Economic Growth and Environmental Quality in the European Union Countries – Is there Evidence for the Environmental Kuznets Curve?

Open access

Abstract

This research empirically explores the relation between carbon dioxide emission and economic growth during the period 1992-2010, using panel data on the European Union countries. Both fixed and random effect models are employed to test the Environmental Kuznets Curve (EKC) relationship between CO2 emissions and GDP per capita. While no U-shaped EKC was confirmed empirically for all 28 current EU member states, the graphical analysis demonstrates a justified turning point for CO2 emissions as GDP per capita reaches the level of 23,000 USD. Furthermore, there is a firm empirical ground for the EKC hypothesis based on data from 16 older, relatively high-income EU states. Thus, though not empirically confirmed, there is ample data verifying the existence of the EKC in EU economies.

If the inline PDF is not rendering correctly, you can download the PDF file here.

  • Arouri M. H. Ben Youssef A. M’Henni H. Rault C. (2012) Energy consumption economic growth and CO2 emissions in middle east and north African countries CESifo Working Papers No. 3726 pp. 342-349.

  • Azomahou T. Laisney F. Nguyen Van P. (2006) Economic development and CO2 emissions: a nonparametric panel approach Journal of Public Economics Vol. 90 Issues 6-7 pp. 1347-1363.

  • Beckerman W. (1992) Economic growth and the environment: whose growth? Whose environment? World Development pp. 481-496.

  • Bruyn J. van den Bergh. Opschoor J. (1998) Economic growth and emissions: reconsidering the empirical basis of environmental Kuznets curves. Ecological Economics 25 pp. 161-175.

  • Cialani C. (2007) Economic growth and environmental quality an econometric and a decomposition analysis Management of Environmental Quality An International Journal Vol. 18 No. 5 pp. 568-577.

  • Alvarez F. Marrero G. A. Puch L. A. (2004). Air pollution convergence and economic growth across European countries ICAE Working Paper 0406.

  • Dietz T. Rosa E. A. York R. (2012) Environmentally efficient well-being: Is there a Kuznets curve? Applied Geography 32 pp. 21-28.

  • Dijkgraaf E. Vollebergh H. R. J. (2005) A test for parameter heterogeneity in CO2 panel EKC estimations Environmental and Resource Economics 32 (2) pp. 229-239.

  • Donfouet H. P. P. Jeanty P. W. Malin M. (2013) A spatial dynamic panel analysis of the environmental Kuznets curve in European countries. Center for Research in Economics and Management (CREM) Economics Working Paper Archive 2013-18.

  • European Commission (2007) A European Strategic Energy Technology Plan: Towards a low carbon future COM (2007) 723.

  • European Commission (2014) Communication from the Commission to the European Parliament the Council the European Economic and Social Committee and the Committee of the Regions. Taking stock of the Europe 2020 strategy for smart sustainable and inclusive growth. COM (2014) 130.

  • European Parliament (2007) European Parliament Resolution on Climate Change P6_TA (2007) 0038.

  • Farhani S. Mrizak S. Chaibi A. Rault C. (2014) The environmental Kuznets curve and sustainability: A panel data analysis Energy Policy 71 pp. 189-198.

  • Fodha M. Zaghdoud O. (2010) Economic growth and environmental degradation in Tunisia An empirical analysis of the environmental Kuznets curve Energy Policy 38 pp. 1150-1156.

  • Giovanis E. (2012) Environmental Kuznets curve: evidence from the British household panel survey Economic Modelling 30 pp. 602-611.

  • Grossman G. M. Krueger A. B. (1991) Environmental impacts of a North American free trade agreement Working Paper 3914 National Bureau of Economic Research.

  • Grossman G. M. Krueger A. B. (1993) Environmental impacts of the North American free trade agreement in Peter Garber (ed.) The U. S.‑Mexico Free Trade Agreement MIT Press Cambridge.

  • Hannesson R. (2009) Energy and GDP growth International Journal of Energy Sector Management 3 (2) pp. 157-170.

  • Hausman J. A. (1978) Specification tests in econometrics Econometrica 46 pp. 1251-1271.

  • Heaps C. Erickson P. Kartha S. Kemp-Benedict E. (2009) Europe’s Share of the Climate Challenge Domestic Actions and International Obligations to Protect the Planet Stockholm Environment Institute.

  • Holtz-Eakin D. Selden T. M. (1992) Stoking the fires? CO2 emissions and economic growth NBER Working Paper 4248 National Bureau of Economic Research Inc. pp. 42-48.

  • IPCC (2007) Climate change 2007: A Synthesis Report. A Contribution of Working Groups I II and III to the Fourth Assessment Report of the IPCC Intergovernmental Panel on Climate Change Geneva.

  • Kahn M. E. (2003) New Evidence on Eastern Europe’s Pollution Progress Topics in Economic Analysis & Policy (3) 1.

  • Komen M. H. Genking S. Folmer H. (1997) Income and environmental R&D: empirical evidence from OECD countries Environment and Development Economics Vol. 2 pp. 505-515.

  • Kuznets S. (1955) Economic growth and income inequality American Economic Review 49 pp.1-28.

  • Lau L. S. Choong C. K. Eng Y. K. (2014) Investigation of the environmental Kuznets curve for carbon emissions in Malaysia: Do foreign direct investment and trade matter? Energy Policy 68 pp. 490-497.

  • Marrero G. A. (2009) Greenhouse gases emissions growth and the energy mix in Europe: a dynamic panel data approach FEDEAWorking Papers (16).

  • M’Henni H. (2005) Economic development adjustment and environmental quality the case of Tunisia for a contingent valuation study Mediterranean Journal of Economics Agriculture and Environment Vol. IVN (2) pp. 342-349.

  • M’Henni H. Arouri M. H. Ben Youssef A. Rault C. (2011) Income level and environmental quality in the MENA countries: Discussing the environmental Kuznets curve hypothesis The Economic Research Forum Working Paper 587.

  • Onafowora O. A. Owoye O. (2014) Bounds testing approach to analysis of the environment Kuznets curve hypothesis Energy Economics 44 pp. 47-62.

  • Panayotou T. (1992) Environmental Kuznets Curves: Empirical Tests and Policy Implications Harvard Institute for International Development Harvard University.

  • Panayotou T. (1993) Empirical tests and policy analysis of environmental degradation at different stages of economic development Working Paper WP238 Technology and Employment Programme International Labour Office Geneva.

  • Panayotou T. (1995) Environmental degradation at different stages of economic development Beyond Rio. The Environmental Crisis and Sustainable Livelihoods in the Third World.

  • Park H. M. (2009) Linear regression models for panel data using SAS Stata LIMDEP and SPSS Working Paper The University Information Technology Services Center for Statistical and Mathematical Computing Indiana University.

  • Rosser J. Jr. Rosser B. Rosser M. (2006) Institutional evolution of environmental management under global economic growth Journal of Economic Issues Vol. XL pp. 421-429.

  • Schmalensee R. Stoker T. M. Judson R. A. (1998) World carbon dioxide emissions: 1950-2050 Review of Economics and Statistics 80 pp. 15-27.

  • Selden T. M. Song D. (1993) Environmental quality and development: is there a Kuznets curve for air pollution emissions? Journal of Environmental Economics and Management Vol. 27 No. 2 pp. 147-62.

  • Shafik N. Bandyopadhyay S. (1992) Economic growth and environmental quality: Time series and cross-country evidence The World Development Report 1992 The World Bank Washington.

  • Shafik N. (1994) Economic development and environmental quality: an econometric analysis Oxford Economic Papers 46 pp. 757-773.

  • Stern D. I. Common M. S. Barbier E. B. (1996) Economic growth and environmental degradation: the environmental Kuznets curve and sustainable development World Development 24 pp. 1151-1160. Stern D. I. (2003) The environmental Kuznets curve Internet Encyclopaedia of Ecological Economics International Society for Ecological Economics Department of Economics Rensselaer Polytechnic Institute.

  • Stern D. I. (2014) The environmental Kuznets curve: A primer Centre for Climate Economic & Policy Working Paper 1404 Crawford School of Public Policy The Australian National University.

  • Torras M. (2005) Income and power inequality as determinants of environmental and health outcomes: some findings Social Science Quarterly Vol. 86 pp. 1354-1376.

  • World Bank (2009) World Development Indicators Online (WDI) World Bank. Data retrieved July 20 2014 data.worldbank.org/indicator

Search
Journal information
Cited By
Metrics
All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 558 325 11
PDF Downloads 296 214 23