Environmental Kuznets Curve Phenomenon Research Articles

Examining the drivers of CO2 Emission: Evidence from Indonesia

CO2 emissions are a significant risk and threat not only to the economy, environment, and agriculture but also to public health. In this study, we examine empirical evidence of the impact of economic growth, renewable energy use, and agricultural sector improvement on reducing CO2 emissions and environmental degradation in Indonesia based on the Environmental Kuznets Curve (EKC) hypothesis. This study uses annual time series data from 1988 to 2020 by applying Dynamic Least Squares (DOLS) and Fully-Modified Least Squares (FMOLS) econometric estimation techniques. Based on empirical evidence, the EKC phenomenon in Indonesia cannot be validated and justified because it correlates with increasing economic growth rates as well as increasing CO2 emissions. In addition, technological innovation and renewable energy applied to Indonesia’s more modern agricultural sector have a significant impact on reducing carbon emissions and improving environmental quality. Furthermore, the consumption of renewable energy in Indonesia is limited to the manufacturing and service sectors, which means it does not contribute to carbon emissions.

Revisiting the pollution haven hypothesis within the context of the environmental Kuznets curve

PurposeThis purpose of this study is to explore the impact of global trend of economic integration and interconnectedness which has drawn the attention of world economies and their implications on trade inflow. This trajectory has its impact, either positive/negative, on key macroeconomic indicators, to say the least on environmental sustainability, especially emerging economies. To this end, the need to explore the connection between foreign direct investment (FDI) inflow and energy consumption amidst the wave of economic globalisation is timely and pertinent for the case of Turkey.Design/methodology/approachThis study seeks to explore the interaction between the outlined variables in a carbon-income framework for annual time series data from 1970 to 2016. A series of econometrics strategies was used consisting of unit root tests to examine the stationarity properties of the highlighted series. Subsequently, Pesaran’s Bounds testing technique is used to explore the long-run equilibrium relationship between the highlighted variables in conjunction with the Johansen cointegration test. For long-run regression coefficients, Pesaran’s autoregressive distributed lag and dynamic ordinary least squares methodology are used, and innovative accounting approaches are used to explore the responsiveness of each variable on another.FindingsEmpirical results validate the pollution haven hypothesis (PHH) in the long run for the case of Turkey. Thus suggesting that FDI inflow induced environmental degradation in Turkey. Additionally, this study observed that renewable energy, on the contrary, improves the quality of the environment. This study also affirms the presence of the environmental Kuznets curve phenomenon, indicating that Turkey, at its early stage of economic trajectory, emphasis is on economic growth rather than environmental quality. This suggests a need for more deliberate action(s) by the government administrators to pursue cleaner FDI inflow and energy technologies and strategies to foster a clean environment in Turkey and a cleaner ecosystem at large.Originality/valueThis study is unique in its choice of variables which is in line with the United Nations Sustainable Development Goals (SDGs) agenda to be achieved by 2030 and is very limited in the extant literature. From the economic perspective, the effect of the PHH is of interest especially to ascertain the extent the interplay among the variables has on the economy of Turkey. The empirical insights on PHH hypothesis have received less documentation in the extant literature especially for emerging economy like Turkey. Thus, this study seeks to revisit this theme for Turkey with aim to presents environmentally sustainable strategies without compromise for economic growth. Thus, this study seeks to revisit this theme.

Revisiting EKC hypothesis in context of renewable energy, human development and moderating role of technological innovations in E-7 countries?

The present study examines the potential of the traditional environmental Kuznets curve (EKC) with an extension for growing industrialized economies, including Brazil, China, India, Indonesia, Russia, Mexico and Turkey (E-7 economies) spanning from 1995 to 2019. Since the E-7 economies are still in a growing phase, this study adds to the EKC phenomenon by taking into description human development, the use of renewable energy, and technological innovations for investigation. Second-generational panel econometrics techniques, such as cross-sectional augmented autoregressive distributive lag (CS-ARDL), Augmented Mean Group (AMG), and Dumitrescu-Hurlin causality tests, form the basis of the experimental framework’s design. The study confirms the existence of the EKC phenomena in E-7 economies, where income expansion is prioritized in relation to environmental sustainability. The study’s findings demonstrate that technological modernization helps to mitigate pollution level. Therefore, human development, technological innovation, and the use of renewable energy are held up as the panacea for reducing carbon emissions over the time period under study. Finally, some further policy suggestions are provided.

How does financial inclusion affect environmental degradation in the six oil exporting countries? The moderating role of information and communication technology

Progress in financial inclusion has played a major role in economic development and poverty reduction. However, the environmental impact of financial inclusion calls for urgent implementation of environmental strategies to mitigate climate change. Financial inclusion forces the policies of developed countries to advance and not affect the present and future development of developing countries. Therefore, the current study aims to investigate the direct effects of information and communication technology (ICT) usage on environment as well as its moderating role on the association between financial inclusion and environmental degradation for six oil exporting countries (United Arab Emirates, Saudi Arabia, Russia, Kuwait, Canada, and the United States), using annual panel data from 1995 to 2019. We also analyze the validity of the environmental Kuznets curve (EKC) phenomenon for the entire sample, as well as the role of energy consumption and population. Employing the Method of Moments Quantile Regression (MMQR) with fixed effects, this study supported the existence of EKC phenomenon here as linkage amid human development index and carbon intensity. We find that energy consumption significantly increases carbon intensity. The empirical results showed that the application of internet- and mobile use as indicators of ICT usage lead to environmental preservation in the six oil exporting economies. Also, we observe that financial inclusion has mitigating effects on pollutant emissions, contributing to environmental preservation. Interaction between ICT usage and financial inclusion jointly reduces carbon intensity in all quantile distributions. A robustness check using an alternative proxy of the financial inclusion also confirms that ICT usage significantly and negatively moderates the association between financial inclusion and carbon intensity. Based on the findings of this study, the selected oil exporting countries should integrate financial inclusion with environmental policies to reduce carbon intensity.

Testing non-linear effect of urbanization on environmental degradation: Cross-country evidence

The contribution of structural transformation and urban development is considered crucial for the long run socio-economic growth but has adversely affected environmental sustainability over last few decades. This empirical research makes an innovative and holistic addition to the prior literature by examining the non-linear effect of economic growth and urban dynamics on environmental degradation in a comprehensive panel data of 66 countries and across respective income groups for the period 1990–2016. For empirical analysis, the robust econometric methods of two-way fixed effects (2W-FE), panel fully modified ordinary least squares (PFMOLS), and Driscoll-Kraay regressions have been applied to account for all econometric issues. The study unveils the bell-shaped effect of economic growth on environmental degradation which confirms the Environmental Kuznets Curve (EKC) and structural change hypotheses. The results of this study signifies the inverted U influence of urbanization and urban agglomerations on CO2 emissions and hence supports Ecological Modernization Theory (EMT). Our empirical findings also unfold the heterogeneous non-linear effects of urban dynamics across various income categories of selected economies. By employing the heterogeneous Dumitrescu and Hurlin (D-H) (Granger non-causality tests), the findings of this study confirm the prior estimations and establish significant unilateral and bilateral causal nexus of structural change and urban dynamics with environmental degradation. By verifying the existence of Environmental Kuznets Curve phenomenon in Low and Lower Middle Income (LLMI) and Upper Middle Income (UMI) group countries, this study necessitates for the policy makers to adopt the eco-friendly industrial and energy policies for the long run social, economic and environmental sustainability.

The Nexus between FDI, Per Capita Income, Energy Consumption, Trade Openness, and Carbon Dioxide Emissions: Panel Data Analysis of ASEAN Plus Six

ASEAN and ASEAN Plus countries’ commitment in following the Paris Agreement requires them to utilize trade and investment to balance economic growth and improve environment quality. Using observational data from eleven ASEAN Plus countries from 1979–2018, this study aims to assess how income, energy consumption, FDI, and trade openness jointly cause CO2 emissions in ASEAN Plus countries using panel data estimates. This research proves the existence of the Inverted-U Environmental Kuznets Curve phenomenon in ASEAN Plus countries. In addition, a significant increase in energy consumption explains the increase in CO2 emissions levels in this region. FDI inflows have been found to have a negative relationship with the level of CO2 emissions. Meanwhile, trade openness has been found to positively influence the level of CO2 emissions. This FDI and trade relationship with CO2 emissions shows the need for a new harmonization of a more environmental-friendly integrated production system in the region.

Environmental consequences of foreign direct investment influx and conventional energy consumption: evidence from dynamic ARDL simulation for Turkey.

The preponderance of emerging economies confronts significant trade-offs between economic growth and environmental sustainability considerations, and Turkey is no exception. This study draws strength from the United Nations Sustainable Development Goals (UN-SDGs-7,11,12 & 13). To this end, the present study explores the role of the environmental Kuznets curve (EKC) hypothesis for the case of Turkey for annual frequency data from 1970 to 2020. The present study leverages on the novel dynamic autoregressive-distributed lag (DARDL) methodology and Bayer and Hanck combined cointegration test. The combined Bayer and Hanck cointegration test alongside ARDL bounds test traces equilibrium relationship between economic growth, urbanization, FDI, energy use, and CO2 emission over the investigated period. Empirical results from the DARDL simulation analysis validates the EKC hypothesis. These results suggest that environmental quality is being compromised for economic growth at the earlier stage of economic growth (scale stage). The EKC phenomenon is affirmed as a 1% increase in economic growth increase emission level by 0.1580% and quadratic economic growth decrease emission by 0.1095% in the short and long run, respectively. Similarly, urbanization and energy used in both the short and long run also worsen environmental quality while FDI influx in the long run improves environmental quality in Turkey. These outcomes have far-reaching environment-urbanization growth implications. From a policy lens, the current study subscribed to the environmental stick policies and investment on strategies on a paradigm shift from fossil-fuel energy consumption base to renewables. Further insights are highlighted in the concluding section.

Exploring the tourism-CO2 emissions-real income nexus in E7 countries: accounting for the role of institutional quality

ABSTRACT The purpose of this study is to explore the long-run and causality relationship between tourism development and the real income level in an environmental Kuznets Curve (EKC) framework for emerging industrialised economies (E7). The newness of our study to the tourism literature is the inclusion of institutional quality and tradeto the mix. The inclusion of the additional variables in the econometrics setting is worthwhile to circumvent omitted variable bias. Second-generation panel estimation techniques, in conjunction with the Driscoll-Kraay robust estimator, have been employed to accommodate cross-sectional dependency in the panel under review, as well as for robustness of coefficients and estimates. The Empirical results affirm the presence of the EKC phenomenon and tourism-induced emission in E7 economies, thereby suggesting that sustainable tourism has a deteriorating impact on economic growth in the examined industrialised countries. Similarly, real GDP per capita and non-renewable energy also dampen the quality of the environment, as indicated by the robust regression of AMG and CCEMG. Hence, an increase in non-renewable energy and tourism demand increases CO2emission in E7 economies. Additionally, we observe that the quality of institution improves the quality of the environment, thus, indicating that the role of good governance (institutional quality) improves the quality of the environment in E7. Furthermore, there is a need for a paradigm shift to sustainable tourism development alongside the adoption of the polluters pay principles to mitigate the adverse implications of the consumption of non-renewable energy. More insights are presented in the concluding section.

Beyond the environmental Kuznets Curve in E7 economies: Accounting for the combined impacts of institutional quality and renewables

This study explores the applicability of conventional environmental Kuznets curve (EKC) with an extension for the case of emerging industrialized economies, comprised of China, India, Brazil, Mexico, Russia, Indonesia, and Turkey, for annual time frequency from 1995 to 2016. This study is distinct from that already documented in the extant literature by extending the traditional EKC phenomenon by accounting for the combined impact of institutional quality and renewables in E7 blocs. The countries under review are known to be emerging and still at their scale stage of their growth path. As such, the need to explore the theme is pertinent for stakeholders. Empirical framework is built on second-generational panel econometrics strategies that consist of Augmented Mean Group, Common Correlated Effects Mean Group estimator, Driscoll-Kraay and Dumitrescu and Hurlin Causality analysis, which is superior to first-generation methods. Our study validates the EKC phenomenon in E7, i.e., where emphasis is placed on economic expansion relative to the quality of the environment. The EKC phenomenon is validated by the deteriorating effect of fossil-fuel energy consumption in the bloc. However, renewables are seen as a panacea to reduce pollution emission as renewable energy exerts a negative and statistical relationship with CO2 emission over the sampled period. Additional results show that weak institution also dampens the quality of the environment in E7. These outcomes are suggestive to policy makers to reinforce their commitment to the quality of the environment in terms of growth and energy transition from fossil fuel to clean energy sources. Further policy prescriptions are presented in the concluding section.

Estimating different order polynomial logarithmic environmental Kuznets curves

This paper contributes to the environmental literature by (i) demonstrating that the estimated coefficients and the statistical significance of the non-leading terms in quadratic, cubic, and quartic logarithmic environmental Kuznets curve (EKC) specifications are arbitrary and should therefore not be used to choose the preferred specification and (ii) detailing a proposed general-to-specific type methodology for choosing the appropriate specifications when attempting to estimate higher-order polynomials such as cubic and quartic logarithmic EKC relationships. Testing for the existence and shape of the well-known EKC phenomenon is a hot topic in the environmental economics literature. The conventional approach widely employs quadratic and cubic specifications and more recently also the quartic specification, where the variables are in logarithmic form. However, it is important that researchers understand whether the estimated EKC coefficients, turning points, and elasticities are statistically acceptable, economically interpretable, and comparable. In addition, it is vital that researchers have a clear structured non-arbitrary methodology for determining the preferred specification and hence shape of the estimated EKC. We therefore show mathematically and empirically the arbitrary nature of estimated non-leading coefficients in quadratic, cubic, and quartic logarithmic EKC specifications, being dependent upon the units of measurement chosen for the independent variables (e.g. dependent upon a rescaling of the variables such as moving from $m to $bn). Consequently, the practice followed in many previously papers, whereby the estimates of the non-leading terms are used in the decision to choose the preferred specification of an estimated EKC relationship, is incorrect and should not be followed since it potentially could lead to misleading conclusions. Instead, it should be based upon the sign and statistical significance of the estimated coefficients of the leading terms, the location of turning point(s), and the sign and statistical significance of the estimated elasticities. Furthermore, we suggest that researchers should follow a proposed general-to-specific type methodology for choosing the appropriate order of polynomials when attempting to estimate higher-order polynomial logarithmic EKCs.

The Moderating Role of Employment in an Environmental Kuznets Curve Framework Revisited in G7 Countries

Anthropogenic activities have resulted in environmental concerns due to the global consciousness for mitigating climate change issues. This awareness is emphasized in the sustainable development goals contained in the seventh and 13th targets. The study investigates the nexus between energy and growth while considering the moderating role of employment and its interaction with energy consumption in G7 countries for the period of 1980–2018. To achieve this objective, a carbon-income function is fitted to ameliorate the problems related to omitted variable bias. Empirical results indicate that all outlined variables are cointegrated over the investigated period, as reported by the Kao cointegration test. The study further validates the environmental Kuznets curve (EKC) hypothesis in the short-run. With emphasis on economic growth relative to environmental quality while in the long run, there is no statistical evidence in support of the EKC phenomenon. Furthermore, a 1% increase in energy consumption increases pollutant emission in the long run by 3.80%. Similarly, a positive elastic relationship is observed between trade and environmental degradation. This outcome is demonstrated in the causality results, which reveal a one-way causality running from trade to pollutant emission. These findings provide insights that can help policy formulations, including decoupling economic growth from pollutant emission and the need to adopt cleaner and eco-friendly technologies.

Testing the transport-induced environmental Kuznets curve hypothesis: The role of air and railway transport

The airline and railway industry contribute immensely to economic development, however, its role in environmental pollution requires attention. Here, this study builds on the theoretical pedigree of the environmental Kuznets curve (EKC) hypothesis to explore the contribution of the air and railway transportation sector and urbanization to the emission-growth argument. We utilized annual time-frequency data from 1995 to 2014 for a panel of top 10 air passenger carrier countries using robust panel estimators that control for cross-section dependence. The empirical analysis shows a positive significant relationship between emissions and economic growth, thus, economic growth is emission-embedded with limited green growth. The existence of the EKC phenomenon is affirmed for the investigated blocs — where economic growth is prioritized over environmental quality. Additional, while air transportation drives pollution, railway transportation and urbanization decline emission over the sampled period. The results underscore the need for clean and environmentally friendly energy sources for air sector operations.

The empirical relationship between environmental degradation, economic growth, and social well-being in Belt and Road Initiative countries.

This study used principal component analysis (PCA) to develop composite indexes for economic growth, environmental degradation, and social well-being. The mutual relationship between these indexes was empirically tested using a panel vector autoregressive model based on a generalized method of moment approach (PVAR-GMM), and robustness was determined with Driscoll and Kraay regression. To this end, we gathered the data for 36 Belt and Road Initiative (BRI) countries over the period 1995-2016. Using a multivariate framework, the empirical results showed that environmental degradation and social well-being have a significant positive impact on the economic growth index. The social well-being index and economic growth are contributors to environmental degradation. Similarly, economic growth, in the long run, improves social well-being. The results confirm bidirectional causality between economic growth and environmental degradation. Another bidirectional causal relationship was found between economic growth and social well-being. Further, causality exists from social well-being to environmental degradation, but not vice versa. The analysis of the impulse response function exhibited the presence of the environmental Kuznets curve phenomenon in BRI countries. Moreover, the results of variance decomposition suggested that a shock in one index spills over to other indexes simultaneously. The study suggests that policymakers should consider social well-being and environmental degradation in economic activity to achieve sustainable development goals.

Effusions of carbon dioxide in MENA countries: inference of financial development, trade receptivity, and energy utilization.

In the new golden era, the financial catastrophe, energy consumption, and environmental contamination are seen as a vital economic concern. Review of empirical study between financial developments, with trade, and the consumption of energy on emissions of CO2 has revealed no consensus in the literature. Therefore, this research scrutinizes the inference of financial development, receptivity of trade, and the utilization of energy on the effusion of CO2. The present study adopts FMOLS {fully modified ordinary least squares} and DOLS {dynamic ordinary least squares} estimators to investigate the nexus between the outlined variables for the case of ten MENA countries for annual data from 1970 to 2017. The major findings provide proof of a negative linkage between financial development and that of CO2 emission. Hence, higher financial development in the region over time will lead to more reduction of CO2 emission. However, the trade receptivity and energy utilization result to positive remarkable influence on the effusion of CO2. The major policy inference from this study is that expansion of trade or increase in trade openness as suggest by Environmental Kuznets curve phenomenon will reduce the emission of carbon in MENA region in the long run. Also, financial development causes a reduction in emission of carbon in the region. Thus, it is very essential for policymakers and government administrators of MENA countries to promote policies and activities that will enhance development financially and trade receptivity in the region. Energy consumption is found to increase the emission of carbon in the region; thus, there is need to ensure implementation of policies designed to secure efficient energy use and energy supply at the same actualizing the target of having supportable environment and enlargement of MENA nations' far-reaching projects in renewable energy.

Policy or income to affect the generation of medical wastes: An application of environmental Kuznets curve by using Taiwan as an example

Abstract Prior studies primarily suggest that the generation of medical wastes maintains a positive relationship with national incomes. In contrast, higher incomes may lead to improved health status, consequently resulting in lower generation of medical wastes. Under this circumstance, an inverted U-shaped curve may be used to describe the generation of medical wastes along with economic growth. Additionally, illegal disposal is believed to have a high impact on human health. Thus, the purpose of this paper is to examine the presence of the environmental Kuznets curve for both the generation and illegal disposal of medical wastes by using a model of the environmental Kuznets curve. The results find the generation of medical wastes is positively affected by incomes, but this paper identifies the existence of the environmental Kuznets curve phenomenon for illegal disposal. Both the generation and illegal disposal of medical wastes are positively affected by medical capacity but negatively affected by medical policy. The primary contributions of this paper are three-fold. First, this paper is the first to focus on the existence of the environmental Kuznets curve phenomenon for both the generation and the illegal disposal of medical wastes. Second, this paper confirms the existence of the environmental Kuznets curve for the illegal disposal of medical wastes. Illegal disposal may be blocked when national incomes reach a specific level, and thus, the government may focus on the formulation of medical policy to encourage reduced demand for medical care. Third, this paper finds that the implementation of medical policy may have an important effect on inhibiting the generation and illegal disposal of medical wastes.

How economic growth, renewable electricity and natural resources contribute to CO2 emissions?

This study explores the relationship between economic growth and CO2 emissions in the so-called European Union 5 (EU-5) countries (Germany, France, Italy, Spain, and the United Kingdom) for the 1985–2016 period. In doing so, we employ a carbon emission function to investigate the environmental Kuznets curve phenomenon, which describes a relationship between economic growth and environmental degradation. The empirical results confirm the existence of an N-shaped relationship between economic growth and CO2 emissions in the EU-5 countries. We incorporate additional variables such as renewable electricity consumption, trade openness, natural resource abundance, and energy innovation to augment the carbon emission function. Renewable electricity consumption, natural resources, and energy innovation improve environmental quality, while trade openness and the interaction between economic growth and renewable electricity consumption exert a positive impact on CO2 emissions. This study is novel in that it presents an interaction between economic growth and renewable electricity consumption. We also confirm the need for renewable energy regulations related to increasing renewable sources and promoting energy innovation to reduce the negative effects of energy and fossil energy resources on environmental degradation.

The coordination between China’s economic growth and environmental emission from the Environmental Kuznets Curve viewpoint

The coordination between China’s economic growth and environmental emission is very important. Based on the Environmental Kuznets Curve theory, this paper uses panel smooth transition regression model to investigate the relationship between two representative emissions, i.e., CO2 and SO2, and economic growth. The empirical results show that there is no linear relationship between them. Inverted “U”-shaped relationship does not exist between carbon dioxide emissions and economic growth in China, but we find that the elasticity of the high-income areas is significantly less than that of the low-income areas. Environmental Kuznets Curve phenomenon exists between economic growth and sulfur dioxide emissions, and the elasticity in many developed provinces experienced from positive to negative status. This result verifies the international empirical evidence that CO2 does not decrease with economic growth and SO2 can generally meet the Environmental Kuznets Curve. This phenomenon indicates that the relationship between China’s economic development and environmental emission is consistent with international experience. Finally, some policy recommendations are given in the conclusion.

Environmental Kuznets Curve Hypothesis: A Survey

The Environmental Kuznets Curve ( EKC) hypothesis postulates an inverted-U-shaped relationship between different pollutants and per capita income, i.e., environmental pressure increases up to a certain level as income goes up; after that, it decreases. An EKC actually reveals how a technically specified measurement of environmental quality changes as the fortunes of a country change. A sizeable literature on EKC has grown in recent period. The common point of all the studies is the assertion that the environmental quality deteriorates at the early stages of economic development/growth and subsequently improves at the later stages. In other words, environmental pressure increases faster than income at early stages of development and slows down relative to GDP growth at higher income levels. This paper reviews some theoretical developments and empirical studies dealing with EKC phenomenon. Possible explanations for this EKC are seen in (i) the progress of economic development, from clean agrarian economy to polluting industrial economy to clean service economy; (ii) tendency of people with higher income having higher preference for environmental quality, etc. Evidence of the existence of the EKC has been questioned from several corners. Only some air quality indicators, especially local pollutants, show the evidence of an EKC. However, an EKC is empirically observed, till there is no agreement in the literature on the income level at which environmental degradation starts declining. This paper provides an overview of the EKC literature, background history, conceptual insights, policy and the conceptual and methodological critique.

Progress on the environmental Kuznets curve?

The environmental Kuznets curve (EKC) hypothesis proposes that there is an inverted U-shape relation between environmental degradation and income per capita. This has been taken to imply that economic growth will eventually redress the environmental impacts of the early stages of economic development. The literature on this issue has developed rapidly over the last few years. This paper examines whether progress has been made on both understanding the EKC phenomenon and on addressing the various criticisms raised against some of the empirical studies and their interpretation in the policy literature. Though basic EKC studies continue to be carried out, recent work has focused on the effect of a variety of conditioning variables on the environmental impact-GDP relationship. Some attempts have also been made to examine the history of the relationship in individual countries. The econometric techniques used have improved. However, empirical decompositions of the EKC into proximate or underlying causes are either limited in scope or non-systematic, and explicit testing of the various theoretical models has not yet been attempted.