The environmental Kuznets curve (EKC): a logistic curve?

Abstract

This study argues that the environmental Kuznets curve (EKC) can be shaped as a logistic curve rather than a mere quadratic equation. Instead of being modelled as a polynomial of degree two, the EKC can be characterized by a polynomial of degree three. The inverted-U shape remains. However, in the proposed specification, what matters, is the rate at which total environmental degradation (TED) occurs, that is, marginal environmental degradation (MED). When TED is quadratic, MED is linearly represented with respect to per capita output. This is considered to be inconsistent with real-life situations, and instead a quadratic MED is postulated, from which a logistic EKC is derived. Prior to a given income threshold, MED rises, attains a maximum at the threshold, and falls ultimately beyond it. This formulation of the EKC conforms to the probabilistic econometric models usually applied in environmental studies.

Notes

¹ See Stern et al. (1996) for a review of empirical studies on the EKC.

² Institutional reforms incorporate significant changes in production process and composition of production usually referred as the technique effect and composition effect respectively (see de Bruyn, 1997 on these effects).