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Economic growth and its impact on environment: A panel data analysis

Ahmet Asici ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper aims to explore the relationship between the economic growth and the pressure on nature from the environmental sustainability perspective. We measure pressure on nature as the sum of energy, mineral, net forest depletions and carbon dioxide damage, all measured in US dollars. The data is taken from the Adjusted Net Savings data of World Bank. Our panel consists of 213 countries and spans the period between 1970 and 2008. To investigate the causal effect of economic growth on nature we employ two strategies; fixed-effects and fixed-effects instrumental-variables (IV) regressions. Cross-country analysis reveals that there is a positive relationship between income and pressure on nature. However, the relationship is not linear across countries; the effect is much stronger in middle-income countries than in low and high-income countries. Our results are robust to the inclusion of various covariates and moreover they do not support the Environmental Kuznets Curve hypothesis which foresees a reduction in environmental degradation once a certain level of development is reached.

Keywords: Adjusted Net Saving; Genuine Saving; Sustainability; Panel data (search for similar items in EconPapers)
JEL-codes: Q32 Q56 Q01 (search for similar items in EconPapers)
Date: 2011-04
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

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