Interrelationships and Causal Linkages Between Socioeconomic and Environmental Factors

The purpose of this study was to examine interrelationship and causal linkages between socioeconomic and environmental variables in OECD countries. To aid this study, a LISREL modelling tool was implemented. The findings of the study indicated that gross public debt increases with deterioration in air quality in North America, Asia and the Pacific, Central, Eastern and Atlantic regions of Western Europe. Energy consumption contributes to deterioration of air quality in all regions. Economic growth, measured by growth in GDP, accelerates deterioration of air quality in all regions except in Southern and Eastern regions of Western Europe. Increases in energy consumption and economic growth contribute to declines in gross public debt in most OECD countries. Spending for environmental protection contributes to reduced emission of CO2 in all regions of Europe except Asia/Pacific and North America. Expenditure for environmental protection causes increases in public debt in all regions. However, environmental expenditure exerts positive impact on economic growth in Asia/Pacific and Central Europe. Spending in environmental protection is associated with reduction in emissions of most pollutants except in North America and Asia/Pacific and Southern regions of Western Europe. The findings also indicated that in regions where emission of SO2 is the greatest, harvesting of forests increased while fish catches declined. Emission of NOx is associated with increases in agricultural production in most regions, except in Southern and Atlantic regions of Western Europe and North America. Emission of VOCs contributed to reduction in agricultural production in most regions except in Central regions of Western Europe. In summary, economic growth tends to significantly contribute to energy consumption and deterioration of air quality. However, the later can be improved through aggressive spending in environmental protection. Therefore, it is imperative to identify a strategy that would balance economic growth and energy consumption with improved environmental quality