Re-examine environmental Kuznets curve in China: Spatial estimations using environmental quality index

Abstract

China is facing the challenge of maintaining sustainable economic growth in an environmental friendly manner. Therefore, it is of great necessity and importance to forecast the turning point of China’s environmental pollution. In this field, a frequently used empirical framework is the environmental Kuznets curve (EKC); however, the majority of the literature examining the EKC has focused on specific pollutants, which may have led to controversial estimation results because of the different characteristics of various pollutants. Therefore, in this study, a self-assessed environmental quality index (EQI) is constructed across 8 environmental factors that account for important pollutants and environmental emergencies by using the overall entropy method, and this EQI index is used to investigate the existence of EKC in China. Moreover, given that many environmental pollutants, especially air pollutants, may flow across regions, appropriate spatial econometric tools are employed to account for the potential spatial dependence of the environmental quality. Using the panel data of 30 provinces and autonomous regions for the period 2006–2015, the empirical results indicate evidence for an N-shaped relationship between the EQI and income per capita; this suggests that the overall environmental quality in China would first worsen and then gradually improve as the economy continues to grow. In addition, good governance is an important factor to accelerate the occurrence of the turning point of EKC. For policymakers, targeted policies and industrial upgrades would favor relatively underdeveloped regions and improve environmental quality.