Better to grow or better to improve? Measuring environmental efficiency in OECD countries with a Stochastic Environmental Kuznets Frontier
The standard approach to the Environmental Kuznets Curve (EKC) holds that as a country develops and GDP per capita grows environmental degradation initially increases but eventually it reaches a turning point where environmental degradation begins to decline. Environmental degradation takes many forms, one of them being emissions of harmful gases. According to the EKC concept, a country can reduce emissions by ‘growing’. The standard approach implicitly assumes that a country emits as little as possible for its economic development, whereas in reality, a country might emit above the best attainable level of emissions. Therefore, emissions could be reduced before and after the turning point by becoming more environmentally efficient – i.e., ‘improving’ the emissions level. This article proposes a Stochastic Environmental Kuznets Frontier (SEKF) which is estimated for CO2 emissions for OECD countries and used to benchmark each country before and after the turning point differently, thus, indicating how a country could ‘grow’ and/or ‘improve’ to reduce its CO2 emissions. Additionally, we analyse the role of the stringency of environmental policies in reducing a country’s carbon inefficiency measured by the distance from the benchmark EKC and find widespread carbon inefficiencies that could be reduced by more stringent market-based environmental policies.
Year of publication: |
2021
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Authors: | Badunenko, Oleg ; Galeotti, Marzio ; Hunt, Lester C. |
Publisher: |
Milano : Fondazione Eni Enrico Mattei (FEEM) |
Subject: | Environment and growth | Environmental Kuznets Curve | CO2 emissions | Panel data | OECD countries | Stochastic frontier approach | Stochastic Environmental Kuznets Frontier | Environmental Policy Stringency |
Saved in:
Series: | Working Paper ; 028.2021 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 1780671067 [GVK] hdl:10419/249963 [Handle] RePEc:fem:femwpa:2021.28 [RePEc] |
Classification: | o44 ; Q56 - Environment and Development; Environment and Trade; Sustainability; Environmental Accounting ; Q54 - Climate; Natural Disasters ; C13 - Estimation ; C33 - Models with Panel Data |
Source: |
Persistent link: https://ebvufind01.dmz1.zbw.eu/10012819782