Investigating the relationships between economic growth and environmental degradation: Evidence from EU15 countries
Abstract
The Environmental Kuznets Curve (EKC) hypothesis has become a centre of interest for empirical research, as it serves to identify the relationships between economic growth and environmental degradation that will lead to a sustainable development path. The aim of the paper is to investigate these relationships for each of the EU15 countries, which are responsible for the largest amount of carbon dioxide emissions in Europe. Based on the results of the analysis of ARDL bounds cointegration approach, for the 1960–2019 period, it was found that there is a great diversity between the countries in the EU15 regarding the existence and shape of EKC, from the identification of N shape, Inverted U-shape or monotonic relationships to the absence of statistically significant relationships. Thus, there are countries that have managed to implement environmental protection measures early and now ensure GDP growth while significantly reducing CO2 emissions. The similarities and differences identified among EU15 countries can serve as a guide for EU policymakers in developing recommendations adapted to specific situations in order to facilitate economic growth taking into consideration environmental protection.
first published online 01 December 2022
Keyword : CO2 emissions, economic growth, environmental Kuznets curve, ARDL bounds cointegration approach, error correction models, EU15 countries
How to Cite
Hatmanu, M., & Cautisanu, C. (2023). Investigating the relationships between economic growth and environmental degradation: Evidence from EU15 countries. Technological and Economic Development of Economy, 29(1), 192–216. https://doi.org/10.3846/tede.2022.17874
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Obradović, S., & Lojanica, N. (2019). Does environmental quality reflect on national competitiveness? The evidence from EU-15. Energy & Environment, 30(4), 559–585. https://doi.org/10.1177/0958305X18813596
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Sugiawan, Y., & Managi, S. (2016). The environmental Kuznets curve in Indonesia: Exploring the potential of renewable energy. Energy Policy, 98, 187–198. https://doi.org/10.1016/j.enpol.2016.08.029
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Zivot, E., & Andrews, D. (1992). Further evidence of great crash, the oil price shock and unit root hypothesis. Journal of Business and Economic Statistics, 10(3), 251–270. https://doi.org/10.2307/1391541
Adebayo, T. S., Akinsola, G. D., Kirikkaleli, D., Bekun, F. V., Umarbeyli, S., & Osemeahon, O. S. (2021). Economic performance of Indonesia amidst CO2 emissions and agriculture: A time series analysis. Environmental Science and Pollution Research, 28, 47942–47956. https://doi.org/10.1007/s11356-021-13992-6
Adebayo, T. S., Oladipupo, S. D., Adeshola, I., & Rjoub, H. (2022). Wavelet analysis of impact of renewable energy consumption and technological innovation on CO2 emissions: Evidence from Portugal. Environmental Science and Pollution Research, 29, 23887–23904. https://doi.org/10.1007/s11356-021-17708-8
Altıntaş, H., & Kassouri, Y. (2020). Is the environmental Kuznets Curve in Europe related to the per-capita ecological footprint or CO2 emissions? Ecological Indicators, 113, 106187. https://doi.org/10.1016/j.ecolind.2020.106187
Arltová, M., & Fedorová, D. (2016). Selection of unit root test on the basis of length of the time series and value of AR(1) parameter. Statistika: Statistics and Economy Journal, 96(3), 47–64.
Baek, J. (2015). Environmental Kuznets curve for CO2 emissions: The case of Arctic countries. Energy Economics, 50, 13–17. https://doi.org/10.1016/j.eneco.2015.04.010
Balaguer, J., & Cantavella, M. (2016). Estimating the environmental Kuznets curve for Spain by considering fuel oil prices (1874–2011). Ecological Indicators, 60, 853–859. https://doi.org/10.1016/j.ecolind.2015.08.006
Bekaliyev, A., Junissov, A., Kakimov, Y., & Poulopoulos, S. G. (2021, October). Evaluation of decoupling of GDP and CO2 emissions in EU-15. In IOP Conference Series. Earth and environmental science: Vol. 899. 2nd International Conference on Environmental Design (pp. 1–9). Athens, Greece. https://doi.org/10.1088/1755-1315/899/1/012028
Bilgili, F., Lorente, D. B., Kuşkaya, S., Ünlü, F., Gençoğlu, P., & Rosha, P. (2021a). The role of hydropower energy in the level of CO2 emissions: An application of continuous wavelet transform. Renewable Energy, 178, 283–294. https://doi.org/10.1016/j.renene.2021.06.015
Bilgili, F., Nathaniel, S. P., Kuşkaya, S., & Kassouri, Y. (2021b). Environmental pollution and energy research and development: An environmental Kuznets Curve model through quantile simulation approach. Environmental Science and Pollution Research, 28(38), 53712–53727. https://doi.org/10.1007/s11356-021-14506-0
Destek, M. A., Ulucak, R., & Dogan, E. (2018). Analyzing the environmental Kuznets curve for the EU countries: The role of ecological footprint. Environmental Science and Pollution Research, 25, 29387–29396. https://doi.org/10.1007/s11356-018-2911-4
Dinda, S. (2004). Environmental Kuznets Curve hypothesis: A survey. Ecological Economics, 49(4), 431–455. https://doi.org/10.1016/j.ecolecon.2004.02.011
Dogan, E., & Seker, F. (2016). An investigation on the determinants of carbon emissions for OECD countries: Empirical evidence from panel models robust to heterogeneity and cross-sectional dependence. Environmental Science and Pollution Research, 23, 14646–14655. https://doi.org/10.1007/s11356-016-6632-2
Gagea, M. (2009). Analiza seriilor de timp sezoniere. Sedcom Libris.
Granger, C. W. J. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica, 37(3), 424–438. https://doi.org/10.2307/1912791
Grossman, G. M., & Krueger, A. (1991). Environmental impacts of a North American free trade agreement (NBER Working Paper, No. 3914). https://doi.org/10.3386/w3914
Hatmanu, M., Cautisanu, C., & Iacobuta, A. O. (2021). On the relationships between CO2 emissions and their determinants in Romania and Bulgaria. An ARDL approach. Applied Economics. https://doi.org/10.1080/00036846.2021.1998328
Hatmanu, M., Cautisanu, C., & Ifrim, M. (2020). The impact of interest rate, exchange rate and European business climate on economic growth in Romania: An ARDL approach with structural breaks. Sustainability, 12(7), 2798. https://doi.org/10.3390/su12072798
Iwata, H., Okada, K., & Samreth, S. (2010). Empirical study on the environmental Kuznets curve for CO2 in France: The role of nuclear energy. Energy Policy, 38(8), 4057–4063. https://doi.org/10.1016/j.enpol.2010.03.031
Jóźwik, B., Gavryshkiv, A.-V., Kyophilavong, P., & Gruszecki, L. E. (2021). Revisiting the environmental Kuznets curve hypothesis: A case of Central Europe. Energies, 14(12), 3415. https://doi.org/10.3390/en14123415
Ketenci, N. (2021). Environmental Kuznets curve in the presence of structural breaks: New evidence for individual European Countries. Environmental Science and Pollution Research, 28, 31520–31538. https://doi.org/10.1007/s11356-021-12677-4
Kotroni, E., Kaika, D., & Zervas, E. (2020). Environmental kuznets curve in Greece in the period 1960–2014. International Journal of Energy Economics and Policy, 10(4), 364–370. https://doi.org/10.32479/ijeep.9671
Kuznets, S. (1955). International differences in capital formation and financing. In Capital formation and economic growth (pp. 17–110). Princeton University Press. https://www.nber.org/system/files/chapters/c1303/c1303.pdf
Lamb, W. F., Grubb, M., Diluiso, F., & Minx, J. C. (2022). Countries with sustained greenhouse gas emissions reductions: An analysis of trends and progress by sector. Climate Policy, 22(1), 1–17. https://doi.org/10.1080/14693062.2021.1990831
Lazăr, D., Minea, A., & Purcel, A. A. (2019). Pollution and economic growth: Evidence from Central and Eastern European countries. Energy Economics, 81, 1121–1131. https://doi.org/10.1016/j.eneco.2019.05.011
Lipford, J. W., & Yandle, B. (2010). Environmental Kuznets curves, carbon emissions, and public choice. Environment and Development Economics, 15(4), 417–438. https://doi.org/10.1017/S1355770X10000124
Madaleno, M., & Moutinho, V. (2021). Analysis of the new Kuznets relationship: Considering emissions of carbon, methanol and nitrous oxide greenhouse gases – Evidence from EU countries. International Journal of Environmental Research and Public Health, 18(6), 2907. https://doi.org/10.3390/ijerph18062907
Narayan, P. K. (2005). The saving and investment nexus for China: Evidence from cointegration tests. Applied Economics, 37(17), 1979–1990. https://doi.org/10.1080/00036840500278103
Obradović, S., & Lojanica, N. (2019). Does environmental quality reflect on national competitiveness? The evidence from EU-15. Energy & Environment, 30(4), 559–585. https://doi.org/10.1177/0958305X18813596
Olabi, A. G., & Abdelkareem, M. A. (2022). Renewable energy and climate change. Renewable and Sustainable Energy Reviews, 158, 112111. https://doi.org/10.1016/j.rser.2022.112111
Oliver, J. G. J., & Peters, J. A. H. W. (2020). Trends in global CO2 and total greenhouse gas emissions – 2020 report. https://www.pbl.nl/sites/default/files/downloads/pbl-2020-trends-in-global-co2-and_total-greenhouse-gas-emissions-2020-report_4331.pdf
Shahbaz, M., Tiwari, A. K., & Nasir, M. (2013). The effects of financial development, economic growth, coal consumption and trade openness on CO2 emissions in South Africa. Energy Policy, 61, 1452–1459. https://doi.org/10.1016/j.enpol.2013.07.006
Sugiawan, Y., & Managi, S. (2016). The environmental Kuznets curve in Indonesia: Exploring the potential of renewable energy. Energy Policy, 98, 187–198. https://doi.org/10.1016/j.enpol.2016.08.029
Tahvonen, O. (2000). Economic sustainability and scarcity of natural resources: A brief historical review. https://media.rff.org/documents/RFF-IB-00-tahvonen.pdf
United Nations. (1997). Kyoto Protocol to the United Nations framework convention on climate change. https://digitallibrary.un.org/record/250111?ln=en
World Economic Forum. (2014). EU28: achieving the 20/20/20 targets in EU15 and EU11 member states. http://reports.weforum.org/global-energy-architecture-performance-index-2014/eu28-achieving-the-202020-targets-in-eu15-and-eu11-member-states/?doing_wp_cron=1639779426.4937429428100585937500
Zivot, E., & Andrews, D. (1992). Further evidence of great crash, the oil price shock and unit root hypothesis. Journal of Business and Economic Statistics, 10(3), 251–270. https://doi.org/10.2307/1391541