The Relationship between Environmental Quality and Urbanization under the LCC Hypothesis: Empirical Evidence from Türkiye

Serhat Çamkaya

Fiscaoeconomia, 2024, issue 2

Abstract: The load capacity factor is a recently developed and highly comprehensive environmental quality indicator that takes into account not only the consumption side of nature but also the supply side. Therefore, recent studies have used the load capacity factor as an environmental quality indicator. In this context, unlike the previous literature, this study aims to test the long-run effect of economic growth and urbanization on the load capacity factor in Türkiye within the framework of the load capacity curve (LCC) hypothesis. Annual data for the period 1961-2022 and Fourier-based time series techniques (ADF, ADL, and FMOLS) are used to test this effect. Moreover, the long-run robustness of the study is also tested using Fourier-based DOLS and fractional frequency flexible Fourier Toda-Yamamoto (FFFF-TY) causality techniques. The empirical findings of the study indicate that the LCC hypothesis is valid in Türkiye, but income in Türkiye is not sufficient to improve environmental quality. Moreover, the findings reveal that increasing urbanization deteriorates environmental quality by reducing the load capacity factor. Based on the empirical findings, policymakers in Türkiye should urgently implement some policies to improve environmental quality. For this, policymakers should take steps to invest more in renewable energy sources. In addition, necessary steps should be taken to establish green growth. Finally, comprehensive environmental strategies should be developed and implemented with common stakeholders to establish sustainable urbanization.

Keywords: LCC Hypothesis; Environmental Quality; Urbanization; FADL; Türkiye (search for similar items in EconPapers)
JEL-codes: O11 O40 Q42 Q50 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:fis:journl:240216

DOI: 10.25295/fsecon.1435550

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