Abstract
In the presence of more than one scenario on the interaction of growth, environmental regulation and environmental quality, it is unclear what shape is assumed by the relation between environmental degradation and income per capita (that is, the environmental Kuznets curve). Evidence based on Australian data is presented, suggesting that the environmental Kuznets curve EKC is valid for carbon dioxide, in the sense that an inverted U-shaped curve is observed for several measures of CO2 emissions. The results, however, cannot be generalized because the relation between environmental degradation and income per capita is time-varying and country-specific. It also depends on how environmental degradation and income per capita are measured.
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Notes
- 1.
Conversely, environmental quality is a U-shaped function of income per capita. The convention is to consider the dependent variable to be environmental degradation (as indicated, for example, by the level of a pollutant) rather than environmental quality.
- 2.
The origin of the KEC can be traced back to the original Kuznets curve. At the sixty-seventh annual meeting of the American Economic Association in December 1954, Simon Kuznets delivered a presidential address on economic growth and income inequality. He suggested that rising per capita income is conducive to rising income inequality up to a certain point after which inequality declines with rising income (Kuznets 1955). Kuznets believed that the distribution of income becomes more unequal at early stages of income growth but it eventually moves towards more equality as growth continues. This changing relation between per capita income and income inequality can be represented by an inverted U-shaped curve.
- 3.
The demand for environmental quality may rise more than proportionately if the income elasticity of demand for environmental quality is greater than one.
- 4.
This argument does not invalidate the EKC if environmental degradation is measured in terms of pollution per capita or per dollar of output.
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Appendix
Appendix
Measures of environmental degradation
Source: Author’s construction
Measures of income per capita
Source: Author’s construction
EKC for CO2 emissions (ton per capita)
Source: Author’s construction
EKC for CO2 emissions (kg per PPP dollar of GDP)
Source: Author’s construction
EKC for CO2 emissions from electricity and heat
Source: Author’s construction
EKC for CO2 emissions from gaseous fuel (ton per capita)
Source: Author’s construction
EKC for CO2 emissions from liquid fuel
Source: Author’s construction
EKC for CO2 emissions (per dollar of real GDP)
Source: Author’s construction
EKC for CO2 emissions (per PPP dollar of GDP)
Source: Author’s construction
EKC for CO2 emissions from gaseous fuel (%)
Source: Author’s construction
EKC for CO2 intensity
Source: Author’s construction
EKC for forest area (%)
Source: Author’s construction
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Moosa, I.A. (2017). Economic Growth as a Cause of Environmental Degradation: The Australian Experience. In: Banik, A., Barai, M., Suzuki, Y. (eds) Towards A Common Future. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-10-5592-8_12
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