The disappearing Environmental Kuznets Curve: A study of water quality in the Lower Mekong Basin (LMB)

Abstract

The literature is flush with articles focused on estimating the Environmental Kuznets Curve (EKC) for various pollutants and various locations. Most studies have utilized air pollution variables; far fewer have utilized water quality variables, all with mixed results. We suspect that mixed evidence of the EKC stems from model and error specification. We analyze annual data for four water quality indicators, three of them previously unstudied – total phosphorus (TOTP), dissolved oxygen (DO), ammonium (NH4) and nitrites (NO2) – from the Lower Mekong Basin region to determine whether an Environmental Kuznets Curve (EKC) is evident for a transboundary river in a developing country and whether that curve is dependent on model specification and/or pollutant. We build upon previous studies by correcting for the problems of heteroskedasticity, serial correlation and cross-sectional dependence. Unlike multi-country EKC studies, we mitigate for potential distortion from pooling data across geographically heterogeneous locations by analyzing data drawn from proximate locations within a specific international river basin in Southeast Asia. We also attempt to identify vital socioeconomic determinants of water pollution by including a broad list of explanatory variables alongside the income term. Finally, we attempt to shed light on the pollution–income relationship as it pertains to trans-boundary water pollution by examining data from an international river system.We do not find consistent evidence of an EKC for any of the 4 pollutant indicators in this study, but find the results are entirely dependent on model and error specification as well as pollutant.