Persistence of policy shocks to an environmental degradation index: The case of ecological footprint in 128 developed and developing countries

Abstract

The objective of this study is to examine the stationarity of ecological footprint for 128 countries for the period 1961–2013. We have been motivated by the seeming inadequacy of CO2 emission as an index for environmental degradation, the rising importance of ecological footprint as an aggregate environmental indicator and the lack of studies on the stochastic behaviour of ecological footprint. After separating the series into linear and nonlinear categories, we have used recent unit root test to examine the stationarity of the series. The overall results show evidence of a non-reverting mean in the series for 96 countries or 81% of the sample. This implies that ecological footprint is a nonstationary series and as such policies such as imposition of carbon tax, subsidy on cleaner energy and appropriate land use act will have long-term and permanent effects on it in many countries. The policy designs should also take into consideration the individual economic characteristics of each country as ecological footprint is found to be region invariant.