Slide 1

CO 2 Emissions and Economic Development Binta Sidibe & Amarachi Okorigbo University of Wisconsin-Superior Slide 2 Introduction Nations around the world pay high costs for their economic development Human activities cause pollution Pollution is increasing around the world When would development help reduce pollution? Slide 3 Research Questions Is there a relationship between pollution and the level of economic development? If the relationship exists, what functional form characterizes it best? Linear/monotonically increasing Quadratic/concave Slide 4 Theoretical Models of Pollution IPAT Ehrlich and Holdren (1971) Monotonically increasing relationship I= Impact of human activities on the environment P= Population Size A= Affluence, measured here by RGDPPC T= Technology used to produce a unit for consumption Stern (2003) Curve Shifts down over time Environmental Kuznets Curve Grossman and Krueger (1991) Quadratic relationship Early stages of economic development are characterized by degradation and pollution. Turning point where they begin to care more about the environment Real GDP per capita Pollution Real GDP per capita Pollution Slide 5 Measures of Pollution Water and Land Pollution Territory-specific Air pollution Fewer boundaries Negative worldwide externalities of air pollution Main Measure: CO2 Emissions Slide 6 Research Hypotheses 1. There exists a relationship between real GDP per capita and CO2 emissions 2. The relationship between the CO2 emissions and real GDP per capita is quadratic Slide 7 Data: Descriptive Statistics Slide 8 Data: Graph Matrix Slide 9 Empirical Model If hypothesis 1 holds, 1 should be positive and statistically significant If hypothesis 2 holds, 2 should be negative and statistically significant Slide 10 Empirical Model CO 2 emissions A B Real GDP pc Slide 11 Empirical Results: Robust LSDV ***, **, * statistically significant coefficients at 1%, 5%, 10% variable12345 constant-12.09***-18.86***-16.47***-9.79***-11.69* lnrgdppc1.54***1.19***2.89***1.60***2.69*** lnrgdppc2-0.04***-0.02-0.14***-0.4-0.13** lnpop0.48*** lncars0.07** lnforestarea-0.28*-0.16 lncoalrents0.04** lnoilrents0.06 lnforestrents-0.08 No of obs.5516 773588156 R-squared0.97510.97560.9980.97730.9908 Slide 12 Analysis of Results There is a statistically significant positive relationship between the CO 2 emissions and real GDP per capita The quadratic relationship between CO2 emissions and real GDP per capita is negative and statistically significant in 3 out of 5 regressions While there is evidence to support the Environmental Kuznets Curve theory, such evidence is not robust Slide 13 Analysis of Results: Regression 5 CO 2 emissions A B $41,942 $83,884 Slide 14 Slide 15