Advanced Search
MyIDEAS: Login

Do Productivity Improvements Move Us Along the Environmental Kuznets Curve?

Contents:

Author Info

  • Janine De Fence

    ()
    (Department of Economics, University of Strathclyde)

  • Nick Hanley

    ()
    (Department of Economics, University of Stirling)

  • Karen Turner

    ()
    (Department of Economics, University of Strathclyde)

Abstract

The Environmental Kuznets Curve (EKC) hypothesis focuses on the argument that rising prosperity will eventually be accompanied by falling pollution levels as a result of one or more of three factors: (1) structural change in the economy; (2) demand for environmental quality increasing at a more-than-proportional rate; (3) technological progress. Here, we focus on the third of these. In particular, energy efficiency is commonly regarded as a key element of climate policy in terms of achieving reductions in economy-wide CO2 emissions over time. However, a growing literature suggests that improvements in energy efficiency will lead to rebound (or backfire) effects that partially (or wholly) offset energy savings from efficiency improvements. Where efficiency improvements are aimed at the production side of the economy, the net impact of increased efficiency in any input to production will depend on the combination and relative strength of substitution, output/competitiveness, composition and income effects that occur in response to changes in effective and actual factor prices, as well as on the structure of the economy in question, including which sectors are targeted with the efficiency improvement. In this paper we consider whether increasing labour productivity will have a more beneficial, or more predictable, impact on CO2/GDP ratios than improvements in energy efficiency. We do this by using CGE models of the Scottish regional and UK national economies to analyse the impacts of a simple 5% exogenous (and costless) increase in energy or labour augmenting technological progress.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.strath.ac.uk/media/departments/economics/researchdiscussionpapers/2009/09-08KT.pdf
Download Restriction: no

Bibliographic Info

Paper provided by University of Strathclyde Business School, Department of Economics in its series Working Papers with number 0908.

as in new window
Length: 52 pages
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:str:wpaper:0908

Contact details of provider:
Postal: Sir William Duncan Building, 130 Rottenrow, Glasgow G4 0GE
Phone: +44 (0)141 548 3842
Fax: +44 (0)141 548 4445
Email:
Web page: http://www.strath.ac.uk/economics/
More information through EDIRC

Related research

Keywords: Scomputable general equilibrium models; technical progress; energy efficiency; labour productivity; environmental kuznets curve;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Selden Thomas M. & Song Daqing, 1995. "Neoclassical Growth, the J Curve for Abatement, and the Inverted U Curve for Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 162-168, September.
  2. Rose, Adam & Benavides, Juan & Lim, Dongsoon & Frias, Oscar, 1996. "Global warming policy, energy, and the Chinese economy," Resource and Energy Economics, Elsevier, vol. 18(1), pages 31-63, March.
  3. Pizer, William A. & Popp, David, 2007. "Endogenizing Technological Change: Matching Empirical Evidence to Modeling Needs," Discussion Papers dp-07-11, Resources For the Future.
  4. McPherson, Michael A. & Nieswiadomy, Michael L., 2005. "Environmental Kuznets curve: threatened species and spatial effects," Ecological Economics, Elsevier, vol. 55(3), pages 395-407, November.
  5. Hanley, Nick & McGregor, Peter G. & Swales, J. Kim & Turner, Karen, 2009. "Do increases in energy efficiency improve environmental quality and sustainability?," Ecological Economics, Elsevier, vol. 68(3), pages 692-709, January.
  6. Grossman, Gene M & Krueger, Alan B, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 353-77, May.
  7. Jones, L.E. & Manuelli, R.E., 1997. "A Positive Model of Growth and Pollution Controls," Working papers 9513r, Wisconsin Madison - Social Systems.
  8. Gerlagh, Reyer & van der Zwaan, Bob, 2003. "Gross world product and consumption in a global warming model with endogenous technological change," Resource and Energy Economics, Elsevier, vol. 25(1), pages 35-57, February.
  9. Matthew A. Cole & Eric Neumayer, 2003. "Examining the Impact of Demographic Factors On Air Pollution," Labor and Demography 0312005, EconWPA, revised 13 May 2004.
  10. Deacon, Robert & Norman, Catherine S, 2004. "Does the Environmental Kuznets Curve Describe How Individual Countries Behave?," University of California at Santa Barbara, Economics Working Paper Series qt6gm8164w, Department of Economics, UC Santa Barbara.
  11. Arrow, Kenneth & Bolin, Bert & Costanza, Robert & Dasgupta, Partha & Folke, Carl & Holling, C.S. & Jansson, Bengt-Owe & Levin, Simon & Mäler, Karl-Göran & Perrings, Charles & Pimentel, David, 1996. "Economic growth, carrying capacity, and the environment," Environment and Development Economics, Cambridge University Press, vol. 1(01), pages 104-110, February.
  12. Suri, Vivek & Chapman, Duane, 1998. "Economic growth, trade and energy: implications for the environmental Kuznets curve," Ecological Economics, Elsevier, vol. 25(2), pages 195-208, May.
  13. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
  14. James Andreoni & Arik Levinson, 1998. "The Simple Analytics of the Environmental Kuznets Curve," NBER Working Papers 6739, National Bureau of Economic Research, Inc.
  15. Herring, Horace, 1999. "Does energy efficiency save energy? The debate and its consequences," Applied Energy, Elsevier, vol. 63(3), pages 209-226, July.
  16. Learmonth, D. & McGregor, P.G. & Swales, J.K. & Turner, K.R. & Yin, Y.P., 2007. "The importance of the regional/local dimension of sustainable development: An illustrative Computable General Equilibrium analysis of the Jersey economy," Economic Modelling, Elsevier, vol. 24(1), pages 15-41, January.
  17. Karen Turner, 2008. "A Computable General Equilibrium Analysis of the Relative Price Sensitivity Required to Induce Rebound Effects in Response to an Improvement in Energy Efficiency in the UK Economy," Working Papers 0807, University of Strathclyde Business School, Department of Economics.
  18. Bergman, Lars, 1988. "Energy Policy Modeling: A survey of general equilibrium approaches," Journal of Policy Modeling, Elsevier, vol. 10(3), pages 377-399.
  19. De Bruyn, Sander M., 1997. "Explaining the environmental Kuznets curve: structural change and international agreements in reducing sulphur emissions," Environment and Development Economics, Cambridge University Press, vol. 2(04), pages 485-503, November.
  20. Annegrete Bruvoll & Taran Fæhn & Birger Strøm, 2003. "Quantifying Central Hypotheses on Environmental Kuznets Curves for a Rich Economy: A Computable General Equilibrium Study," Discussion Papers 341, Research Department of Statistics Norway.
  21. Allan, Grant & Hanley, Nick & McGregor, Peter & Swales, Kim & Turner, Karen, 2007. "The impact of increased efficiency in the industrial use of energy: A computable general equilibrium analysis for the United Kingdom," Energy Economics, Elsevier, vol. 29(4), pages 779-798, July.
  22. Birol, Fatih & Keppler, Jan Horst, 2000. "Prices, technology development and the rebound effect," Energy Policy, Elsevier, vol. 28(6-7), pages 457-469, June.
  23. Barrett, Scott & Graddy, Kathryn, 2000. "Freedom, growth, and the environment," Environment and Development Economics, Cambridge University Press, vol. 5(04), pages 433-456, October.
  24. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345.
  25. Greenwood, Michael J, et al, 1991. "Migration, Regional Equilibrium, and the Estimation of Compensating Differentials," American Economic Review, American Economic Association, vol. 81(5), pages 1382-90, December.
  26. Popp, David, 2004. "ENTICE: endogenous technological change in the DICE model of global warming," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 742-768, July.
  27. Louis Beuuséjour & Gordon Lenjosek & Michael Smart, 1995. "A CGE Approach to Modelling Carbon Dioxide Emissions Control in Canada and the United States," The World Economy, Wiley Blackwell, vol. 18(3), pages 457-488, 05.
  28. Naqvi, Farzana, 1998. "A computable general equilibrium model of energy, economy and equity interactions in Pakistan," Energy Economics, Elsevier, vol. 20(4), pages 347-373, September.
  29. Bretschger, Lucas, 2005. "Economics of technological change and the natural environment: How effective are innovations as a remedy for resource scarcity?," Ecological Economics, Elsevier, vol. 54(2-3), pages 148-163, August.
  30. Stern, David I. & Common, Michael S. & Barbier, Edward B., 1996. "Economic growth and environmental degradation: The environmental Kuznets curve and sustainable development," World Development, Elsevier, vol. 24(7), pages 1151-1160, July.
  31. Adam B. Jaffe & Richard G. Newell & Robert N. Stavins, 2000. "Technological Change and the Environment," NBER Working Papers 7970, National Bureau of Economic Research, Inc.
  32. Brookes, Len, 1990. "The greenhouse effect: the fallacies in the energy efficiency solution," Energy Policy, Elsevier, vol. 18(2), pages 199-201, March.
  33. Costanza, Robert, 1995. "Economic growth, carrying capacity, and the environment," Ecological Economics, Elsevier, vol. 15(2), pages 89-90, November.
  34. Loschel, Andreas, 2002. "Technological change in economic models of environmental policy: a survey," Ecological Economics, Elsevier, vol. 43(2-3), pages 105-126, December.
  35. Sam Anson, 2009. "Rebound and disinvestment effects in oil consumption and supply resulting from an increase in energy efficiency in the Scottish commercial transport sector," Working Papers 0901, University of Strathclyde Business School, Department of Economics.
  36. Thomas W. Hertel & Timothy D. Mount, 1985. "The Pricing of Natural Resources in a Regional Economy," Land Economics, University of Wisconsin Press, vol. 64(3), pages 229-243.
  37. Stern , David I., 1998. "Progress on the environmental Kuznets curve?," Environment and Development Economics, Cambridge University Press, vol. 3(02), pages 173-196, May.
  38. Karen Turner, 2009. "Negative rebound and disinvestment effects in response to an improvement in energy efficiency in the UK economy," Working Papers 0902, University of Strathclyde Business School, Department of Economics.
  39. Sue Wing, Ian & Eckaus, Richard S., 2007. "The implications of the historical decline in US energy intensity for long-run CO2 emission projections," Energy Policy, Elsevier, vol. 35(11), pages 5267-5286, November.
  40. Bergman, Lars, 1990. "Energy and environmental constraints on growth: A CGE modeling approach," Journal of Policy Modeling, Elsevier, vol. 12(4), pages 671-691.
  41. Stokey, Nancy L, 1998. "Are There Limits to Growth?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 1-31, February.
  42. Treyz, George I, et al, 1993. "The Dynamics of U.S. Internal Migration," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 209-14, May.
  43. Anderson, Dennis & Cavendish, William, 2001. "Dynamic Simulation and Environmental Policy Analysis: Beyond Comparative Statistics and the Environmental Kuznets Curve," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 721-46, October.
  44. Kemfert, Claudia, 1998. "Estimated substitution elasticities of a nested CES production function approach for Germany," Energy Economics, Elsevier, vol. 20(3), pages 249-264, June.
  45. Harrigan, Frank & McGregor, Peter G. & Dourmashkin, Neil & Perman, Roger & Swales, Kim & Yin, Ya Ping, 1991. "AMOS : A macro-micro model of Scotland," Economic Modelling, Elsevier, vol. 8(4), pages 424-479, October.
  46. Das, Gouranga G. & Alavalapati, Janaki R. R. & Carter, Douglas R. & Tsigas, Marinos E., 2005. "Regional impacts of environmental regulations and technical change in the US forestry sector: a multiregional CGE analysis," Forest Policy and Economics, Elsevier, vol. 7(1), pages 25-38, January.
  47. Jette Jacobsen & Nick Hanley, 2009. "Are There Income Effects on Global Willingness to Pay for Biodiversity Conservation?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(2), pages 137-160, June.
  48. Harty D. Saunders, 1992. "The Khazzoom-Brookes Postulate and Neoclassical Growth," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 131-148.
  49. Bruvoll, Annegrete & Faehn, Taran, 2006. "Transboundary effects of environmental policy: Markets and emission leakages," Ecological Economics, Elsevier, vol. 59(4), pages 499-510, October.
  50. Saunders, Harry D., 2000. "A view from the macro side: rebound, backfire, and Khazzoom-Brookes," Energy Policy, Elsevier, vol. 28(6-7), pages 439-449, June.
  51. Saunders, Harry D., 2000. "Does predicted rebound depend on distinguishing between energy and energy services?," Energy Policy, Elsevier, vol. 28(6-7), pages 497-500, June.
  52. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2003. "Chapter 11 Technological change and the environment," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 11, pages 461-516 Elsevier.
  53. Stina Hökby & Tore Söderqvist, 2003. "Elasticities of Demand and Willingness to Pay for Environmental Services in Sweden," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 26(3), pages 361-383, November.
  54. Despotakis, Kostas A. & Fisher, Anthony C., 1988. "Energy in a regional economy: A computable general equilibrium model for california," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 313-330, September.
  55. J. Daniel Khazzoom, 1980. "Economic Implications of Mandated Efficiency in Standards for Household Appliances," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 21-40.
  56. Lopez Ramon, 1994. "The Environment as a Factor of Production: The Effects of Economic Growth and Trade Liberalization," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 163-184, September.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:str:wpaper:0908. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kirsty Hall).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.