Most of the studies on N2O have either not included additional variable in the model or the study is specific to a certain country. Our article is one of the first few attempts to comprehensively analyse EKC hypothesis (quadratic and cubic models) for the case of N2O emissions in the APECcountries by considering other explanatory variables such as population of the member countries, trade openness, R&D expenditure, use of renewable energy and fossil fuels, and gross capital formation. This provides a comprehensive analysis in understanding the optimal energy policy mix a nation or a group of nations should have in order to minimize nitrousoxide emission. Our study attempts to contribute to the existing literature on the fact that nitrousoxideemissions can be minimized with simultaneous generation of renewable energy (Ming et al., 2016). Our study contributes to the literature of energy and environmental economics in several ways: (a) for the APECcountries, this is the first ever study to analyse the impact of economic growth parameters on N2O emissions, (b) in this study, the impact assessment has been carried out following the N-shaped EKC framework, (c) we have used the renewable and non-renewable energy consumptions singularly and combinedly in the EKC models, so that their differential and mixed impacts on N2O emissions can be seen, (d) analysing the EKC models assuming cross-sectional dependence has allowed us to incorporate the cross- country effects in the analysis, and (e) based on the results of the study, we have shown a way to achieve some of the objective of sustainable development goals (SDGs) within 2030.
there is no causal link between GDP and EC; and between CO2 emissions and EC in the short run. Christopher (2012) examined Energy Consumption, Economic Growth and CO2 Emissions in Middle East and North African Countries. The study applied bootstrap panel unit root tests and co-integration techniques to investigate the relationship between carbon dioxide emissions, energy consumption, and real GDP for 12 Middle East and North African Countries (MENA) over the period 1981–2005. The findings show that in the long-run energy consumption has a positive significant impact on CO2 emissions. It also shows that real GDP exhibits a quadratic relationship with CO2 emissions for the region as a whole. Although the estimated long-run coefficients of income and its square satisfy the EKC hypothesis in most studied countries, the turning points are very low in some cases and very high in other cases, hence providing poor evidence in support of the EKC hypothesis. Thus, overall findings suggest that not all MENA countries need to sacrifice economic growth to decrease their emission levels as they may achieve CO2 emissions reduction via energy conservation without negative long-run effects on economic growth.
emissions in the past year have a positive impact on the level of current emissions . Similarly, the Arellano–Bond test for zero autocorrelation in first differenced errors reveals that AR(1) is significant and AR(2) cannot reject the null hypothesis, suggesting that error terms are serially uncorrelated in all models [33,37]. Because Brazil, Russia, India, China, and South Africa (BRICS) are among the countries emitting the most carbon in the world (China, rank 1; India, rank 3; Russia, rank 4; Brazil, rank 13; and South Africa, rank 14) , we have also presented a separate model examining the EKC relationship for BRICS countries. BRICS’ emissions have been increasing faster than that of other parts of the world. This is because, over the past decade, BRICS have greatly exceeded economic growth compared to the world’s leading industrialized nations and are expected the similar trend in coming decades.
The paradox can best be understood by looking at two distinct schools of thought. Proponents of smart growth argue that economic development should be integrated with the community’s quality-of-life by preserving the natural environment (see MAPC, 2010). This implies that to ensure sustainable economic growth, environmental resources must be used responsibly because most of them are non-renewable and some of the consequences of environmental degradation are irreversible. Another school of thought is the ‘going-for-growth’ perspective which emphasizes on achieving faster economic growth rather than on forming environmentally friendly policies because economic growth is perceived to be able to achieve both economic and environmental goals, whereas implementing environmental policies may impede economic growth. (Webber and Allen, 2004). This implies that countries should be allowed to economically grow out of environmentally damaging activity. The proponents of this policy further argue that it is possible to allow initial environmental degradation to accelerate economic growth such that the realized income will be used for environmental management.
Since the beginning of this century, the level of energy consumption in the Asian region has been growing at an unprecedented speed (see Figure 1) and now the Asian region is the world’s largest energy consumer. As the current climate change is largely related to the anthropogenic emissions of carbon dioxide resulted from increased fossil fuel energy use (EIA, 2016, p.136), this surge in the energy consumption in the Asian region is increasingly placing pressure on the environment. Consequently, the Asian region needs to find ways to reduce its level of fossil fuel energy use while attaining economic growth. To gain more useful information for constructing an effective energy policy to meet this goal, more studies need to be done to understand the relationship between economic growth and energy consumption and how this relationship will lead to environmental pressure.
For the estimation, we use the cointegration technique as our methodol- ogy. To conduct the cointegration analysis, there are several approaches such as the residual-based approach proposed by Engle and Granger (1987) and the maximum likelihood-based approach proposed by Johansen and Juselius (1990). When there are more than two I(1) variables in the system, the lat- ter has the advantage over the former. These approaches, however, have disadvantages due to the requirement that the variables in the system must have the same order of integration. This requirement often causes difficulty to researchers when the system contains variables with different orders of integration. To overcome this problem, Pesaran et al . (2001) propose a new approach known as the autoregressive distributed lag (ARDL) for cointegra- tion analysis which does not require the classification of variables into I(0) or I(1). Here, we adopt this new approach.
The fast growing literature on environmentalKuznets curves has to date ignored the econometric implications of the presence of polynomial powers of integrated regressors in cointegrating regres- sions. Regressions involving nonlinear transformations of integrated regressors typically require different statistical analysis than standard linear cointegrating regressions. Based on the work of Park and Phillips (1999; 2001) we develop estimation and testing theory for regressions including stationary regressors, deterministic regressors and integrated regressors and their integer powers. This setup is clearly a rather special formulation of a nonlinear relationship but it offers some advantages. First, this setup leads to relationships that are linear in the parameters which implies that modified OLS estimation techniques will suffice, avoiding the need to resort to nonlinear es- timation techniques that arises in more general formulations. Note that regressions involving also cross-products of the powers of the regressors can be studied by slightly modifying the results pre- sented in this paper. We, however, believe that unless the application one has in mind leads one to consider such cross-products as being important the more parsimonious formulation without cross- products we focus on in this paper is a potentially good starting point for nonlinear cointegration analysis, not only for EKC analysis.
Economic growth improves quality of life through produced goods and reduces welfare degrading environmental quality. The rapid growth inevitably results in greater use of natural resources and emission of pollutants, which in turn put more pressure on environment. During last two decades the impact of economic growth on environment has come to the research focus of academics and policy makers; and outcome is the EnvironmentalKuznetsCurve 1 (EKC). Intuition is that at initial stage environmental pressure rises with rapid industrialization and later declines mainly due to income and technological effects. This paper develops a growth model to provide a theoretical explanation of the environmentalKuznetscurve. The paper mainly focuses on technological development driven by environmental problems, ceteris paribus. Paper shows that the EKC result arises in two ways – (i) it can be observed from a single technology that matures and (ii) it can be observed as an economy develops new technologies over time. This second effect is represented as an envelope of Kuznets curves. The contribution of this paper is to show that the pollution paths associated with new technologies can be collectively viewed as an envelope of underlying Kuznets curves. This paper provides an interesting application of growth theory and of the envelope theorem. The contribution aims at providing additional theory in environment and development field where empirical studies lack adequate theoretical foundation. This effort is useful, because the EKC has received a lot of attention in the recent literature. Moreover, there have so far not been many serious attempts which go in this direction.
the EKC hypothesis. The issue of environmental pollutants is in a progressive trend in developing countries as they require more energy consumption for higher economic development. Consequently, they suffer from more environmental problems. Among the developing countries, Indonesia has been one of the fastest-growing open country with a rapid economic transformation, population expansion and high energy consumption with particular emphasis on city context and a significant rise in pollutant emissions, specifically CO 2
In sum, it is impossible to solve environmental pollution by economic growth itself. The government has to choose the right path for its economic growth by taking into account the environmental issues whilst turning towards sustainable development. However, Saudi Arabia needs to adopt new strategies and new technologies to mitigate the GHGs emissions. This study also explored the current situation and future of environmental pollution in Saudi Arabia and whether the country applies environmental policies or not, through the existence of a turning point. Our finding showed that there is no turning point; this means there is no technical effect that contributes to reducing environmental pollution. Even though Saudi Arabia has environmental organisation and has signed environmental protection treaties, the country needs to employ environmental reduction policies using environmental instruments to reach the turning point.
Even though there are many contradictory results about the EKC in literature, the current study confirms the existence of the EKC. It should be noted that the findings depend on many criteria such as the pollutants considered, the econometric techniques used, and the period studied, among others. These results imply that economic growth can be a remedy for environmental degradation which means that the exploitation of natural resources for the sake of economic growth can be accepted until the turning point of the EKC curve is reached. However, some studies have shown that deterioration of the ecosystems may persist even after reaching a specific income level when irreversible damages have already been done (see Özokcu and Özdemir, 2017). It should be noted that this persistence is of paramount importance especially for CO 2 emissions and its long-run effect on the environment. This means that actions to slow
Following Choumert et al. (2013)  meta analysis on EKC in deforestation on nearly 70 studies, there are only 6 results using time-series for analyzing deforestation. These appear to be Shafik (1992) , who does not consider cointegration (or order of integration of the series), and thus cannot investigate EKC in the long- term as discussed above. Ewers et.al. (2008) , in a correlation analysis, use a 1990-2005 sample over the Amazon basin, but fail to acknowledge the potential for unit roots. For Latin America, an EKC was identified in 2 panel studies of deforestation, both using FAO data over similar periods from the early 70’s to the early 90’s: Bhattarai and Hammig (2001) , and Culas and Dutta (2003) . For the Legal Amazon, Araujo et al.  found a weakly significant Kuznets effect using panel data for the 1988-2000 period and 9 States. The samples in these last five papers end too early to detect the steep post-2004 decline in deforestation. Corrêa de Oliveira et.al. (2011)  focused on deforestation at the municipal level in a spatial panel (2001-2006) model. They found a cubic “inverted N-shaped” relation when accounting for spatial correlation. None of these deforestation papers appear to account for the presence of unit roots in the series.
However, the efforts of ASEAN countries have not always led to successful performances in environmental management, because they have often lacked the capacity to enforce environmental laws and standards, and to disseminate new technologies nationwide. Developed countries, therefore, have focused their assistance since the 1980s on capacity building in environmental management. As a typical example, the Japanese government has provided official development assistance (ODA) to establish and manage environmental management centers, with functions such as environmental monitoring, training, and research (Ministry of the Environment 2001) — in Thailand, the Environmental Research and Training Center opened in March 1992; and in Indonesia, the Environmental Management Center opened in August 1993. The Japanese government has promoted technical cooperation with these centers, involving a systematic and comprehensive combination of dispatching experts, providing equipment and offering training programs. 3
Pesaran et al. (2001) specified that ARDL bound testing can only be applied to series that are in 𝐼(1), 𝐼(0), or the combination of both, without presence of 𝐼(2) in any of the variables. After applying ADF test and PP test to check the stationarity, the result strongly suggests none of the selected variables are 𝐼(2). Therefore, it is valid to use ARDL bound testing to check the cointegration between the variables. As the F-statistics is sensitive to the number of lags imposed in the model, Schwarz criterion (SC) is utilized to select the appropriate lags because it chooses the smallest possible lags for the model. Table 4 provides a summary of the results of ARDL cointegration test. The computed F-statistics in Indonesia, Thailand, Vietnam is greater than the upper bound critical values at 5% level of significance, which support the presence of cointegration in these three countries. On the other hand, the F-statistics of Singapore, Malaysia, and Philippines fall into the inconclusive zone at 5% significant level. However, the presence of cointegration can be supported by the statistically significant and negative values of 𝐸𝐶𝑇 𝑡−1 in these three nations. As mentioned, 𝐸𝐶𝑇 𝑡−1 measures the speed of
The results of the empirical investigation of public environmental expenditure in selected OECD countries between 1980 and 1991 provide support to the hypothesis developed in this paper according to which relative income and thus in- come inequality affect environmental public pol- icy decisions. For this OECD sample, income inequality shows the expected negative correlation with environmental care as predicted by the theo- retical discussion. Furthermore, as both proposi- tion 1 and proposition 2 hold, provided the necessary income elasticity condition is satisfied, the finding of empirical results consistent with such propositions validates the hypothesis dear to the environmental literature that public concern for the environment grows with per capita in- come. Lastly, as stated in proposition 2, countries where growth in per capita income is accompa- nied by rise in income inequality (e.g. the US in the 1980s) are the ones that may witness a nega- tive impact of economic growth on public envi- ronmental expenditure. A caveat accompanies these results. This analysis has explicitly restricted the focus to high-income countries. It is particu- larly important to bear this in mind when inter- preting Table 3. The association between decreasing income equality and increasing envi- ronmental protection for values of per capita GDP below the reported critical level cannot be generalized to low-income countries. Whether or not the suggested relationship applies to these countries remains to be answered. This caution applies a fortiori because the assumptions used in the present analysis are known not to apply for the majority of low-income countries.
Lopez and Miltra’s (2000) theoretical postulation that, for any level of per capita income, the rent-seeking activities of government officials raises pollution levels above the social optimum is particularly relevant for a resource dependent economy like Nigeria with very high levels of institutional corruption. Also, according to the Hecksher-Ohlin theorem, several authors have emphasized the role of international trade in shaping the income-environment relation. There is theoretically no consensus on the expected direction and nature of the impact of trade on the environment. Rothman (1998) explains that what may appear to be an improvement in environmental quality as a result of trade may in reality be an indication of the increased ability of consumers to distance themselves from the environmental degradation associated with their consumption; an idea referred to as the pollution heaven hypothesis. Copeland and Taylor (2004) conducted an extensive survey on this issue, and though he acknowledges the links between trade, environment and regulation, he downplays the idea of the pollution heaven hypothesis on grounds of little empirical support.
Consistently with the above described arguments in the literature, we select - in addition to per capita GDP - the following variables as potential determinants of CO2 emissions: i) supply side variables such as sources of energy production (coal, oil, gas, hydro and nuclear power as a percent of total energy production for domestic use); 5 ii) inputs and proxies of agricultural activity such as the number of tractors per 1000 inhabitants and the intensity in the use of fertilisers; iii) population density so that it is possible to compare under-populated countries with over-populated countries and their contributions to the overall environment degradation; iv) social variables which are usually added as proxies of given moments in the distribution of income (respectively, the number of radios and telephone mainlines per 1000 inhabitants) or, alternatively, as proxies of the weight of information-intensive activities which should increase the marginal cost of pollution and the share of less environmentally degrading non rivalrous goods in the economy (Holtz-Eakin-Selden, 1992 and 1995); v) fuel import (as a percent of total commercial imports) to evaluate the marginal effect on domestic pollution of the country capacity to distance itself from environmental degradation (Rothman, 1998). In Tables 1 and 2, we present some descriptive statistics of the variables considered for both specifications on the overall sample.
13 Our work is related to numerous attempts to explain the pollution growth nexus. Most studies test the validity of the so called EnvironmentalKuznetsCurve hypothesis, which postulates an inverted U-shape relationship between environmental degradation and income (Grossman and Krueger, 1994 and 1995; Osabuohien et al., 2014; Beckerman 1992; Stern 2003); while others such as (Agra and Chapman 2008; Galeotti et al., 2006; Coondoo and Dinda 2008) failed to validate the hypothesis. Although numerous studies test the EKC hypothesis, for individual countries (friedl and Getzner 2003; Roca et al., 2001; De Bruyn et al 1998; Roberts and Grimes 1997) and panel of countries (canes et al 2003; stern 2004; Perman and Stern 2003; Huang and Cin 2007) empirics have failed to yield conclusive result (Aslanidis 2009; Soyas and Sari 2009; Bassetti et al.,). Moreover, most empirical studies are considered to be econometrically weak (Stern 2004; Narayan and Narayan, 2010; Brock and Taylor, 2010). In a recent study, Narayan and Narayan 2010 examine the EKC hypothesis in a panel of 43 developing countries using panel cointegration in order to overcome econometric pitfalls. They conclude that CO2 emissions fall as income rises only in Middle Eastern and South Asian countries. Finally, Brock and Taylor (2010) employ the Green Solow model as an alternative framework and present robust evidence of convergence between the 173 countries examined using standard panel technique.
9 openness at the cost of environment in developing economies. Copeland and Taylor,  pointed that trade depends upon the relative abundance of factor endowment in each country and therefore, comparative advantage of trade also affects environmental quality depending upon trade and environmental policy in the country. Birdsall and Wheeler, ; Lee and Roland-Host, ; Jones and Rodolfo  opined that environmental degradation is not the main cause of trade openness. Similarly, Antweiler et al.  and Liddle,  pointed out that trade openness improves environmental quality via technique effect. Environmental regulations become strict as income increases and the adoption of energy-efficient technologies are encouraged to save environment from degradation. In case of China; Dean,  reported that trade openness deteriorates environmental quality via improved terms of trade, however, rise in income saves environment from degradation. Magani,  used data of 63 developed and developing economies to examine the effect of trade openness on energyemissions. The results showed that a 0.58% carbon emission is linked with a 1% increase in trade. Similarly; McAusland,  reported that trade affects environment significantly and same view is confirmed by Frankel, .