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Quantifying Central Hypotheses on Environmental Kuznets Curves for a Rich Economy: A Computable General Equilibrium Study

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  • Annegrete Bruvoll
  • Taran Fæhn
  • Birger Strøm

Abstract

We investigate whether the future relationships between several pollutants and per capita income in rich countries may assume the inverted U‐forms of Environmental Kuznets Curves (EKC). The emission‐augmenting effect of scaling up aggregate economic activity can be counteracted by greener composition of production and consumption, technological progress, and increased demand for environmental quality and policy. To quantify the importance of these central hypotheses, we use a CGE model with endogenous policy for Norway. Our results suggest significant future effects of all these three counteracting mechanisms. For most local and regional pollutants, they may be strong enough to prolong the falling emission trends. However, we cannot rely on reductions in emissions of climate gases and some transport‐related local pollutants. Our results also indicate that pollution leakages abroad are likely to take place.

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  • Annegrete Bruvoll & Taran Fæhn & Birger Strøm, 2003. "Quantifying Central Hypotheses on Environmental Kuznets Curves for a Rich Economy: A Computable General Equilibrium Study," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(2), pages 149-173, May.
    • Handle: RePEc:bla:scotjp:v:50:y:2003:i:2:p:149-173
    DOI: 10.1111/1467-9485.5002003
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    1. Fæhn, Taran & Bruvoll, Annegrete, 2009. "Richer and cleaner--At others' expense?," Resource and Energy Economics, Elsevier, vol. 31(2), pages 103-122, May.
    2. Brita Bye & Marit E. Klemetsen, 2018. "The Impacts of Alternative Policy Instruments on Environmental Performance: A Firm Level Study of Temporary and Persistent Effects," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(2), pages 317-341, February.
    3. Balsalobre-Lorente, Daniel & Shahbaz, Muhammad & Roubaud, David & Farhani, Sahbi, 2018. "How economic growth, renewable electricity and natural resources contribute to CO2 emissions?," Energy Policy, Elsevier, vol. 113(C), pages 356-367.
    4. 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.
    5. Enrico Maria Mosconi & Andrea Colantoni & Filippo Gambella & Eva Cudlinová & Luca Salvati & Jesús Rodrigo-Comino, 2020. "Revisiting the Environmental Kuznets Curve: The Spatial Interaction between Economy and Territory," Economies, MDPI, vol. 8(3), pages 1-20, September.
    6. Caviglia-Harris, Jill L. & Chambers, Dustin & Kahn, James R., 2009. "Taking the "U" out of Kuznets: A comprehensive analysis of the EKC and environmental degradation," Ecological Economics, Elsevier, vol. 68(4), pages 1149-1159, February.
    7. Van Hoa, Tran & Limskul, Kitti, 2013. "Economic impact of CO2 emissions on Thailand's growth and climate change mitigation policy: A modelling analysis," Economic Modelling, Elsevier, vol. 33(C), pages 651-658.
    8. Janine De Fence & Nick Hanley & Karen Turner, 2009. "Do Productivity Improvements Move Us Along the Environmental Kuznets Curve?," Working Papers 0908, University of Strathclyde Business School, Department of Economics.
    9. Alvarez-Herranz, Agustin & Balsalobre-Lorente, Daniel & Shahbaz, Muhammad & Cantos, José María, 2017. "Energy innovation and renewable energy consumption in the correction of air pollution levels," Energy Policy, Elsevier, vol. 105(C), pages 386-397.
    10. Bruvoll, Annegrete & Faehn, Taran, 2006. "Transboundary effects of environmental policy: Markets and emission leakages," Ecological Economics, Elsevier, vol. 59(4), pages 499-510, October.
    11. Shahbaz, Muhammad & Nasir, Muhammad Ali & Roubaud, David, 2018. "Environmental degradation in France: The effects of FDI, financial development, and energy innovations," Energy Economics, Elsevier, vol. 74(C), pages 843-857.
    12. Turner, Karen & Hanley, Nick, 2011. "Energy efficiency, rebound effects and the environmental Kuznets Curve," Energy Economics, Elsevier, vol. 33(5), pages 709-720, September.
    13. Salvati Luca, 2013. "Land Quality, Development and Space: Does Scale Matter?," European Spatial Research and Policy, Sciendo, vol. 20(2), pages 99-112, December.
    14. Stern, David I., 2004. "The Rise and Fall of the Environmental Kuznets Curve," World Development, Elsevier, vol. 32(8), pages 1419-1439, August.
    15. Jette Jacobsen & Nick Hanley, 2009. "Are There Income Effects on Global Willingness to Pay for Biodiversity Conservation?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(2), pages 137-160, June.
    16. Bruvoll, Annegrete & Larsen, Bodil Merethe, 2004. "Greenhouse gas emissions in Norway: do carbon taxes work?," Energy Policy, Elsevier, vol. 32(4), pages 493-505, March.
    17. Holmøy, Erling, 2016. "The development and use of CGE models in Norway," Journal of Policy Modeling, Elsevier, vol. 38(3), pages 448-474.
    18. Mumbunan, Sonny & Maitri, Ni Made Rahayu, 2022. "A Review of Basic Income for Nature and Climate," OSF Preprints bre43, Center for Open Science.
    19. Arief Anshory Yusuf, 2004. "Poverty and Environmental Degradation: Searching for Theoretical Linkages," Working Papers in Economics and Development Studies (WoPEDS) 200403, Department of Economics, Padjadjaran University, revised Oct 2004.

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    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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