Hostname: page-component-78c5997874-xbtfd Total loading time: 0 Render date: 2024-11-05T10:02:57.368Z Has data issue: false hasContentIssue false
  • English
  • Français

Output and pollution abatement in a U.S. state emission function

Published online by Cambridge University Press:  21 June 2019

Neophyta Empora ,
Theofanis P. Mamuneas  and
Thanasis Stengos
Neophyta Empora
Affiliation:
Department of Economics, University of Cyprus, Nicosia, Cyprus
Theofanis P. Mamuneas
Affiliation:
Department of Economics, University of Cyprus, Nicosia, Cyprus
Thanasis Stengos*
Affiliation:
Department of Economics and Finance, University of Guelph, Ontario, Canada
*
*Corresponding author. Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Using U.S. state-level data for the period 1973–1994, this study models the relationship between emissions, output and pollution abatement by defining an emissions function, in a manner that is consistent with the residual (emissions) generation mechanism and firms' optimizing behavior. It thus accounts for factors that were previously unaccounted for or addressed only individually. Applications using this comprehensive setting can offer more informed insights for policy-making, something that is particularly useful for developing countries that face the environmental degradation that comes together with the benefits of economic growth. Using nonparametric econometric techniques as well as threshold regression, the empirical results show that there is a positive nonlinear relationship between emissions and output, rejecting an inverted-U type of relationship between the two (the Environmental Kuznets Curve, or EKC). In the absence of abatement the relationship turns around, verifying the arguments in the literature that abatement is one of the driving forces for an EKC to emerge.

Keywords

Environmental Kuznets Curveemissionspollution abatementresidual generation mechanismsemiparametric estimationthreshold regressionQ50Q52Q53
Type
Research Article
Information
Environment and Development Economics , Volume 25 , Special Issue 1: The Economics of Climate Change and Sustainability (Part B) , February 2020 , pp. 44 - 65
Copyright
Copyright © Cambridge University Press 2019

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Aldy, JE (2005) An Environmental Kuznets Curve analysis of U.S. State-level carbon dioxide emissions. Environment and Development Economics 14(1), 48–72.Google Scholar
Andreoni, J and Levinson, A (2001) The simple analytics of the Environmental Kuznets Curve. Journal of Public Economics 80(2), 269–286.CrossRefGoogle Scholar
Anselin, L (1988) Spatial Econometrics: Methods and Models. Dordrecht, The Netherlands: Kluwer Academic Publishers.CrossRefGoogle Scholar
Ansuategi, A (2003) Economic growth and transboundary pollution in Europe: an empirical analysis. Environmental and Resource Economics 26(2), 305–328.CrossRefGoogle Scholar
Ansuategi, A, Barbier, E and Perrings, C (1998) The Environmental Kuznets Curve. In van den Bergh, JCJM and Hofkes, MW (eds), Theory and Implementation of Sustainable Development Modelling, vol. 15. Dordrecht, The Netherlands: Kluwer Academic Publishers, pp. 139–164.CrossRefGoogle Scholar
Aslanidis, N and Xepapadeas, A (2006) Smooth transition pollution-income paths. Ecological Economics 57(2), 182–189.CrossRefGoogle Scholar
Aslanidis, N and Xepapadeas, A (2008) Regime switching and the shape of the emission-income relationship. Economic Modelling 25(4), 731–739.CrossRefGoogle Scholar
Ayres, RU and Kneese, AV (1969) Production, consumption, and externalities. American Economic Review 59(3), 282–297.Google Scholar
Azomahou, T, Laisney, F and Nguyen Van, P (2006) Economic development and CO2 emissions: a nonparametric panel approach. Journal of Public Economics 90(6–7), 1347–1363.CrossRefGoogle Scholar
Baumgärtner, S, Dyckhoff, H, Faber, M, Proops, J and Schiller, J (2001) The concept of joint production and ecological economics. Ecological Economics 36(3), 365–372.CrossRefGoogle Scholar
Becker, RA and Shadbegian, RJ (2005) A change of PACE: comparing the 1994 and 1999 pollution abatement costs and expenditures surveys. Journal of Economic and Social Measurement 30(1), 63–95.CrossRefGoogle Scholar
Bertinelli, L and Strobl, E (2005) The Environmental Kuznets Curve semi-parametrically revisited. Economics Letters 88(3), 350–357.CrossRefGoogle Scholar
Bertinelli, L, Strobl, E and Zou, B (2012) Sustainable economic development and the environment: theory and evidence. Energy Economics 34(4), 1105–1114.CrossRefGoogle Scholar
Case, AC, Rosen, HS and Hines, JR (1993) Budget spillovers and fiscal policy interdependence: evidence from the states. Journal of Public Economics 52(3), 285–307.CrossRefGoogle Scholar
Dasgupta, P (1982) The Control of Resources. Cambridge, MA: Harvard University Press.Google Scholar
Driscoll, JC and Kraay, AC (1998) Consistent covariance matrix estimation with spatially dependent panel data. Review of Economics and Statistics 80(4), 549–560.CrossRefGoogle Scholar
Fan, Y and Li, Q (1996) Consistent model specification tests: omitted variables and semiparametric functional forms. Econometrica 64(4), 865–890.CrossRefGoogle Scholar
Fredriksson, PG and Millimet, DL (2002) Strategic interaction and the determinants of environmental policy across US states. Journal of Urban Economics 51(1), 101–122.CrossRefGoogle Scholar
Grossman, GM and Krueger, AB (1993) Environmental impacts of a North American free trade agreement. In Garber, P (ed.), The US-Mexico Free Trade Agreement. Cambridge, MA: MIT Press, pp. 1–10.CrossRefGoogle Scholar
Grossman, GM and Krueger, AB (1995) Economic growth and the environment. Quarterly Journal of Economics 110(2), 353–377.CrossRefGoogle Scholar
Hansen, BE (2000) Sample splitting and threshold estimation. Econometrica 68(3), 575–603.CrossRefGoogle Scholar
Harbaugh, W, Levinson, A and Wilson, DM (2002) Reexamining the empirical evidence for an Environmental Kuznets Curve. Review of Economics and Statistics 84(3), 541–551.CrossRefGoogle Scholar
Helland, E and Whitford, AB (2003) Pollution incidence and political jurisdiction: evidence from TRI. Journal of Environmental Economics and Management 46(3), 403–424.CrossRefGoogle Scholar
Im, KS, Pesaran, MH and Shin, Y (2003) Testing for unit roots in heterogeneous panels. Journal of Econometrics 115(1), 53–74.CrossRefGoogle Scholar
Israel, D and Levinson, A (2004) Willingness to pay for environmental quality: testable empirical implications of the growth and environment literature. The B.E. Journal of Economic Analysis and Policy 3(1), 1–31.Google Scholar
John, A and Pecchenino, R (1994) An overlapping generations model of growth and the environment. The Economic Journal 104(427), 1393–1410.CrossRefGoogle Scholar
Jones, LE and Manuelli, RE (2001) Endogenous policy choice: the case of pollution and growth. Review of Economic Dynamics 4(2), 369–405.CrossRefGoogle Scholar
Jorgenson, DW (1990) Productivity and economic growth. In Berndt, E and Triplett, J (eds), Fifty Years of Economic Measurement, NBER Studies in Income and Wealth 54. Chicago, IL: The University of Chicago Press, pp. 19–118.Google Scholar
Jorgenson, DW and Stiroh, KJ (2000) Raising the speed limit: U.S. Economic growth in the information age. Brookings Papers on Economic Activity 1, 125–235.CrossRefGoogle Scholar
Levin, A, Lin, CF and Chu, CSJ (2002) Unit root tests in panel data: asymptotic and finite-sample properties. Journal of Econometrics 108(1), 1–24.CrossRefGoogle Scholar
Levinson, A (1999) An industry-adjusted index of state environmental compliance costs. NBER Working Papers 7297, National Bureau of Economic Research, Cambridge, MA.CrossRefGoogle Scholar
Li, Q and Wang, S (1998) A simple consistent bootstrap test for a parametric regression function. Journal of Econometrics 87(1), 145–165.CrossRefGoogle Scholar
List, J and Gallet, C (1999) The Environmental Kuznets Curve: does one size fit all? Ecological Economics 31(3), 409–423.CrossRefGoogle Scholar
Maddala, GS and Wu, S (1999) A comparative study of unit root tests with panel data and new simple test. Oxford Bulletin of Economics and Statistics 61, 631–652.CrossRefGoogle Scholar
Maddison, D (2006) Environmental Kuznets Curves: a spatial econometric approach. Journal of Environmental Economics and Management 51(2), 218–230.CrossRefGoogle Scholar
Maddison, D (2007) Modelling sulphur in Europe: a spatial econometric approach. Oxford Economics Papers 59(4), 72–743.CrossRefGoogle Scholar
Managi, S (2006) Are there increasing returns to pollution abatement? Empirical analytics of the Environmental Kuznets Curve in pesticides. Ecological Economics 58(3), 617–636.CrossRefGoogle Scholar
Millimet, D, List, JA and Stengos, T (2003) The Environmental Kuznets Curve: real progress or misspecified models? Review of Economics and statistics 85(4), 1038–1047.CrossRefGoogle Scholar
Murdoch, JC, Sandler, T and Sargent, K (1997) A tale of two collectives: sulphur versus nitrogen oxide emission reduction in Europe. Economica 64(254), 281–301.CrossRefGoogle Scholar
Murty, S and Russell, RR (2002) On modelling pollution-generating technologies. Working Paper Series, Department of Economics, University of California, Riverside (revised April 2010).Google Scholar
Murty, S, Russell, RR and Levkoff, SB (2012) On modeling pollution-generating technologies. Journal of Environmental Economics and Management 64(1), 117–135.CrossRefGoogle Scholar
Nadaraya, E (1964) On estimating regression. Theory of Probability and Its Applications 10, 186–190.CrossRefGoogle Scholar
Perman, R and Stern, DI (2003) Evidence from panel unit root and cointegration tests that the Environmental Kuznets Curve does not exist. Australian Journal of Agricultural and Resource Economics 47(3), 325–347.CrossRefGoogle Scholar
Pethig, R (2003) The ‘materials balance approach’ to pollution: its origin, implications and acceptance. Discussion Paper No. 105–03, University of Siegen.Google Scholar
Pethig, R (2006) Nonlinear production, abatement, pollution and materials balance reconsidered. Journal of Environmental Economics and Management 51(2), 185–204.CrossRefGoogle Scholar
Plassmann, F and Khanna, N (2006) A note on the simple analytics of the Environmental Kuznets Curve. Environment and Development Economics 11(6), 697–707.CrossRefGoogle Scholar
Robinson, PM (1988) Root-N-Consistent semiparametric regression. Econometrica 56(4), 931–954.CrossRefGoogle Scholar
Rupasingha, A, Goetz, SJ, Debertin, DL and Pagoulatos, A (2004) The Environmental Kuznets Curve for US counties: a spatial econometric analysis with extensions. Papers in Regional Science 83(2), 407–424.CrossRefGoogle Scholar
Savvides, A and Stengos, T (2000) Income inequality and economic development: evidence from the threshold regression model. Economic Letters 69(2), 207–212.CrossRefGoogle Scholar
Selden, T and Song, D (1994) Environmental quality and development: is there a Kuznets Curve for air pollution emissions? Journal of Environmental Economics and Management 27(2), 147–162.CrossRefGoogle Scholar
Seo, MH and Shin, Y (2016) Dynamic panels with threshold effect and endogeneity. Journal of Econometrics 195(2), 169–186.CrossRefGoogle Scholar
Sigman, H (2005) Transboundary spillovers and decentralization of environmental policies. Journal of Environmental Economics and Management 50(1), 82–101.CrossRefGoogle Scholar
Stern, DI and Common, MS (2001) Is there an Environmental Kuznets Curve for sulfur? Journal of Environmental economics and management 41(2), 162–178.CrossRefGoogle Scholar
Stern, DI, Common, MS and Barbier, EB (1996) Economic growth and environmental degradation: the Environmental Kuznets Curve and sustainable development. World Development 24(7), 1151–1160.CrossRefGoogle Scholar
Stokey, NL (1998) Are there limits to growth? International Economic Review 39(1), 1–31.CrossRefGoogle Scholar
Taskin, F and Zaim, O (2000) Searching for a Kuznets Curve in environmental efficiency using kernel estimation. Economics Letters 68(2), 217–223.CrossRefGoogle Scholar
US Bureau of the Census (2002) Pollution Abatement Cost and Expenditures (PACE), Current Industrial Reports, MA-200. Available at https://www.epa.gov/environmental-economics/pollution-abatement-costs-and-expenditures-2005-survey.Google Scholar
US Bureau of Economic Analysis (BEA) (2006) Regional Economic Accounts. Available at https://www.bea.gov/data/economic-accounts/regional.Google Scholar
Wand, MP and Jones, MC (1995) Kernel Smoothing. London, UK: Chapman and Hall.CrossRefGoogle Scholar
Watson, GS (1964) Smooth regression analysis. Sankhya: The Indian Journal of Statistics, Series A 26(4), 359–372.Google Scholar
Supplementary material: PDF

Empora et al. supplementary material

Empora et al. supplementary material
Download Empora et al. supplementary material(PDF)
PDF 336.4 KB