Grossman and Krueger (1994) examine the reduced form relationship between the level of a country's per capita income and various environmental quality indicators (concentration of urban air pollution, measure of the stat of the oxygen regime in river basins, concentration of fecal contaminants in river basins and concentrations of heavy metals in river basin). The authors find no evidence that environmental quality is constantly deteriorated with economic growth and for most of the indicators the initial deterioration is followed by improvement. The turning points for most cases come before the per capita income of $8000.
Cole's (2004) paper examines the EKC inverted U relationship explained by trade and specifically the migration of industries from the developed regions to the developing regions (the pollution haven hypothesis (PHH)). Using data on trade flows for pollution intensive products the evidence for the PHH is examined for North-South. Emissions of air and water pollutants are estimated which leads to a evidence of pollution haven effects.
Dinda (2004) comments that a sizeable literature on EKC has grown in recent periods provides an overview of the EKC literature, background history, conceptual insights, policy and the conceptual and methodological critique. Environmental deterioration increases faster than income at early stages of development and slows down relative to GDP growth at higher income levels. According to author's survey of literature 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. The existence of the EKC has been questioned from several corners, only some air quality indicators for example local pollutants, show the evidence of an EKC. However, an EKC is empirically observed, so far there is no agreement in the literature on the income level at which environmental degradation starts declining.
Galeotti et.al (2006) shows the robustness of results using a different parametric approach and using an alternative emissions data from international energy agency. The results show that EKC does not appear to depend upon the source of the data, at least as far as carbon dioxide is concerned. There is evidence of an inverted-U pattern for the group of OECD countries, when an alternate specification form is employed.
Ang. (2007) explores dynamic causal relationships between pollutant emissions, energy consumption, and output for France using vector error-correction and co integration modeling techniques. He examines the relationship using a integrated framework since they argue that the variables are strongly inter related. The results show the existence of a long-run relationship between variables for the period 1960-2000. The causality results show that economic growth exerts a causal influence on growth of pollution and growth of energy use in the long run. There is a uni-directional causality running from growth of energy use to growth in output in the short run.
Halicioglu (2009) empirically examine the dynamic causal relationships in Turkey using the time-series data for the period 1960-2005, between carbon emissions, energy consumption, income, and foreign trade. The research uses bounds testing approach to co integration procedure and indicates that there exist two forms of long-run relationships between the variables. Firstly, carbon emissions are determined by energy consumption, income and foreign trade. Secondly, income is determined by carbon emissions, energy consumption and foreign trade. An augmented form of Granger causality analysis show that income is the most significant variable in explaining the carbon emissions in Turkey followed by energy consumption and foreign trade.
Jalil and Mahmud (2009) examine the relationship between carbon emissions and energy consumption, income and foreign trade for China by using time series data of 1975-2005. A quadratic relationship between income and CO2emission has been found for the sample period by employing Autoregressive Distributed Lag Model, supporting EKC relationship. Granger causality tests indicate one way causality runs form economic growth to CO2 emissions. The results show that the carbon emissions are determined by income and energy consumption in the long run however Trade has a positive but statistically insigniï¬cant impact on CO2 emissions.
Shahbaz et.al (2010) attempts to investigate the relationship between CO2 emissions, energy consumption, economic growth and trade openness for Pakistan for the period of 1971-2009. ARDL model for co integration and Granger causality tests suggests that there exists long run relationship among the variables and there exist uni-directional causal relationship running from income to CO2 emissions. Energy consumption and trade openness increases CO2 emissions both in short and long run however the latter is insignificant in short run.
Iwata et.al (2010) investigates the environmental Kuznets curve (EKC) hypothesis for CO2 emissions using a panel data of 28 countries by taking nuclear energy into account. Their main results, using pooled mean group estimation, show that nuclear energy has negative impact on CO2 emissions and CO2 emissions actually increase monotonically within the sample period in all cases (the full sample, OECD countries, and non-OECD countries). However the growth rate in CO2 emissions with income is decreasing in OECD countries and increasing in non-OECD countries.
Iwata et.al (2010), investigates the environmental Kuznets curve (EKC) for CO2 emissions for 11 OECD countries by taking into account the role of nuclear energy in electricity production. The autoregressive distributed lag (ARDL) approach indicates that energy consumption has a positive impact on CO2 emissions. However, the results provide evidence for a role of nuclear power in reducing CO2 emissions only in some countries. Trade has insignificant impact on CO2 emissions. Although the estimated long-run coefficients of income and its square satisfy the EKC hypothesis in Finland, Japan, Korea and Spain, only Finland's EKC turning point is inside the sample period of the study, providing poor evidence in support of the EKC hypothesis.
Iwata et.al (2010), attempts to estimate the role of nuclear electricity production in France to find the environmental Kuznets curve (EKC) hypothesis. They employ autoregressive distributed lag (ARDL) approach and examine the stability of the estimated models and investigate causality relationships between the variables. The results provide evidence supporting the EKC hypothesis, and the estimated models are shown to be stable over the sample period. There is uni-directional causality running from other variables to CO2 emissions. The uni-directional causality relationship running from nuclear energy to CO2 emissions provides evidence on the role of nuclear energy in reducing CO2 emissions.
According to He and Richard (2010) majority of studies based on environmental Kuznets curve estimate fully parametric quadratic or cubic regression models. However such a techniques lacks flexibility as it may fail to detect the true relationship. While this is not technically wrong, the authors provide more robust inferences by use of semiparametric and flexible nonlinear parametric modeling methods. Little evidence was found to support environmental Kuznets curve hypothesis. Their main results show that the oil shock of the 1970s had an important impact on progress towards less polluting technology and production.
Elif Akbostancı et.al (2010) investigates the relationship between income and environmental quality for Turkey. The relationship between the CO2 emissions and per capita income is examined by the help of co integration techniques and incorporates panel relationship between income and air pollution is investigated by using PM10 and SO2 measurements in Turkish provinces. The data covers 1968-2003, and the panel data model covers observations from 58 provinces for the time 1992-2001. According to analysis a monotonically increasing relationship was found between CO2 and income whereas Panel data analysis indicates an N-shape relationship for SO2 and PM10 emissions. The results show the non existence of Environmental Kuznets curve for Turkey.
Fodha and Zaghdoud (2010) investigate the relationship between economic growth and pollutant emissions Tunisia, for the period 1961-2004. Using Carbon dioxide (CO2) and sulfur dioxide (SO2) as the environmental indicators and GDP as the economic indicator and using co integration techniques their results show that there is a long-run relationship between emissions of pollutants and per capita GDP. A monotonically increasing relationship with GDP is found for CO2 emissions. However an inverted U relationship between SO2 emissions and GDP has been found. With income turning point approximately equals to $1200. The causality results there are unidirectional causality with income causing environmental changes which implies that an emission reduction policies and more investment in pollution abatement expense will not harm economic growth.
Kijima (2010) overviews the current stage of theoretical models that explain relationship between income and environment and finds out that since the early 1990s, a considerable number of empirical studies have been conducted on the EKC and it has been recognized that the EKC emerges as an empirical regularity. Recent studies cast doubt on the evidence of the existence of the EKC and the controversy continues about the fact, how economic growth affects the environmental quality.
Naryan and Naryan (2010) test the Environment Kuznet's Curve (EKC) hypothesis for 43 developing countries. The authors suggest that if the long-run income elasticity is smaller than the short-run income elasticity then it is evident that a country has reduced carbon dioxide emissions as its income has increased. Their analysis suggests that for countries Jordan, Iraq, Kuwait, Yemen, Qatar, the UAE, Argentina, Mexico, Venezuela, Algeria, Kenya, Nigeria, Congo, Ghana, and South Africa, carbon dioxide emissions have fallen over the long run and their short-run income elasticity is greater than the long-run elasticity with increase in their incomes. They also examined the EKC hypothesis on the basis of regional location using the panel co integration. The results show that only for the Middle Eastern and South Asian panels' carbon dioxide emission has fallen with a rise in income i.e. the income elasticity in the short run is greater than the long run.
Ozturk and Acaravci (2010) examines the long run and causal relationship using autoregressive distributed lag bounds testing approach of co integration, between economic growth, carbon emissions, energy consumption and employment ratio in Turkey over the period 1968-2005. Estimates suggest the evidence of a long-run relationship between the variables. Causality results show that neither carbon emissions per capita nor energy consumption per capita cause real GDP per capita, but employment ratio causes real GDP per capita in the short run. EKC hypothesis using a linear logarithmic model is not valid in case of Turkey. Energy conservation policies have no adverse effect on the real output growth of Turkey.
Turner and Halely (2011) argue that technological improvements are a key factor in mitigating the impacts of economic growth on environmental quality. The authors use a CGE model of the Scottish economy to find out the factors (elasticity of substitution between energy and non-energy inputs, responses in the labor market and the structure of the economy) influencing the impacts of one form of technological change that is improvements in energy efficiency-on absolute levels of CO2 emissions, on the carbon intensity of the economy (CO2 emissions relative to real GDP), and the per capita EKC relationship. Results show that the key role played by the general equilibrium price elasticity of demand for energy, and the relative influence of different factors on technological change.
