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Decomposing the CO2-income tradeoff: an output distance function approach

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  • REZEK, JON P.
  • ROGERS, KEVIN

Abstract

The environmental Kuznets curve (EKC) hypothesis holds that economic growth leads to increases in pollution in early stages of development, but is a significant driver of environmental improvements as income levels increase. Most empirical applications have focused on estimating a reduced form equation in which the measure of environmental degradation is posited as a non-linear function of income. In this paper we develop a structural production model based on an output distance function to investigate the EKC hypothesis for CO2 in a panel of industrialized countries from 1971 to 2000. This structural approach allows for the decomposition of the observed emission changes into the scale, composition, and productivity effects, thus providing additional insight into the interlinked processes of economic growth and environmental change. The findings from our preferred model indicate that for most countries, the CO2-saving productivity effect is not large enough to offset the CO2-producing scale effect.

Suggested Citation

  • Rezek, Jon P. & Rogers, Kevin, 2008. "Decomposing the CO2-income tradeoff: an output distance function approach," Environment and Development Economics, Cambridge University Press, vol. 13(4), pages 457-473, August.
    • Handle: RePEc:cup:endeec:v:13:y:2008:i:04:p:457-473_00
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    Cited by:

    1. Lau, Lin-Sea & Choong, Chee-Keong & Ng, Cheong-Fatt & Liew, Feng-Mei & Ching, Suet-Ling, 2019. "Is nuclear energy clean? Revisit of Environmental Kuznets Curve hypothesis in OECD countries," Economic Modelling, Elsevier, vol. 77(C), pages 12-20.
    2. Muhammad Shahbaz & Giray Gozgor & Philip Kofi Adom & Shawkat Hammoudeh, 2019. "The technical decomposition of carbon emissions and the concerns about FDI and trade openness effects in the United States," International Economics, CEPII research center, issue 159, pages 56-73.
    3. Roberto Mosheim, 2013. "A shadow distance function decomposition of the environmental Kuznets curve: comparing the South China Sea and the Caribbean," Journal of Productivity Analysis, Springer, vol. 40(3), pages 457-472, December.
    4. Liu, Lee, 2012. "Environmental poverty, a decomposed environmental Kuznets curve, and alternatives: Sustainability lessons from China," Ecological Economics, Elsevier, vol. 73(C), pages 86-92.
    5. Lau, Lin-Sea & Choong, Chee-Keong & Eng, Yoke-Kee, 2014. "Investigation of the environmental Kuznets curve for carbon emissions in Malaysia: Do foreign direct investment and trade matter?," Energy Policy, Elsevier, vol. 68(C), pages 490-497.
    6. Tetsuya Tsurumi & Shunsuke Managi, 2010. "Decomposition of the environmental Kuznets curve: scale, technique, and composition effects," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 11(1), pages 19-36, February.
    7. Song, Malin & Wang, Jianlin, 2018. "Environmental efficiency evaluation of thermal power generation in China based on a slack-based endogenous directional distance function model," Energy, Elsevier, vol. 161(C), pages 325-336.
    8. Kibonge Naik, Aziza, 2014. "Agricultural Productivity In Sub-Saharan Africa: Carbon Dioxide Emissions From Land-Use Change," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 172350, Agricultural and Applied Economics Association.
    9. Melenberg, B. & Vollebergh, H.R.J. & Dijkgraaf, E., 2011. "Grazing the Commons : Global Carbon Emissions Forever?," Discussion Paper 2011-020, Tilburg University, Center for Economic Research.
    10. Tiba, Sofien & Frikha, Mohamed, 2019. "The controversy of the resource curse and the environment in the SDGs background: The African context," Resources Policy, Elsevier, vol. 62(C), pages 437-452.
    11. Béchir Ben Lahouel & Younes Ben Zaied & Guo-liang Yang & Maria-Giuseppina Bruna & Yaoyao Song, 2022. "A non-parametric decomposition of the environmental performance-income relationship: evidence from a non-linear model," Annals of Operations Research, Springer, vol. 313(1), pages 525-558, June.
    12. Can, Muhlis & Gozgor, Giray, 2016. "Dynamic Relationships among CO2 Emissions, Energy Consumption, Economic Growth, and Economic Complexity in France," MPRA Paper 70373, University Library of Munich, Germany.
    13. Herrala, Risto & Goel, Rajeev K., 2016. "Sharing the emission reduction burden in an uneven world," Energy Policy, Elsevier, vol. 94(C), pages 29-39.
    14. Abdul Rahim Ridzuan & Vikniswari Vija Kumaran & Bayu Arie Fianto & Mohd Shahidan Shaari & Miguel Angel Esquivias & Aliashim Albani, 2022. "Reinvestigating the Presence of Environmental Kuznets Curve in Malaysia: The Role of Foreign Direct Investment," International Journal of Energy Economics and Policy, Econjournals, vol. 12(5), pages 217-225, September.
    15. Herrala, Risto & Goel, Rajeev K., 2012. "Global CO2 efficiency: Country-wise estimates using a stochastic cost frontier," Energy Policy, Elsevier, vol. 45(C), pages 762-770.
    16. Zuoxiang Zhao, 2017. "Measurement of production efficiency and environmental efficiency in China’s province-level: a by-production approach," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(4), pages 735-759, October.

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