Cointegration and causality: considering Iberian economic activity sectors to test the environmental Kuznets curve hypothesis

Few studies have attempted to study the environmental Kuznets curve (EKC) hypothesis at the individual sector level using more than one sector at once. This paper investigates the existence of the EKC hypothesis in the Iberian countries (Portugal and Spain) using thirteen economic activity sectors for each, analyzing each individual sector’s cointegration and causality relationships considering carbon dioxide (CO2) emissions, sector gross value added and energy consumption. The findings of this paper using the autoregressive distributed lag (ARDL) approach only validate cointegration in six Portuguese sectors and in five of the Spanish sectors. Results confirm both short- and long-run bi-directional and unidirectional causality between economic growth, energy consumption and CO2 emissions, using the error correction model (ECM) and Toda and Yamamoto’s causality approaches. Moreover, results for Portuguese and Spanish sectors indicate an inverted U-shaped relationship only for one sector each. In some sectors there was evidence of a U-shaped relationship and in others the EKC hypothesis could be verified but no statistical significance was obtained. The study has significant contributions for sector policy, including implications to curtail energy pollutants by implementing environmental friendly regulations to sustain economic development at the sector level in the Iberian market. It also allows inferences to be made about the existence of different behaviors in comparative terms for the same economic activity sectors of the individual countries.     

Renewable resources in an endogenously growing economy: balanced growth and transitional dynamics

We introduce a renewable resource sector into an endogenous growth model of a small economy, deriving the transitional dynamic equilibrium. The model generates a long-run equilibrium in which a resource sector of limited size can coexist with constant ongoing growth elsewhere. The key feature of the model is the allocation of labor between harvesting the resource and its use in the final output sector. This naturally generates the empirically observed negative relationship between resource abundance and growth. We examine both the dynamic and long-run responses of the economy to various shocks pertaining to technological production conditions and resource sector parameters.     

Structural change and sustainable development

In this paper, we show that the commonly observed decline in primary (natural resource using) sector output and employment shares, often termed structural change, can be explained as an endogenous response to the presence of nature's constraint. Structural change takes place even if consumer preferences are homothetic, and technological progress does not discriminate against the primary sector. Under certain conditions, structural change allows an open economy to grow with natural resource sustainability. Sustained and environmentally sustainable economic growth is possible even if the natural resource is exploited under open access. Well-defined property rights are neither necessary, nor sufficient for sustainable growth. We show that there is no unique relationship between natural resource endowment and the rate of economic growth over the long run. Resource-rich economies may grow faster or slower than resource-poor ones.     

北京市环境政策评价研究

选取北京市 1985— 1999年环境经济数据 ,建立北京市经济增长与环境污染水平计量模型 ,为评价北京市环境政策提供依据。此实证研究得出两个重要结论 :北京市环境指标与人均GDP演替轨迹呈现显著的环境库兹涅茨曲线特征 ;但比发达国家较早实现了其环境库兹涅茨曲线转折点     

Green tax reform,endogenous innovation and the growth dividend

We study theoretically and numerically the effects of an environmental tax reform using endogenous growth theory. In the theoretical segment, mobile labor between manufacturing and R&D activities, and elasticity of substitution between labor and energy in manufacturing lower than unity allow for a growth dividend, even if we consider preexisting tax distortions. The scope for innovation is reduced when we consider direct financial investment in the lab, or elastic labor supply. We then apply the core theoretical model to a real growing economy and find that a boost in long-run economic growth following such a carbon policy is a possible outcome. Redistribution of additional carbon tax revenue by lowering capital taxation performs best in terms of effciency measured by aggregate welfare. In terms of equity among social segments the progressive character of lump-sum redistribution fails when we consider very high emissions reduction targets.     

Environmental policy and misallocation: The productivity effect of intensity standards

Firm-level idiosyncratic policy distortions misallocate resources between firms, lowering aggregate productivity. Many environmental policies create such distortions; in particular, output-based intensity standards (which limit firms energy use or emissions per unit of output) are easier for high-productivity firms to achieve. We investigate the productivity effect of intensity standards using a tractable general-equilibrium model featuring multiple sectors and firm-level heterogeneity. Qualitatively, we demonstrate that intensity standards are always inferior to uniform taxes, as they misallocate both dirty and clean inputs across firms and sectors, which lowers productivity. Quantitatively, we calibrate the model to US data and show that these productivity losses can be large.     

Prospects for Reconciling the Conflict between Economic Growth and Biodiversity Conservation with Technological Progress

Abstract: The conflict between economic growth and biodiversity conservation is understood in portions of academia and sometimes acknowledged in political circles. Nevertheless, there is not a unified response. In political and policy circles, the environmental Kuznets curve (EKC) is posited to solve the conflict between economic growth and environmental protection. In academia, however, the EKC has been deemed fallacious in macroeconomic scenarios and largely irrelevant to biodiversity. A more compelling response to the conflict is that it may be resolved with technological progress. Herein I review the conflict between economic growth and biodiversity conservation in the absence of technological progress, explore the prospects for technological progress to reconcile that conflict, and provide linguistic suggestions for describing the relationships among economic growth, technological progress, and biodiversity conservation. The conflict between economic growth and biodiversity conservation is based on the first two laws of thermodynamics and principles of ecology such as trophic levels and competitive exclusion. In this biophysical context, the human economy grows at the competitive exclusion of nonhuman species in the aggregate. Reconciling the conflict via technological progress has not occurred and is infeasible because of the tight linkage between technological progress and economic growth at current levels of technology. Surplus production in existing economic sectors is required for conducting the research and development necessary for bringing new technologies to market. Technological regimes also reflect macroeconomic goals, and if the goal is economic growth, reconciliatory technologies are less likely to be developed. As the economy grows, the loss of biodiversity may be partly mitigated with end‐use innovation that increases technical efficiency, but this type of technological progress requires policies that are unlikely if the conflict between economic growth and biodiversity conservation (and other aspects of environmental protection) is not acknowledged.     

The dynamic causal links between CO2 emissions from transport,real GDP,energy use and international tourism

This study examines the dynamic causality relationship between international tourism and carbon dioxide (CO₂) emissions from transport, real gross domestic product and energy use. The vector error correction model and Granger causality test approach have been used to investigate these relationships for the top ten international tourism destinations spanning the period 1995–2013. Results reveal a unidirectional causality running from CO₂ emissions to economic growth without feedback; a bidirectional causality between economic growth and energy use; a bidirectional causality between international tourism and economic growth; and a bidirectional causality between international tourism and energy use. They also suggest that energy use and international tourism both contribute to the decrease of emissions level coming from transport sector, while economic growth leads to the increase of CO₂ emissions. This study can be used in policy recommendations by encouraging countries to use clean energy and to stimulate tourism sector for combating global warming.     

The environmental effects of trade within and across sectors

This paper presents a model that combines within and across sector channels through which trade affects our environment by embedding heterogeneous firms and fixed costs into a two-sector framework with an endogenous response to environmental policy. In contrast to existing literature that tends to examine these channels separately, the combined framework developed here shows how cross-sector comparative advantage and within-sector responses to trade and environmental policy or factor endowments interact to affect our environment through three channels: changes in output, cross-sector market share, and emissions intensity. In contrast to a single-sector model with neutral productivity, consideration of two sectors allows for trade liberalization to affect the allocation of inputs in each sector and thereby affect total pollution output. The additional consideration of heterogeneous firm responses to falling trade costs will generate endogenous increases in productivity that increase output, reduce aggregate emissions intensity, and moderate the cross-sector resource adjustment, relative to a representative-firm model. Simulation results show how the combined framework can replicate existing empirical outcomes, and provide concise ceteris paribus insights regarding the potential role of trade and environmental policy changes and factor expansion in driving observed outcomes and their contribution to each of the three channels.     

The resistibility and shiftability of depletable externalities

In their recently revised book Baumol and Oates (“The Theory of Environmental Policy,” 2nd ed., Cambridge Univ. Press, Cambridge, UK 1988) accept Bird's argument on the optimal taxation policy when externalities are shiftable and depletable. Their conclusion is that the standard Pigouvian tax which is placed upon the generator of a negative externality can be extended to tax the victims who shift the externality to others or extended to compensate recipients in order to achieve Pareto optimality. It is shown in this paper that their conclusion is not free from error, because the possibility of resisting a shifted externality and conjectural variations by recipients is not recognized. Whether an externality is shiftable depends not only on the shifting activity of the original victim but also the resisting activity of his neighbors and their conjectures about each other's action. As such, the shifters should be taxed and the recipients should be compensated at the same rate per unit of externality shifted if the tax base is the output of the shifting and resisting activities. On the other hand, if the tax base is the input which produced the shifting of the externality, then both the shifters and the recipients should be subject to a tax (or subsidy) per unit of input that they have engaged in. Whether it is a tax or a subsidy depends on the direction and magnitude of the conjectural variation. The model and its policy implication can be generalized to cover the omnipresent and wasteful rent seeking activities.     

福建省经济发展与工业污染水平计量模型研究

经济增长和环境污染之间的关系常用环境库兹涅茨曲线（EKC）来描述,典型的EKc一般呈倒u形。对福建省1988—2008年的经济与环境系列数据研究表明,福建省工业“三废”排放与人均GDP之间存在明显的相关性,但并不完全符合EKC的典型倒“U”模型。工业废水和工业s02排放曲线为“U＋倒U”形,EKC的转折点已分别在2006年和2008年到达;工业废气排放曲线为正“U”形的右半部分,EKc的转折点尚未出现。因此,福建省要进一步调整产业结构,提升第三产业在整个国民经济中的比重,优化第二产业结构,减少工业废气排放量,争取尽早跨越EKC拐点。     

青岛市“三废”排放的环境库兹涅茨特征分析

环境库兹涅茨曲线(Environmental Kuznets Curve,简称EKC)常用来描述经济增长与环境质量之间的关系,典型的EKC一般呈倒U形。通过对1986—2003年青岛市环境经济数据的经济计量模型研究,发现青岛市“三废”排放的EKC不完全符合典型的EKC特征,并对这一结果进行了初步分析。     

Impacts of policy related to structural adjustment of agriculture on grain supply in China

China's policy on structural adjustment of its agriculture is an effective instrument for increasing agricultural production and developing the rural economy. The policy interventions used included converting cultivated land from growing grain crops to cash crops and increasing the production of meat, eggs and milk. The impacts of these changes on grain supply between 1998 and 2004 are identified and quantified at national and regional levels. The data on cultivated land diverted to other purposes are presented for the benefit of the decision maker. The paper concludes that the policy had significant impacts on China's grain supply, which declined by 14.4% of the total grain output in 1998. However, nearly 40% of the cultivated land at national level could potentially be converted by 2010. Regional disparities in the extent of the reduction in grain supply and in land conversion are highlighted with reference to different economic conditions and policy directions.     

Growth,deforestation and the efficiency of the REDD mechanism

This paper assesses the long term impacts of an international transfer called the Reduced Emissions from Deforestation and Degradation (REDD) mechanism, which aims at preserving tropical forests of the recipient economy. This two-sector economy faces a dilemma between economic growth and deforestation. The rural sector can substitute reproducible capital for agricultural land whereas the manufacturing sector only requires capital. The model shows that the REDD mechanism has a non-monotonic effect on steady state welfares. For low transfer schemes, the agricultural output increases with the transfer even though less land is under cultivation. For high transfer schemes, the increase in the transfer may not offset the decrease in the agricultural output. The open-loop symmetric Nash equilibrium in a dynamic deforestation game predicts that redistributing the transfer among a finite number of producers is less efficient in reducing deforestation than in the social optimum.     

Growth,deforestation and the efficiency of the REDD mechanism

This paper assesses the long term impacts of an international transfer called the Reduced Emissions from Deforestation and Degradation (REDD) mechanism, which aims at preserving tropical forests of the recipient economy. This two-sector economy faces a dilemma between economic growth and deforestation. The rural sector can substitute reproducible capital for agricultural land whereas the manufacturing sector only requires capital. The model shows that the REDD mechanism has a non-monotonic effect on steady state welfares. For low transfer schemes, the agricultural output increases with the transfer even though less land is under cultivation. For high transfer schemes, the increase in the transfer may not offset the decrease in the agricultural output. The open-loop symmetric Nash equilibrium in a dynamic deforestation game predicts that redistributing the transfer among a finite number of producers is less efficient in reducing deforestation than in the social optimum.     

Testing the Environmental Kuznets Curve Hypothesis with Bird Populations as Habitat-Specific Environmental Indicators: Evidence from Canada

Abstract:  The traditional environmental Kuznets curve (EKC) hypothesis postulates that environmental degradation follows an inverted U-shaped relationship with gross domestic product (GDP) per capita. We tested the EKC hypothesis with bird populations in 5 different habitats as environmental quality indicators. Because birds are considered environmental goods, for them the EKC hypothesis would instead be associated with a U-shaped relationship between bird populations and GDP per capita. In keeping with the literature, we included other variables in the analysis—namely, human population density and time index variables (the latter variable captured the impact of persistent and exogenous climate and/or policy changes on bird populations over time). Using data from 9 Canadian provinces gathered over 37 years, we used a generalized least-squares regression for each bird habitat type, which accounted for the panel structure of the data, the cross-sectional dependence across provinces in the residuals, heteroskedasticity, and fixed- or random-effect specifications of the models. We found evidence that supports the EKC hypothesis for 3 of the 5 bird population habitat types. In addition, the relationship between human population density and the different bird populations varied, which emphasizes the complex nature of the impact that human populations have on the environment. The relationship between the time-index variable and the different bird populations also varied, which indicates there are other persistent and significant influences on bird populations over time. Overall our EKC results were consistent with those found for threatened bird species, indicating that economic prosperity does indeed act to benefit some bird populations.     

浙江省废水排放增长的EKC曲线特征分析

选取浙江省1985~2004年经济和废水排放数据,通过分析经济因子与废水排放之间的相互关系,建立浙江省废水排放的库兹涅茨曲线模型。结果表明:浙江省废水排放与人均GDP的演替轨迹呈现显著的环境库兹涅茨曲线特征,1985~2004期间处于曲线的上升阶段。浙江省废水排放总量的EKC曲线理论转折点为人均GDP约34 305元,相应的废水排放总量峰值为35亿t,预测转折点出现的时间为2007年左右。工业废水排放量正处于EKC曲线的转折点附近,而生活废水排放量目前正处于EKC曲线加速上升的阶段,转折点出现的时间为2007年左右,对应的生活废水排放量的峰值为15亿t,是2004年生活废水排放量(11.6亿t)的1.3倍,形势非常严峻,应该引起重视。因此,十一五期间,浙江省尤其要注重对生活废水排放的控制和治理,并且保持较高的治理投入。     

Modeling a sustainable Saudi Arabian economy: the real issues

This paper develops a macroeconomic framework for creating a competitive and sustainable Saudi Arabian economy, taking into account the interrelationships among social, environmental, and economic factors. The objective of the research is to build a model that will allow for evaluating the effects of a wide range of emissions abatement policies on economic growth and development. The research methodology is grounded in econometric modeling of the Saudi economy over the period 1980–2010. The estimated parameters of the model were used to project long-term gross domestic product (GDP) growth paths based on three environmental degradation abatement scenarios. The results suggest that the sustainability of economic growth in Saudi Arabia critically depends on aggressive emissions-reduction policies since policy scenarios corresponding to higher pollution cuts yielded higher, sustained long-term GDP. The results also broadly reject the Environmental Kuznets Curve (EKC) hypothesis, implying that a turning point in the relationship between CO₂ emissions and per capita GDP is yet to be attained.     

Integrated assessment of agricultural policies with dynamic land use change modelling

With about half of its territory being farmed, agriculture is the main land use in the European Union (EU). As over 10% of the total EU manufacturing output comes from the agri-food sector, it also is an economic factor of great importance. Moreover, EU policy in this sector has far-reaching consequences ranging from the EU's status as a global trade partner to landscape preservation and development. The LUMOCAP Policy Support System is targeted towards policy makers in the European Commission (EC) and its Member States (MS) and aims to provide support in the field of sustainable agricultural and rural development. To this end it incorporates an integrated model with socio-economic and bio-physical processes, operating at different spatial scales. For supporting integrated assessment, a large number of policy levers is included as inputs for these models and outputs are transformed into policy-relevant social, economic and environmental indicators. The whole system is framed in a flexible, modular and easy to use software package that is useable for process experts and policy-analysts alike.This paper describes the integrated model, the individual models and a first calibration of the system. It demonstrates the system's behaviour for typical scenario runs and concludes with a reflection on the current status of the system and some recommendations for further development.     

Emissions targets and the real business cycle: Intensity targets versus caps or taxes

For reducing greenhouse gas emissions, intensity targets are attracting interest as a flexible mechanism that would better allow for economic growth than emissions caps. For the same expected emissions, however, the economic responses to unexpected productivity shocks differ. Using a real business cycle model, we find that a cap dampens the effects of productivity shocks in the economy on all variables except for the shadow value of the emissions constraint. An emissions tax leads to the same expected outcomes as a cap but with greater volatility. Certainty-equivalent intensity targets maintain higher levels of labor, capital, and output than other policies, with lower expected costs and no more volatility than with no policy.