Environmental Kuznets curve for CO2 in Canada

• Published in: Ecological economics Vol. 69; no. 5; pp. 1083 - 1093
• Main Authors: He, Jie, Richard, Patrick
• Format: Journal Article
• Language: English
• Published: Elsevier 01.03.2010
• Series: Ecological Economics
• Subjects: Air pollution; Canada; Carbon emissions; Environmental economics; Environmental Kuznets curve CO2 emissions Partially linear regression model Flexible parametric inference Oil shock; Gross domestic product; Model testing; Oil price; Regression analysis
• ISSN: 0921-8009; 1873-6106
• DOI: 10.1016/j.ecolecon.2009.11.030

According to the environmental Kuznets curve hypothesis, the relationship between per-capita GDP and per-capita pollutant emissions has an inverted-U shape. This implies that, past a certain point, economic growth may actually be profitable for environmental quality. Most studies on this subject are based on estimating fully parametric quadratic or cubic regression models. While this is not technically wrong, such an approach somewhat lacks flexibility since it may fail to detect the true shape of the relationship if it happens not to be of the specified form. We use semiparametric and flexible nonlinear parametric modeling methods in an attempt to provide more robust inferences. We find little evidence in favour of the environmental Kuznets curve hypothesis. Our main results could be interpreted as indicating that the oil shock of the 1970s has had an important impact on progress towards less polluting technology and production.