Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Environmental Kuznets Curve:An Empirical Analysis in the Indian Context


Affiliations
1 Janki Devi Memorial College, University of Delhi, Delhi, India
 

   Subscribe/Renew Journal


The relationship between economic growth and environmental quality has been much under dispute. According to the EKC (Environmental Kuznets Curve) hypothesis, environmental damage increases in the early stages of economic growth, but diminishes once nations reach higher levels of income. While the notion EKC is well established, there is controversy about its shape, incidence and determinants. In this paper, we model EKC with the variables of GDP and CO2 emissions (aggregate and per capita) using alternative model specifications to bridge the gap between conventional and modern EKC literature. We also place the theoretical construct of EKC into a policy-oriented framework by incorporating the impact of four global policy periods namely, liberalisation, globalisation, world recovery and global financial crisis. We substantiate a cubic form of EKC in the Indian context for the time period 1991 to 2014. With aggregate CO2 emissions as the dependent variable, the linear, quadratic and cubic terms are all significant with the expected signs, which confirm an N-shaped EKC for India. Even with per capita emissions as the dependent variable, existence of an N-shaped EKC is established. In this case however, evidence on the cubic term is rather weak which points towards the difference in socio-psychological factors that influence the revival of upturn in the case of India. The policy period analysis does not show any distinct results, which could be due to contradictory effects on different variables and volatility in these variables.

Keywords

Environmental Kuznets Curve, Environment, Development, Trade, Growth.
Subscription Login to verify subscription
User
Notifications
Font Size


  • Babu, S. S. & Datta, S. K. (2013). The relevance of Environmental Kuznets Curve (EKC) in a framework of broad-based environmental degradation and modified measure of growth – a pooled data analysis. International Journal of Sustainable Development and World Ecology, 20(4), 309-316.
  • Cole, Matthew A. (2004). Trade, the pollution haven hypothesis and the environmental Kuznets curve: examining the linkages. Ecological Economics, 48(1), 71–81.
  • Cole, Matthew A., Rayner, A.J. & Bates, J.M. (1997). The Environmental Kuznets Curve: An empirical analysis. Environment and Development Economics, 2(4), 401-416.
  • De Bruyn, S. M. & Opschoor, J. B. (1997). Developments in the throughput-income relationship: Theoretical and empirical observations. Ecological Economics, 20(3), 255-268.
  • De Bruyn, S. M., Van den Bergh, J. C. J. M. & Opschoor, J. B. (1998). Economic growth and emissions: Reconsidering the empirical basis of Environmental Kuznets Curves. Ecological Economics, 25(2), 161-175.
  • Grossman, G. M. & Krueger, A. B. (1993). Environmental impacts of the North American Free Trade Agreement. In P.M. Garber (ed.) The Mexico-US Free Trade Agreement, Cambridge, MA, MIT Press, 13-56.
  • Grossman, G. M. & Krueger, A. B. (1995). Economic growth and the environment. Quarterly Journal of Economics, 110(2), 353-377.
  • Holtz-Eakin, D. & Selden, T. M. (1995). Stoking the fires? CO2 emissions and economic growth. Journal of Public Economics, 57(1), 85-101.
  • Jayanthakumaran, K., Verma, R. & Liu, Y. (2012). CO2 emissions, energy consumption, trade and income: A comparative analysis of China and India’. Energy Policy, 42, 450-460.
  • Jha, R. & Murthy, K. V. B. (2003). An inverse global Environmental Kuznets Curve. Journal of Comparative Economics, 31(2), 352-368.
  • Jha, R. & Murthy, K. V. B. (2004). A consumption based human development index and the global Environmental Kuznets Curve. RSPAS, ANU Trade and Development Economics Working Paper, 1-36.
  • Jha, R. & Murthy, K. V. B. (2006). Environmental sustainability: A consumption approach. Routledge, London.
  • Kaika, D. & Zervas, E. (2013). The Environmental Kuznets Curve (EKC) theory. Part B: Critical issues. Energy Policy, 62, 1403-1411.
  • Kanjilal, K. & Ghosh, S. (2013). Environmental Kuznets Curve for India: Evidence from tests for cointegration with unknown structural breaks. Energy Policy, 56, 509-515.
  • Kuznets, S. (1955). Economic growth and income inequality. The American Economic Review, 45(1), 1-28.
  • Murthy, K.V. B. & Bhasin, N. (2016). Environmental Kuznets Curve: CO2 emissions, pollution havens and type of economic development. In Ed. John R McIntyre Silvester Ivanaj, Vera Ivanaj, and Rabi Narayan Kar (eds.) Emerging Dynamics of Sustainability in Multinational Enterprises, pp. 209-231. UK: Edward Elgar.
  • Panayotou, T. (2003). Economic growth and the environment. Economic Survey of Europe: UNECE, 2,45-72.
  • Pao, H. & Tsai, C. (2011). Multivariate Granger causality between CO2 emissions, energy consumption, FDI (foreign direct investment) and GDP (gross domestic product): Evidence from a panel of BRIC (Brazil, Russian Federation, India, and China) countries. Energy, 36(1), 685-693.
  • Pezzey, J. C.V. (1989). Economic analysis of sustainable growth and sustainable development. Environment Department Working Paper No. 15. Washington D.C.: World Bank. Published as ‘Sustainable Development Concepts: An Economic Analysis’. World Bank Environment Paper No. 2. Washington D.C.: World Bank.
  • Rothman, D. S. (1998). Environmental Kuznets curves—Real progress or passing the buck? A case for consumption-based approaches. Ecological Economics, 25 (2), 177–194.
  • Selden, T. M. & Song, D. S. (1994). Environmental quality and development: Is there a Kuznets curve for air pollution emissions? Journal of Environmental Economics and Management, 27(2), 147-162.
  • Shafik, N. (1994). Economic development and environmental quality: An econometric analysis’. Oxford Economic Papers, 46(5), 757-773.
  • Shafik, N. & Bandyopadhyay, S. (1992). Economic growth and environmental quality: Time series and cross-country evidence’. World Bank Policy Research Working Paper No. 904, Washington, DC.
  • Stern, D. I. (2004). The rise and fall of the Environmental Kuznets Curve. World Development, 32(8), 1419-1439.
  • Stern, D. I., Common, M. S. & Barbier, E. (1996). Economic growth and environmental degradation: The environmental Kuznets curve and sustainable development. World Development, 24(7), 1151–1160.
  • Vehmas, J., Kaivo-oja, J. & Luukkanen, J. (2003). Global trends of linking environmental stress and economic growth. Tutu publications, Finland Futures Research Centre, Turku School of Economics and Business Administration, 7, 1-24.
  • Zhao, F., Xu, M., Zheng, Y., Huang, H., 7 Chi, Y. (2013). Improving the environmental Kuznets curve for evaluating the relationships between carbon dioxide emissions and economic development. Journal of Food, Agriculture and Environment, 11(2), 1193-1199.

Abstract Views: 219

PDF Views: 163




  • Environmental Kuznets Curve:An Empirical Analysis in the Indian Context

Abstract Views: 219  |  PDF Views: 163

Authors

Sakshi Gambhir
Janki Devi Memorial College, University of Delhi, Delhi, India

Abstract


The relationship between economic growth and environmental quality has been much under dispute. According to the EKC (Environmental Kuznets Curve) hypothesis, environmental damage increases in the early stages of economic growth, but diminishes once nations reach higher levels of income. While the notion EKC is well established, there is controversy about its shape, incidence and determinants. In this paper, we model EKC with the variables of GDP and CO2 emissions (aggregate and per capita) using alternative model specifications to bridge the gap between conventional and modern EKC literature. We also place the theoretical construct of EKC into a policy-oriented framework by incorporating the impact of four global policy periods namely, liberalisation, globalisation, world recovery and global financial crisis. We substantiate a cubic form of EKC in the Indian context for the time period 1991 to 2014. With aggregate CO2 emissions as the dependent variable, the linear, quadratic and cubic terms are all significant with the expected signs, which confirm an N-shaped EKC for India. Even with per capita emissions as the dependent variable, existence of an N-shaped EKC is established. In this case however, evidence on the cubic term is rather weak which points towards the difference in socio-psychological factors that influence the revival of upturn in the case of India. The policy period analysis does not show any distinct results, which could be due to contradictory effects on different variables and volatility in these variables.

Keywords


Environmental Kuznets Curve, Environment, Development, Trade, Growth.

References





DOI: https://doi.org/10.17492/pragati.v4i02.11464