Is There a Environmental Kuznets Curve? Evidence from per capita CO2 emissions

The environmental Kuznets curve (EKC) theory is one way to model the relationship between environmental degradation and economic growth. The theory suggests as an economy develops, environmental degradation will rise until a turning point is reached. After an economy passes the turning point, environmental degradation is predicted to fall. This results in an inverted U-shaped relationship between environmental degradation and environmental growth. This study estimates the EKC for CO2 emissions using panel data from 56 countries. By employing a first-difference log-log model, the investigation predicted turning points for the 56 countries as a whole and separated into subcategories of OECD and non-OECD countries. The study predicts that a turning point does exist for all countries, as well as OECD countries and non-OECD countries, but the per capita GDP required reach this turning point is unrealistic for the world. This suggests policy stimulating the economy at the cost of the environment may be harmful in both the short run and the long run.