The Rise and Fall of the Environmental Kuznets Curve

TLDR: A critical history of the environmental Kuznets curve (EKC) can be found in this article, where a new generation of decomposition and efficient frontier models can help disentangle the true relations between development and the environment and may lead to the demise of the classic EKC.

About: This article is published in World Development.The article was published on 2004-08-01 and is currently open access. It has received 2904 citations till now. The article focuses on the topics: Kuznets curve.

Figures

Table 2. Stern and Comm

Figure 1. Environmental Kuznets curve for sulfur emissions. Source: Panayotou (1993) and Stern, Common, and Barbier (1996).

Table 1. Sulfur EKC studies

Figure 3. Environmental Kuznets curve: alternative views. (2003

Figure 4. Time effects: first differences sulfur

Table 3. Contributions to total change in global sulfur emissions

Frequently asked questions

Q1. What are the contributions mentioned in the paper "The rise and fall of the environmental kuznets curve" ?

— This paper presents a critical history of the environmental Kuznets curve ( EKC ). 

Q2. What was the effect of coal on the energy intensity of Sweden?

In the 19th century coal use replaced wood and muscle power, increasing the carbon intensity, coal was then replaced by oil, and then by electricity (nuclear and hydro) to some extent. 

Q3. What is the elasticity of concentrations w.r.t. capital/labor ratio?

The composition elasticity (elasticity of concentrations w.r.t. capital/labor ratio) is 1.01 and trade intensity has an elasticity of )0.864. 

Q4. What is the key criticism of Arrow et al. (1995)?

The key criticism of Arrow et al. (1995) and others was that the EKC model, as presented in the 1992 World Development Report and elsewhere, assumes that there is no feedback from environmental damage to economic production as income is assumed to be an exogenous variable. 

Q5. What is the test used to test for inconsistency in the random-effects estimate?

A Hausman (1978) test can be used to test for inconsistency in the random-effects estimate by comparing the fixed-effects and random-effectsslope parameters. 

Q6. What is the common problem with the random-effects model?

If the effects ai and ct and the explanatory variables are correlated, then the random-effects model cannot be estimated consistently (Hsiao, 1986). 

Q7. What are the effects of the composition effect on BOD emissions?

The share of manufacturing industry in national income and the share of polluting industries within total manufacturing represent composition effects and actual plant-level end-of-pipe BOD emissions per unit output represent technique effects. 

Q8. What is the effect of environmental regulation in developed countries?

Environmental regulation in developed countries might further encourage polluting activities to gravitate toward the developing countries (Lucas et al., 1992). 

Q9. What does Stern and Common (2001) suggest that the EKC is an inadequate model?

Stern and Common (2001) use three lines of evidence to suggest that the EKC is an inadequate model and that estimates of the EKC in levels can suffer from significant omitted variables bias: (a) Differences between the parameters of the random-effects and fixed-effects models, tested using the Hausman test; (b) differences between the estimated coefficients in different subsamples, and (c) tests for serial correlation. 

Q10. What is the income elasticity of emissions in wealthy countries?

The income elasticity of emissions is likely to be less than one––but not negative in wealthy countries as proposed by the EKC hypothesis. 

Q11. What was the first empirical EKC study?

The first empirical EKC study was the NBER working paper by Grossman and Krueger (1991) 6 that estimated EKCs for SO2, dark matter (fine smoke), and suspended particles (SPM) using the GEMS dataset as part of a study of the potential environmental impacts of NAFTA.