Is the environmental Kuznets Curve in Europe related to the per-capita ecological footprint or CO2 emissions?

Abstract

Abstract The nexus between environment-economic development has been investigated for a long time. Many empirical studies have measured environmental degradation by CO2 emissions and ignored the possibility that the use of such metric as environmental degradation indicator may be invalid in some cases when it comes to resource stocks. This paper focuses on two indicators of environmental degradation including ecological footprint (EF) and CO2 emissions as target variables to provide new insights into the ongoing discussions of whether the environmental Kuznets Curve (EKC) hypothesis is related to the indicators of environmental pressure used. Estimating a heterogeneous panel model with data on 14 European countries over the period 1990–2014, we provide evidence for the sensitivity of the EKC hypothesis to the type of environmental degradation proxy used. Furthermore, we provide new insights regarding the relevance of EF as an appropriate environmental tool that fits the EKC prediction in contrast to CO2 emissions. Regarding the explanatory variables, the results show that renewable energy is an environmentally friendly source while fossil fuels contribute to environmental degradation. The inclusion of renewable energy and fossil fuel does not alter the behavior of economic growth in all environmental degradation indicators. The empirical results demonstrate the need to implement environmental management policies that encourage the production/supply of renewable energy and to reduce reliance on fossil fuel consumption. This paper is expected to provide policy makers with a set of policy proposals to achieve sustainable environmental and economic development.