Abstract
The aim of the present study is to test empirically the Environmental Kuznets Curve (EKC) hypothesis for 42 Romanian counties over the 2000-2014 period. Specifically, we investigate the existence of an inverted U-shaped curve relationship between residential built-up land and economic development in a low-income EU country undergoing rapid and profound transition. We do so by making innovative use of spatial panel econometric techniques. Contrary to our expectations, the results indicate an inverted EKC, implying that higher levels of residential built-up area occur for higher levels of wealth. Moreover, we find that the built-up land in Romania mainly reflects processes of urban expansion, such as sprawl or suburbanization, that may have harmful environmental and social consequences. Spatial spill-overs in terms of built-up land arise and spread, albeit to a limited extent, to neighbouring locations. These findings are of potential significance for policy makers, because they highlight the need for coordination among neighbours. Furthermore, strengthening the institutional framework and local tax management, and planning urban regeneration better could curb and even reverse the extensive built-up land expansion and real estate speculation.
Highlights
Within the European Union (EU), the urban dimension is a priority on the EU Cohesion Policy agenda
The Lagrange Multiplier (LM) test for spatial error dependence and the LM test for spatial lag dependence are both significant, and their robust versions point to spatial lag, since the Robust LM test for spatial lag dependence is more significant than the Robust LM test for spatial error dependence
We have analysed the relationship between GDP per capita and residential built-up land among Romanian NUTS3 regions
Summary
Within the European Union (EU), the urban dimension is a priority on the EU Cohesion Policy agenda. The EU Urban Partnership has an international dimension, being linked with the New Urban Agenda (Habitat III) and the Sustainable Development Goals (SDGs) (UN, 2015). Land use responds inevitably to national regulatory frameworks and to their convergence and harmonization with European and international criteria like those mentioned above. In this regard, we consider the case of Romania as distinctive for the following reason. Being in 2017, according to Eurostat data, the second poorest European country, it experiences an interplay between the general improvement of the economic conditions that cause an increase in demand for housing and for real-estate investment, and the need to comply with SDG 11 and European priorities of the New Urban Agenda.
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