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Production and consumption-based approaches for the environmental Kuznets curve using ecological footprint

ABSTRACT We examine the environmental Kuznets curve (EKC) hypothesis using the ecological footprint (EF), a more comprehensive indicator of environmental degradation, for 11 countries covering the 1971–2007 period. We test the EKC hypothesis using a traditional quadratic function from both the supply and consumption side, adding several explicative variables: urbanisation, petrol price and industrialisation for the supply side; biocapacity, life expectancy and energy use for the consumption side. We perform an autoregressive distributed lagged modelling in order to study both short- and long-run periods. We find that there is no stable relationship between the environment and economic development in the long-run. For the short-run analysis, the EKC hypothesis is supported for no one, we rather find an increasing relationship between growth and environment. Results for explicative variables are mixed: for the production-side approach, industrialisation appears to have a positive impact on EF for Sweden, but a negative one for Portugal and Spain. For the consumption-side approach, energy use seems to have a positive impact on EF for Argentina and Colombia whereas biocapacity and life expectancy have a positive and negative impact, respectively, on EF for Paraguay. Lastly, biocapacity has a positive impact on EF for Canada but negative for Norway, likely depending on levels of biocapacity and ecological reserve.