Production and consumption-based approaches for the environmental Kuznets curve using ecological footprint

ABSTRACT

We examine the environmental Kuznets curve (EKC) hypothesis using the ecological footprint (EF), a more comprehensive indicator of environmental degradation, for 11 countries covering the 1971–2007 period. We test the EKC hypothesis using a traditional quadratic function from both the supply and consumption side, adding several explicative variables: urbanisation, petrol price and industrialisation for the supply side; biocapacity, life expectancy and energy use for the consumption side. We perform an autoregressive distributed lagged modelling in order to study both short- and long-run periods. We find that there is no stable relationship between the environment and economic development in the long-run. For the short-run analysis, the EKC hypothesis is supported for no one, we rather find an increasing relationship between growth and environment. Results for explicative variables are mixed: for the production-side approach, industrialisation appears to have a positive impact on EF for Sweden, but a negative one for Portugal and Spain. For the consumption-side approach, energy use seems to have a positive impact on EF for Argentina and Colombia whereas biocapacity and life expectancy have a positive and negative impact, respectively, on EF for Paraguay. Lastly, biocapacity has a positive impact on EF for Canada but negative for Norway, likely depending on levels of biocapacity and ecological reserve.

Keywords:

• Environmental Kuznets curve
• ecological footprint
• ARDL

Acknowledgements

We would like to thank the anonymous referee for very helpful comments and suggestions. We are also grateful to participants at the 1st Annual French Association of Environmental and Resource Economists for their helpful comments and suggestions.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Shahbaz, Jalil, and Dube (2010), Jalil and Mahmud (2009), Iwata, Okada, and Samreth (2010) and Saboori, Sulaiman, and Mohd (2012) also use the ARDL approach with CO₂ environmental indicator.

2. Income elasticity of demand is greater than one

3. We also added main commodity production for each country, but results were not significant.

4. The authors thank the anonymous referee for this comment.

5. Unfortunately, data on educational attainment are not available for our sample.

6. We tried to remove the share of low carbon energy of our energy use data but results were not significant.

7. We had to remove Peru because there is missing data from 1979 to 1986 and Uruguay because of a short sample beginning in 1983, for some variables such as the industrialisation rate.

8. Global Footprint Network, 2010. National Footprint Accounts, 2010 Edition. Available online at http://www.footprintnetwork.org.

9. The results are available upon request.

10. In constant 2000 $.

11. The results are available upon request.