Governance, institutions and the environment-income relationship: a cross-country study

Abstract

This paper examines the environment-income relationship in the context of the Environmental Kuznets Curve (EKC), and explores the possible role that factors like governance, political institutions, socioeconomic conditions, and education play in influencing this relationship. The results suggest that the EKC exists for carbon dioxide emissions for cross-country data over the period 1984-2002. However, there is nothing automatic about this relationship; policies designed to protect the environment may be responsible for this phenomenon. Two other significant findings are: one, countries with better quality of governance, stronger political institutions, better socioeconomic conditions and greater investment in education have lower emissions; and two, only around 15% of the countries in the dataset have reached income levels high enough to be associated with an unambiguous decline in emissions. The implications of these results are discussed within the context of the international environmental policy arena and the Kyoto Protocol. One of the main objectives of this paper is to bridge the gap between studies conducted on the EKC and developments in the international environmental policy arena. As a final note this paper emphasizes that one needs to connect the body of knowledge on the EKC hypothesis to the international environmental policy arena, despite the apparent difficulty of doing so. One hopes that future studies will further build on this line of thought.

An Analysis of the Environmental Kuznets Curve for Carbon Dioxide Emissions: Evidence for OECD and Non-OECD Countries

“…These outcomes imply that the countries of Asia and Africa have reached the stage where they can start to reduce their CO2 emissions as they grow economically. Hence such results confirm previous efforts that found that a CO2 EKC can occur in countries as they develop economically (Cole et al, 1997;Dietz and Rosa, 1997;Dutt, 2009;Galeotti and Lanza, 1999;Sharma, 2011). Nevertheless, the Latin American region showed insignificant outcomes for both PCI and PCI 2 , thereby implying that an EKC does not exist.…”

“…The POPG variable turned out insignificant and positive for the Latin American region but significant and negative for the Asian region. The results for the Latin American region verify Dutt (2009); the outcomes for the Asian region, though, seem counter-intuitive since a population increase generally means that greater numbers of people place ever escalating demands on available resources, leading to an accelerated depletion of those resources as well as the creation of larger amounts of waste (Dietz and Rosa, 1997). Nevertheless, an argument can be made that many non-OECD countries have as yet to develop a high enough standard of living to allow their population to truly impact CO2 emissions; these countries have such limited economic development that increased production and consumption from population growth have relatively small impacts on emissions.…”

“…This CO2 externality can allow CO2 emissions to continue to rise as economic growth expands. Nevertheless, some researchers have discovered an EKC for CO2in general (Cole et al, 1997;Dietz and Rosa, 1997;Dutt, 2009;Galeotti and Lanza, 1999;Sharma, 2011).Other researchers found a CO2 EKC only for OECD or high income developed countries (Cole, 2005;Galeotti et al, 2006;Schmalensee et al, 1998). Iwata et al (2010) discovered an EKC for France but Heil and Selden (2001) foundan EKC only with their levels model.…”

“…Some studies have found that an increasing population has little influence on CO2 emissions (Dutt, 2009); other research, though, has demonstrated that population growth directly increasesCO2pollution levels (Dinda, 2004;Martínez-Zarzosa et al, 2007;Shi, 2003). We use overall population growth specifically to determine how it might affect per capita emissions; an increase in CO2 emissions per person due to a rise in total population would indicate an additive effect, where every additional person actually increases each person's per capita emissions.…”

Non-trivial Factors as Determinants of the Environmental Taxation Revenues in 27 EU Countries

“…Most of the studies in this field demonstrate the existence of an Environmental Kuznets Curve (EKC) that links economic growth and the environment (e.g., Baek et al 2009;Castiglione et al 2012;Costantini and Martini 2010;Dutt 2009;Lipford and Yandle 2010;Markandya et al 2006). The theory suggests that economic growth and economic welfare are inter-connected, and environmental protection policy can be seen as a consequence but also as a driver of economic development, since environmental regulation can stimulate innovation that reduces the costs of complying with it (Porter and van der Linde 1995).…”