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Essay / Kuznets Curve Environmental Essay - 1557
The threat of global warming has never been more real than it is felt today. With the Intergovernmental Panel on Climate Change's alarming warnings regarding climate change and environmental pollution, a wealth of literature has been created to understand and address the phenomenon. Worldwide, there is growing concern about the deterioration of environmental quality and its impact on human lives. Particularly in the field of economics, relevant questions have been raised in order to understand the link between environmental pressure and economic activity. How does environmental quality affect economic activity? And how does economic development lead to environmental degradation? In this context, many theories have been put forward to understand environmental economics. One of these revolutionary theories is the environmental Kuznets curve, which traces the link between pollution and income growth. It postulates an inverted U-shaped curve between various indicators of environmental degradation and per capita income. [Stern, D. (2004). The rise and fall of the environmental Kuznets curve. Global Development Vol. 32, No. 8, p. 1419-1439, 200. www.elsevier.com/locate/worlddev] The idea emerged in the 1990s with Grossman and Kruger, who conducted empirical studies to try to understand the environmental impacts of global warming. North Atlantic Free Trade Agreement. [ Grossman, GM, Krueger, AB, 1991. Environmental Impacts of the North American Free Trade Agreement. NBER. Working Paper 3914.] They found that as economic growth initially increases, there is an increase in environmental degradation, but that as economic growth continues in later stages, environmental degradation of the environment...... middle of paper ......da Dinda *]However, all economic activity uses natural resources. The use of natural resources also involves the production of waste. Using the quadratic equations from Model 1 results in cases where the regression levels allow indicator levels to become zero or negative. This is not appropriate because it does not reflect the use of natural resources and goes against the laws of thermodynamics. To correct this, the EKC model equation was revised by inserting a logarithmic dependent variable. [Stern, D. (2004). The rise and fall of the environmental Kuznets curve. Global Development Vol. 32, no. 8, pp. 1419-1439, 200. www.elsevier.com/locate/worlddev] The standard EKC regression model is: ln (E/P) = ai + b1 ln (GDP/P) it +b2 ln (GDP/P)2it + b3 ln (GDP/P)3it + b4zit + cit where E represents emissions, P the population and ln indicates the natural logarithms.