Economic growth as a proxy for environmental performance: Exploring the informational content of the environmental performance index

Abstract

International Journal of Energy and StatisticsVol. 02, No. 03, pp. 151-168 (2014) No AccessEconomic growth as a proxy for environmental performance: Exploring the informational content of the environmental performance indexDimitrios D. Thomakos and Thomas A. AlexopoulosDimitrios D. ThomakosDepartment of Economics, University of Peloponnese, Tripolis, GreeceCenter of Economic Analysis, ItalyProfessor at Department of Economics and Senior Rimini fellow at Center of Economic Analysis. Search for more papers by this author and Thomas A. AlexopoulosDepartment of Economics, University of Peloponnese, Tripolis, Greece Search for more papers by this author https://doi.org/10.1142/S2335680414500112Cited by:3 Next AboutSectionsPDF/EPUB ToolsAdd to favoritesDownload CitationsTrack CitationsRecommend to Library ShareShare onFacebookTwitterLinked InRedditEmail AbstractEnvironmental considerations are on the table for over two centuries now, since then the global community has made significant steps to mitigate the problem. Over the recent past, comprehensive environmental indexes such as the EPI index have been created so as to assess a nation's environmental performance. This paper examines the relationship of EPI index and economic growth. Although there are already previous works considering the effects of EPI on GDP, there is not any previous research on the explanatory power of economic growth on EPI. Such a reverse causality analysis is important in order to assess informational content of EPI. The results of our analysis indicate a positive effect of GDP on EPI which becomes stronger when high income developed countries are selected and insignificant for middle income developing countries. Moreover when we examine the interval of time between 2005 and 2012, we find a decreasing positive effect on EPI, which is also cross-checked in the clear negative trend of the country-average correlation of EPI and growth rates after 1995. Finally we examine the relationship between average and cumulative real GDP growth rates and EPI 2012. These results confirm that countries with high level of economic growth rates have the lowest environmental performances according to EPI index and vice versa, as suggested by the Environmental Kuznets Curve hypothesis.Keywords:Environmental performancereal GDPEPIcountry average correlationcountry clusters References A. J. Samimiet al., Advances in Environmental Biology 5(4), 655 (2011). Google ScholarA. H. Fakehi, S. Ahmadi and A. 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Alexopoulos14 April 2022Energy consumption, economic growth and environmental degradation in OECD countriesBurcu Ozcan, Panayiotis G. Tzeremes and Nickolaos G. Tzeremes1 Jan 2020 | Economic Modelling, Vol. 84Re-estimating the interconnectedness between the demand of energy consumption, income, and sustainability indicesBurcu Ozcan, Panayiotis Tzeremes and Eyup Dogan10 July 2019 | Environmental Science and Pollution Research, Vol. 26, No. 26 Recommended Vol. 02, No. 03 Metrics History Received 28 May 2014 Revised 2 July 2014 Accepted 8 July 2014 Published: 30 September 2014 KeywordsEnvironmental performancereal GDPEPIcountry average correlationcountry clustersPDF download