Production and consumption based approaches for the environmental Kuznets curve using ecological footprint
ABSTRACT We examine the environmental Kuznets curve (EKC) hypothesis using the ecological footprint (EF) a more comprehensive indicator of environmental degradation, for 11 countries covering the 1971 2007 period. We test the EKC hypothesis using a traditional quadratic function from both the supply and consumption side, adding several explicative variables: urbanisation, petrol price and industrialisation for the supply side; biocapacity, life expectancy and energy use for the consumption side. We perform an autoregressive distributed lagged modelling in order to study both short and long run periods. We find that there is no stable relationship between the environment and economic development in the long run. For the short run analysis, the EKC hypothesis is supported for no one, we rather find an increasing relationship between growth and environment. Results for explicative variables are mixed: for the production side approach, industrialisation appears to have a positive impact on EF for Sweden, but a negative one for Portugal and Spain. For the consumption side approach, energy use seems to have a positive impact on EF for Argentina and Colombia whereas biocapacity and life expectancy have a positive and negative impact, respectively, on EF for Paraguay. Lastly, biocapacity has a positive impact on EF for Canada but negative for Norway, likely depending on levels of biocapacity and ecological reserve.