Re-visiting the Environmental Kuznets curve for ASEAN: A comparison between ecological footprint and carbon dioxide emissions

Abstract

The relationship between macroeconomic factors and environmental pollution has been widely researched during the last two decades. The Environmental Kuznets Curve (EKC) has been investigated in a number of nations. However, the empirical research concentrating on evaluating two different environmental proxies for ASEAN (Association of Southeast Asian) countries has not been done earlier. Furthermore, the majority of studies considered first-generation econometric approaches since they fail to account for cross-sectional dependency in their estimation. For this intention, the study used the second generation: CADF and CIPS unit root tests, Westerlund cointegration test, fully modified ordinary least square (FMOLS) and Pooled Mean Group (PMG) to reinvestigate the EKC hypothesis in ASEAN nations between 1991 and 2016, examining two EKC specifications and comparing the validity of the EKC for consumption-based emissions (CO2 emission) and footprint-based emissions (ecological footprint). The empirical findings indicate that: (i) when using the EF, ‘the inverted U-shaped hypothesis’ is valid in ASEAN; on the contrary, when using the CO2 emissions, the ‘inverted U-shaped hypothesis’ is not valid in these countries; (ii) Non-renewable energy (NREC) has a significantly positive effect on EF and CO2 emissions whereas renewable energy consumption (REC) decreases environmental pollution in these countries; (iii) Unidirectional causality is reported between economic growth and environmental degradation while a bidirectional relationship is found between NREC and EF. A Significant policy recommendation is highlighted for ASEAN countries to encourage the consumption of renewable energy to lower CO2 emissions in the future and more efforts are needed to maintain the environmental sustainability.