Environmental Kuznets Curves in the People’s Republic of China: turning points and regional differences

Jiang, Yi and Lin, Tun and Zhuang, Juzhong (2008): Environmental Kuznets Curves in the People’s Republic of China: turning points and regional differences. Published in: ADB Economics Working Paper Series No. 141 (December 2008)

Abstract

This paper examines the relationship between economic growth and environmental sustainability in the People’s Republic of China by empirically estimating environmental Kuznets curve (EKC) models using provincial-level panel data from 1985 to 2005. The results show that there exists an inverted-U shaped relationship as hypothesized by the EKC model between per capita income and per capita emissions (or discharges) in the cases of waste gas from fuel burning and waste water, with a turning point at per capita gross domestic product of $12,903 and $3,226, respectively, in 2005 purchasing power parity terms. This relationship does not hold in the case of waste gas from production or solid waste. The estimation results from the model allowing region-specific slope coefficients show that the EKCs of the more developed coastal region have a flatter rising portion with turning points occurring at a higher income level than those of the less developed central and western regions. The paper argues that this may reflect technology diffusion and leapfrogging and institution imitation across regions at different stages of development. Policy implications of these findings are discussed.

• Item Type: MPRA Paper
• Language: English
• Keywords: environmental kuznets curve; EKC; China; economic growth; environmental sustainability
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q51 - Valuation of Environmental Effects; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables

References

Auffhammer, M., and R. T. Carson. 2008. “Forecasting the Path of China’s CO2 Emissions Using Province-level Information.” Journal of Environmental Economics and Management 55:229–47.

Bommer, R. 1999. “Environmental Policy and Industrial Competitiveness: The Pollution Haven Hypothesis Reconsidered.” Review of International Economics 7(2):342–55.

Cavlovic, T. A., K. H. Baker, R. P. Berrens, and K. Gawande. 2000. “A Meta-analysis of Environmental Kuznets Curve Studies.” Agricultural and Resource Economics Review 29(1):32–42.

Cole M. A., and R. J. R. Elliott 2003. “Determining the Trade-environment Composition Effect: The Role of Capital, Labour and Environmental Regulations.” Journal of Environmental Economics and Management 46(3):363–83.

Dasgupta, S., H. Hettige, and D. Wheeler. 2000. “What Improves Environmental Compliance? Evidence from Mexican Industry.” Journal of Environmental Economics and Management 39:39–66.

Dasgupta, S., B. Laplante, H. Wang, and D. Wheeler. 2002. “Confronting the Environmental Kuznets Curve.” Journal of Economic Perspective 16(1):147–68.

Dinda, S. 2004. “Environmental Kuznets Curve Hypothesis: A Survey.” Ecological Economics 49(4):431–55.

Groot, H. L. F., C. A. Withagen, and M. Zhou. 2004. “Dynamics of China’s Regional Development and Pollution: an Investigation into the Environmental Kuznets Curve.” Environment and Development Economics 9:507–37.

Grossman, G. M., and A. B. Krueger. 1995. “Economic Growth and the Environment.” Quarterly Journal of Economics 110(2):353–77.

Halkos, G. E. 2003. “Environmental Kuznets Curve for Sulfur: Evidence using GMM Estimation and Random Coefficient Panel Data Models.” Environment and Development Economics 8:581–601.

Harrison, A. 1996. “Openness and Growth: a Time-series, Cross-country Analysis for Developing Countries.” Journal of Development Economics 48:419–47.

He, J. 2007. Is the Environmental Kuznets Curve Hypothesis Valid for Developing Countries? A Survey. Working Paper 07-03, GREDI, Sherbrooke, Canada.

Hettige, H., M. Mani, and D. Wheeler. 2000. “Industrial Pollution in Economic Development: The Environmental Kuznets Curve Revisited.” Journal of Development Economics 62:445–76.

List, J. A., and C. A. Gallet. 1999. “The Environmental Kuznets Curve: Does One Size Fit All?” Ecological Economics 31:409–23.

Liu X., G. K. Heilig, J. Chen, and M. Heino. 2007. “Interactions between Economic Growth and Environmental Quality in Shenzhen, China’s First Special Economic Zone.” Ecological Economics 62(3,4):559–70.

Lopez, R. 1994. “The Environment as a Factor of Production: The Effects of Economic Growth and Trade Liberalization.” Journal of Environmental Economics and Management 27:163–84.

Millimet, D. L., J. A. List, and T. Stengos. 2003. “The Environmental Kuznets Curve: Real Progress or Misspecified Models?” Review of Economics and Statistics 85(4):1038–47.

Panayotou, T. 1993. Empirical Tests and Policy Analysis of Environmental Degradation at Different Stages of Economic Development. Working Paper WP238, Technology and Employment Programme, International Labor Office, Geneva.

Pargal, S., and D. Wheeler. 1996. “Informal Regulation of Industrial Pollution in Developing Countries: Evidence from Indonesia.” Journal of Political Economy 104(6):1314–27.

Reppelin-Hill, V. 1999. “Trade and Environment: an Empirical Analysis of the Technology Effect in the Steel Industry.” Journal of Environmental Economics and Management 38:283–301.

Selden, T. M., and D. Song. 1994. “Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?” Journal of Environmental Economics and Management 27(2):147–62.

Shafik, N. 1994. Economic Development and Environmental Quality: An Econometric Analysis. Oxford Economic Papers 46:757–73.

Shafik, N., and S. Bandyopadhyay. 1992. Economic Growth and Environmental Quality: Time Series and Cross-Country Evidence. World Bank Policy Research Working Paper WPS904, Washington, DC.

Shen, J. 2006. “A Simultaneous Estimation of Environmental Kuznets Curve: Evidence from China.” China Economic Review 17:383–94.

State Statistical Bureau, various years. China Statistical Yearbooks 1985–2005. Beijing.

Stern, D. I., and M. S. Common. 2001. “Is There an Environmental Kuznets Curve for Surfur?” Journal of Environmental Economics and Management 41:162–78.

Vincent, J. R., 1997. “Testing for Environmental Kuznets Curves within a Developing Country.” Environment and Development Economics 2:417–31.

Vukina, T., J. C. Beghin, and E. G. Solakoglu. 1999. “Transition to Markets and the Environment: Effects of the Change in the Composition of Manufacturing Output.” Environment and Development Economics 4(4):582–98.

Wheeler D. 2000. Racing to the Bottom? Foreign Investment and Air Pollution in Developing Countries. World Bank Development Research Group Working Paper No. 2524, Washington, DC.