Environmental Kuznets Curve Hypothesis Research Articles

The simple analytics of the environmental Kuznets curve: a reformulation

Purpose This paper aims to review the relationship between per capita income and aggregate emission in an economy populated by rational agents. According to the environmental Kuznets curve (EKC) hypothesis, pollution–income relationship is an inverted U-shaped curve. This paper aims to derive that relationship in an endogenous way and extends the relevant literature in an important way. Design/methodology/approach This paper formulated a general equilibrium model of homogenous population with identical tastes and preferences. Production side is modelled with firms operating in a monopolistically competitive environment. The approach is modelling the economy in an analytical way so that closed form solutions can be achieved. Model simulations have also been performed to get a clear view of results. Findings This study shows that increasing returns to scale in abatement technology ceases to be a sufficient condition for the generation of the EKC hypothesis. The general equilibrium structure of the model allows studying the endogenous evolution of income, emissions and prices of the abatement goods in a unified setting. Originality/value The paper is novel and original in nature. The results are new in the literature. These results extend and generalise the previous research work in this area in an important way. The sufficient condition that is obtained in this study limits the applicability of EKC in an otherwise identical economy as used in previous literature. Therefore, this paper adds value to the ongoing research related to EKC.

The Effect of Innovation and Renewable Energy on CO2 Emissions For Emerging Asian Countries

This study investigates the impact of innovation and renewable energy consumption on CO2 emissions in seven emerging Asian countries using static panel data methods. The analysis employs Pooled Ordinary Least Squares (OLS), Fixed Effect (FE), and Random Effect (RE) models to estimate the relationships, with the most appropriate model selected based on the Breusch-Pagan LM test and the Hausman test. Our findings reveal that both GDP and urbanization significantly increase CO2 emissions, while GDP squared and renewable energy consumption significantly decrease emissions, supporting the Environmental Kuznets Curve (EKC) hypothesis. Diagnostic tests indicate the presence of heteroskedasticity and first-order autocorrelation, addressed using robust standard errors. The results underscore the dual role of economic growth and technological advancement in shaping environmental outcomes, highlighting the critical importance of sustainable development policies in emerging economies.

Examining The Impact of Macroeconomics Factors on Carbon Emissions in Selected 7-ASEAN Members: A Panel Data Analysis

This study investigates the relationships between urbanization, economic growth, energy consumption, transportation, and carbon emissions in seven ASEAN countries from 2011 to 2022. As released by the World Health Organization (WHO), more than 80 percent of the world’s population living in urban areas were exposed to air quality levels that were above the WHO limits. The region that is most affected comes from those nations categorized as low to middle-income countries. Hence, it is best to examine why these 7 ASEAN nations categorized from the lower to upper-middle income countries are not able to control the increase in the level of their carbon emissions. The analysis would also identify the appropriate empirical model suitable for the data. Using panel data analysis applying econometric modeling which are the Pooled Ordinary Least Square, Fixed Effects Model, and Random Effects Model, the findings support the Environmental Kuznets Curve hypothesis, revealing that urbanization and economic growth significantly increase carbon emissions. The study emphasizes the need for renewable energy adoption and sustainable urban planning to reduce carbon footprints. Key recommendations include enhancing energy efficiency and promoting cleaner transportation technologies to achieve sustainable economic growth in the ASEAN region.

Global Dynamics of Environmental Kuznets Curve: A Cross-Correlation Analysis of Income and CO2 Emissions

The environmental Kuznets curve (EKC) hypothesis posits an inverted U-shaped relationship between economic growth and environmental degradation. However, there is no consensus regarding the EKC hypothesis among countries and regions of different income groups. This study revisits the EKC hypothesis by employing cross-correlation analysis to explore the income–CO2 emissions relationship across 158 countries and 44 regions from 1990 to 2020. The empirical method utilizes a dynamic cross-correlation coefficient (CCC) approach, allowing for the assessment of lead-lag dynamics between income and CO2 emissions over time. By categorizing nations into the World Bank’s income classifications, we found a heterogeneous EKC pattern highlighting distinct environmental–economic dynamics across different income groups. The findings indicate that high-income countries show a decoupling of economic growth from CO2 emissions; whereas, low-income countries still exhibit a positive correlation between both variables. This underscores the necessity for tailored policy interventions that promote carbon neutrality, while considering each country’s unique development stage. Our research contributes to the ongoing issue of sustainable economic development by providing empirical evidence of the different pathways nations follow in balancing growth with environmental preservation.

The influence of renewable energy and financial development on testing the environmental Kuznets curve in Lebanon: ARDL approach

This study considers the impacts of financial development and the consumption of renewable energy in Lebanon for the period 1990–2021, employing the Environmental Kuznets Curve. The financial sector in Lebanon is considered a major engine in the economic development. Green energy sources and environmental protection are taking higher importance nowadays with the increase of implications for climate change and global warming worldwide. This paper examines the Environmental Kuznets Curve’s presence and implications for Lebanon’s financial development and renewable energy consumption. The econometric model used annual data from the World Development Indicators. Utilizing the autoregressive distributed lag (ARDL) technique, both near- and long-term relationships were estimated. The findings support the Environmental Kuznets Curve hypothesis and show that energy consumption and real income have a statistically significant beneficial effect on carbon emissions and that their square has a statistically significant negative impact on carbon emissions over the long and short term. The results show variations in signs for financial development between the short and long term and stable results for renewable energy with negative signs in both terms. These results show the importance of further research on the influence of financial development and green energy consumption on EKC. Therefore, policymakers need to pay more attention to these variables for a sustainable economy that is facing the effects of climate change.

Building a sustainable environment in EU countries: the critical role of infrastructure investments and institutional quality

ABSTRACT The literature on the intersection of environment and economic growth is extensive, and emerging research emphasizes additional variables that affect both domains. It is well known that institutional quality enhances environmental quality because institutions affect environmental quality and economic growth through regulatory policies. Moreover, infrastructure investment is a critical driver of growth and environmental improvement, providing the necessary foundation for change. This research contributes to the literature by examining the dynamic interaction between ecological footprint, infrastructure investment, institutional quality, and economic growth using the Environmental Kuznets Curve hypothesis for the 10 European Union countries with the highest levels of infrastructure investment from 1996 to 2020 to highlight how infrastructure and institutional quality affect environmental outcomes differently across countries. It finds long-run relationships among the variables in the Czech Republic, Finland, France, Germany, Hungary, Italy, Norway, Slovakia, Sweden, and Switzerland. The findings confirm the cointegration by confirming the EKC hypothesis for the panel and particularly for Finland, France, Norway, Slovakia, and Sweden. The study observes that increased infrastructure investments reduce the ecological footprint in Germany and Sweden but increase the ecological footprint in the Czech Republic and France. In Sweden, higher institutional quality significantly reduces the ecological footprint, suggesting that improvements in institutional quality are associated with a lower ecological footprint. These results provide a new perspective on the policy revisions required to achieve net zero emissions under the Paris Climate Agreement, emphasizing the need to integrate green finance into privately financed infrastructure projects.

Investigating the role of biomass energy consumption and forest products trade on the forest footprint in Finland: an environmental Kuznets curve analysis

AbstractForests are essential in mitigating climate change by absorbing carbon dioxide and maintaining ecosystems, mainly through preserving biodiversity. For this reason, the sustainability of forests is essential for human life. This paper examines the role of biomass energy consumption, forest product trade, and economic growth on Finland’s forest footprint from 1970 to 2018. By employing Fourier-based unit root and cointegration tests, we confirm the Environmental Kuznets Curve (EKC) hypothesis, demonstrating a long-term relationship in which economic growth first raises, then reduces the forest footprint. Biomass energy consumption and forest products trade show an insignificant long-term effect on the forest footprint. We found unidirectional causality from the forest footprint to biomass energy consumption and economic growth. This research fills a gap by focusing on the under-researched forest footprint within the EKC framework, particularly in Finland’s context of stringent forestry policies. Our findings emphasize the need for interdisciplinary collaboration to enhance environmental policy and sustainability practices. We further contribute to the broader literature on sustainable forest management and offer actionable policy recommendations for enhancing Finland’s environmental strategies.

Examining the evolution trajectory of construction and demolition waste in China: An empirical analysis based on spatial metrology and the environmental Kuznets curve

Curbing the increasing construction and demolition waste (C&DW) is critical for achieving China's goals of cleaner production and environmental sustainability. This paper based on the Environmental Kuznets Curve (EKC) and combining spatial econometrics with the GM (1,1) model, predicts key time points that will change the growth trend of C&DW and explores measures to reduce production. The results indicate that: (1)As of 2022, more than 87% of China's regional C&DW is unevenly distributed and agglomeration exists. More than 50% of the regions exhibit “high-high” agglomeration, which can lead to an inevitable inter-regional transfer of C&DW, but the central region has formed a “segregation zone”. (2) The evolution trajectory of C&DW shows a “growth-decline-regrowth” pattern, with points of change for regrowth occurring when GDP per capita reaches 142,914.24. Construction enterprises and consumption levels contribute significantly to C&DW, while the opposite is true for education, market competition, and transportation. (3) More than 95% of regions will experience C&DW regrowth during 2036–2040. Economic development is no longer considered to play a leading role in C&DW reduction measures. Even if the economic growth rate is increased by 10%, 30%, or even 50%, C&DW will enter the era of full-scale regrowth only three years earlier on average. This paper aims to shift the current focus of C&DW forecasting from solely on model innovation to accurately calculating the timing of future C&DW regrowth by verifying the EKC hypothesis application. This approach fills the gap in the quantitative analysis of long-term C&DW forecasting and provides new empirical cases for the theory of environmental economics. Furthermore, it addresses potential obstacles for decision-makers in achieving “zero waste cities”, thereby promoting global cleaner production and environmental sustainability.

Unlocking sustainable development: Evaluating the impact of monetary and fiscal policies on ecological footprint in India

India's rapid economic growth underscores the increased necessity of pursuing the paradigms of sustainable development. However, concerns over environmental sustainability have risen in tandem with the country's aspirational goals for economic progress. Therefore, a crucial aspect of managing this is to create a balance between economic prosperity and environmental quality, wherein comprehending how fiscal and monetary policies affect India's ecological footprint becomes an utmost priority. In this vein, this study evaluates the impact of fiscal and monetary policies on India's ecological footprint while controlling for economic growth, squared economic growth, and renewable energy consumption between 1990 and 2022. Given the complexity of these links and well-suitability for examining both short-term dynamics and long-term relationships, this study employs the Autoregressive Distributed Lag (ARDL) model as its methodology for the empirical analysis. Thus, the findings indicate a significant long-term relationship between India's ecological footprint, fiscal policy, monetary policy, economic growth, squared economic growth, and renewable energy consumption while considering the ecological footprint as the dependent variable. Surprisingly, fiscal policy demonstrates insignificat negligible impacts on the ecological footprint in both the short and long run. Conversely, the result underscores that monetary policy effectively curbs the ecological footprint in both the short and long run. Furthermore, the study validates the Environmental Kuznets Curve (EKC) hypothesis in the long run. However, no evidence supports the EKC hypothesis in the short run. Besides, the outcome unveils that renewable energy consumption reduces the ecological footprint with no temporal differences. Hence, the policy implications derived from these findings emphasize the crucial role of monetary policy and integrating renewable energy strategies into policy frameworks for achieving sustainable development outcomes, in addition to the other policy interventions that prioritize ecological conservation alongside economic development, ensuring a balanced approach to solve environmental and economic challenges in India.

Assessing the eco-effectiveness of energy R&D technologies and environmental patents: A comparison between Portugal and Spain

The validity of environmental hypotheses is important for the implications of a sustainable future. In this context, this study investigates the validity of the Environmental Kuznets Curve (EKC) and the load capacity curve (LCC) for Portugal and Spain. Employing the Fourier-ADL approach from 1983 to 2020, the study concludes that the EKC and LCC hypotheses are valid for both countries, that environmental patents improve ecological quality, but that energy-related R&D expenditures have no significant impact. The findings underline the need to support environmental patents with income growth to ensure a sustainable future.

Balancing growth and preservation: Unravelling Africa’s carbon-economic nexus through the environmental Kuznets curve.

Africa is vulnerable to the challenges of global climate change, which poses a significant obstacle to achieving economic development while protecting the environment. Despite numerous Environmental Kuznets Curve (EKC) studies, evidence remains inconclusive, especially in African countries. This study delves into the carbon-economic nexus within the EKC framework across 46 African countries from 1990 to 2020. Utilizing advanced econometric techniques such as Auto-Regressive Distributed Lag (ARDL) modeling based on the Pooled Mean Group (PMG) estimator, Common Correlated Effects Pooled Mean Group (CCE-PMG), appropriate U-test, and Dumitrescu and Hurlin causality test, the research uncovers significant insights into how GDP, energy consumption, and urbanization impact CO2 emissions across different income groups. The findings strongly support the EKC hypothesis for lower-middle-income (LMI) and upper-middle- and high-income (UM&HI) countries, where economic growth initially worsens environmental degradation but eventually leads to improvements as incomes rise. However, in low-income (LI) countries, the study reveals a U-shaped relationship, suggesting that early economic growth may reduce emissions, but continued development could lead to increased environmental stress. Energy consumption is identified as a persistent driver of CO2 emissions across all income groups, while urbanization shows mixed impacts, with negative environmental consequences in LI countries and potential environmental benefits in LMI and UM&HI countries. These findings carry important policy implications for African countries as they seek to balance economic growth with environmental preservation. The research calls for targeted policies that promote green technologies, enhance energy efficiency, and implement sustainable urban planning to ensure that Africa’s development trajectory is environmentally sustainable.

The Environmental Kuznets Curve (EKC) Hypothesis on GHG emissions: analyses for transportation industry of South Africa

A series of energy-econometrics techniques were employed for a 5-year time span between 2016 and 2020. The tests of Environmental Kuznets Curve (EKC) hypothesis were conducted essentially to examine the significance of economic growth (GDP), energy consumption (EC), with energy intensity (EI), and on-road passenger vehicles (PV) as related to economic development on the mitigation of carbon emissions (CO2-eq) in the transportation industry of South Africa. The findings from the prevailing research imply that, with respect to South Africa’s transportation industry, CO2-eq emissions increased in the course of early phases of economic growth while it tends to decline at certain levels of economic threshold. Though the nation maintains the edge of turning points in both the industrial and circular economy. The results further indicate a nexus between GDP and EC, which consequently affect the CO2-eq emissions. The findings proffer the needs to monitor the EC from the long-run impacts alongside the short run impacts of the forecast. The per capita GDP from the short-run impacts of t-stat—(4.928) to the long run effects of t-stat—(5.033) rises, indicating its improper influence in the industry. To limit the use of fossil-based fuels, as demonstrated in the negative signal of EI for long-run impacts of a p-value (0.2835), then to the short run effects which possess a significant p-value. It also highlights the directional correlation surfacing between EC, EI and South Africa’s on-road PV. In the computation context, the series was determined to be stationary at its first differences, as evident by the R2 combined with the R2 (Adjusted) values of 0.9837 and 0.9827, respectively, for both long-run and short-run assessments. The indication of the research among others further reveals that public transportation systems of road and rail options, which have the potentials to incorporate alternative energy sources, can be the required efforts to mitigate climate change and global warming effects in the transportation industry.

The Impact of Economic Factors on Changing Carbon Emission Landscape in ASEAN With ARDL Approach

This study aims to analyze the factors influencing carbon emissions in the member countries of the Association of Southeast Asian Nations (ASEAN). The data used in this study covers the period from 1990 to 2021, utilizing the Autoregressive Distributed Lag (ARDL) analysis method. All independent variables show a significant impact on carbon emissions in both the short and long term. This research provides evidence that factors such as urbanization, foreign direct investment, population, and economic growth significantly contribute to the increase in carbon emissions in ASEAN countries. The findings also validate the Environmental Kuznets Curve hypothesis for carbon emissions in ASEAN countries. In other words, economic growth leads to a reduction in carbon emissions. The ASEAN region has experienced substantial economic growth over the past few decades. However, carbon dioxide (CO2) remains a socio-economic issue in the ASEAN region. The results of this study can be highly beneficial for policymakers in the region regarding sustainability and economic development.

Economic growth and sustainable development: evidence from OIC countries

Purpose This paper aims to examine the dynamic relationship between economic growth and sustainable development, integrating the Environmental Kuznets Curve (EKC) in 22 Organization of Islamic Cooperation (OIC) member countries across income groups. Design/methodology/approach Using annual data between 1990 and 2022, the authors apply the cross-correlation coefficient (CCC) approach of Narayan et al. (Economic Modeling, 2016, 53, 388–397) to examine the lead/lag relationship between GDP per capita and sustainable development. This study further validates the findings through a panel Granger causality test and a fixed panel regression model. Findings This research provides evidence of a U-shaped EKC for only 1 out of 22 (5%) OIC countries. For 13 out of the 22 (59%) OIC countries, increasing income growth is expected to enhance sustainable development in the future. The results show that as income levels rise, there will be a more significant decline in sustainable development for high-income OIC countries in the future than for both middle-income groups, contradicting the EKC hypothesis. The findings from the panel Granger causality and panel regression models also support the CCC results. Originality/value This study proposes a reverse version of the EKC hypothesis and contributes to the literature on economic growth and environmental sustainability. With increasing economic growth, the results can assist OIC member governments and policy-makers in designing tailored policies and practical measures for future sustainable development.

Testing the environmental Kuznets Curve hypothesis at the sector level: Evidence from PNARDL for OECD countries

Testing the environmental Kuznets Curve hypothesis at the sector level: Evidence from PNARDL for OECD countries

Illuminating the path to decarbonization: Nuclear energy consumption, clean energy production, and sustainable fuel production for long-term development

The global concern over carbon emissions has necessitated a deep understanding of energy use and air pollution. The fossil fuel- and nuclear-dependent Russian economy is an exciting exception. It examined how nuclear energy consumption (NEC), electricity generation, R&D investment, clean energy production technology, e-commerce penetration, capital creation, and carbon pollution affect the Russian economy. Short- and long-term interactions between these variables are assessed using the ARDL-Bound testing model for 1995Q1–2020Q4. The results show that NEC negatively correlates with CO2 emissions. The study also supports the inverted U-shaped Environmental Kuznets Curve (EKC) hypothesis, showing a positive and significant relationship between clean power production technology and CO2 emissions and a negative and significant relationship between square clean alternative energy innovation and CO2 emissions. Scientific and technical expenditures, fossil fuel coal liquefaction, and investment all negatively and statistically significantly affect CO2 emissions. However, the analysis implies that e-commerce increases CO2 emissions. These findings highlight the need for significant R&D investment to create precise and realistic ways to decrease carbon emissions and protect the environment in accordance with COP 26 targets. These findings have significant implications for the Russian economy, showing that improving energy sources and investing more in R&D may reduce carbon emissions.

Identification of Factors Affecting Net Zero Emission Level in Indonesia

Amid the rising risks of fossil fuel prices and uncertainties about the global energy supply, countries worldwide have the opportunity to strengthen the development of clean energy investments. This study analyzes the impact of economic growth and other variables, such as fossil fuel consumption, renewable electricity generation, and low-carbon energy use, on carbon dioxide emissions in Indonesia over the past 58 years, from 1965 to 2022. The analysis compares the findings with the Environmental Kuznets Curve (EKC) hypothesis using quadratic equations and cubic equations through the stepwise application of ordinary least square (OLS) methods. Projections suggest that this relationship could follow the Environmental Kuznets Curve (EKC) hypothesis with an inverted U-shape as GDP per capita increases, CO2 emissions per capita rise until reaching a turning point at $12,440 GDP per capita, after which CO2 emissions per capita potentially decrease with further GDP growth. The EKC is a theoretical framework that suggests that environmental degradation initially increases with economic growth, but it starts to decrease beyond a certain point. The analysis also shows that projections could follow an N-curve when variables such as fossil fuel consumption and low-carbon energy influence the NZE level. This indicates that Indonesia still needs to consider energy security in the short and medium term while advancing sustainable energy initiatives. There is also a need for support in research and development of environmentally friendly technologies to reduce emissions alongside national economic growth.

Testing the Environmental Kuznets Curve Hypothesis within the Context of Industrial Development through NARDL Model: The Case of France

Energy is one of the necessary and vital factors for the economic development of countries and the increase in living standards. The limited availability of conventional energy resources, in parallel with the rapid increase in energy consumption due to industrialization activities and technological developments, has encouraged countries to change their energy production policies and use alternative energy sources. For this purpose, in the study, the relationship and direction of the relationship between industrial production, CO2 emissions, energy use and economic growth in France are examined with the carrying out of the ADF, PP, KPSS unit root and the NARDL test for the period 1990–2023. The analysis findings reveal that the variables are cointegrated in the long-run and a 1% unit raise in energy consumption would trigger CO2 emissions by 0.46%. The increase in energy consumption in the long term affects both negatively and positively in the long term. While a 1% increase in energy consumption reduces carbon emissions by 0.48%, a 1% decrease causes a 0.35 decrease in carbon emissions. The positive increase in economic growth and the negative increase in energy consumption trigger environmental pollution by causing an increase in carbon dioxide emissions. There is interdependence between economic activities and environmental pollution. Policy makers need to adopt a strategic approach in solving the rapid industrialization phenomenon and the accompanying magnitude of energy consumption, the pressure on natural resources and the environmental pollution problems resulting from them. In this respect, it is an inevitable necessity for countries to continue multilateral negotiations in which the public sector, business world, academia and non-governmental organizations will take part in solving environmental problems.

Spatial effects of renewable and fossil energy consumption on the ecological footprint for the EU Countries.

This study examines the spillover of pollution among the 26 European Union (EU) countries from 1995 to 2020. In order to quantify pollution spillovers among the countries, we estimated the Environmental Kuznets Curve (EKC) using spatial econometric methods. Our research is unique in that it investigates ecological footprint spillovers for EU countries. This study also considers the direct and indirect effects of renewable and fossil energy consumption and globalization on environmental degradation in EU countries. The empirical results favor the validity of the EKC hypothesis. Our results support the presence of positive and significant ecological footprint spillovers among EU countries. Our spatial estimates also reveal the significant spillover impact of explanatory variables on the ecological footprint. The ecological footprint of the local country is declining owing to the consumption of renewable energy in neighboring countries. Furthermore, the fossil energy consumption of the local and neighboring countries has a positive impact on the ecological footprint. Evidence obtained from our spatial estimates provides useful insights to policymakers in developing appropriate environmental policies to combat climate change.

World economies’ progress in decoupling from CO2 emissions

The relationship between economic growth and CO2 emissions has been analyzed testing the environmental Kuznets curve hypothesis, but traditional econometric methods may be flawed. An alternative method is proposed using segmented-sample regressions and implemented in 164 countries (98.34% of world population) over different periods from 1822 to 2018. Results suggest that while the association between GDP per capita and CO2 emissions per capita is weakening over time, it remains positive globally, with only some high-income countries showing a reversed association in recent years. While 49 countries have decoupled emissions from economic growth, 115 have not. Most African, American, and Asian countries have not decoupled, whereas most European and Oceanians have. These findings highlight the urgency for effective climate policies because decoupling remains unachieved on a global scale, and we are moving away from, rather than approaching, the Paris Agreement goal of limiting temperature increase to 1.5 °C above preindustrial levels.