, the forecast of future relative SO2 emission figures can be based on its past values.