A Consumption Based Human Development Index and The Global Environmental Kuznets Curve
We extend the analysis of Jha and Murthy (2003) to relate consumption to environmental degradation (conceived of as a composite) within a cross-country framework. We use the method of Principal Components Analysis (PCA) to construct an Environmental Degradation Index (EDI) for each country and global environmental degradation (GED) as the sum of the EDI's. We then identify outliers and influential observations among both the environmental and consumption related variables. Canonical Discriminant analysis is then used to classify development classes along environmental lines. We then estimate a simultaneous equation model to analyze the pattern of causation between per capita income, consumption and environmental degradation. We estimate a Global Environmental Kuznets curve (GEKC) as a relation between EDI ranks and ranks of the consumption-based EDI. A cubic representation is most appropriate with high-consumption countries contributing excessively to GED and middle-consumption countries slightly less. Low-consumption countries are contributing insignificantly to GED. Finally we present an alternative consumption-based Human Development Index to UNDP's income-based Human Development Index. We then compare the ranking of countries according to the consumption-based HDI ranks with their ranking according to their EDI. Two sets of data drawn from the Human Development Report (HDR) UNDP(2000)) are used in the analysis. One relates to the environment and the other to developmental variables. For the formation of a composite index that would enable the estimation of a GEKC for 174 countries, we used cross-sectional data used in the HDR. The two main contributions of this paper are to build a consumption based HDI and to estimate a Global EKC based on consumption. A simultaneous equations model explains the causal structure that is responsible for Global Environmental Degradation. Further, with Canonical Discriminant Analysis it has been shown that GED does not have geo-physical basis but an anthropogenic basis. As a part of the system of equations a Global Consumption Function has been estimated that displays interesting results. In net, the paper attempts to establish that a certain 'type of development' that characterizes high consumption countries is primarily responsible for Global Environmental Degradation.
|Date of creation:||2004|
|Contact details of provider:|| Postal: Crawford Building, Lennox Crossing, Building #132, Canberra ACT 2601|
Phone: +61 2 6125 4705
Fax: +61 2 6125 5448
Web page: https://crawford.anu.edu.au/acde/publications/
More information through EDIRC
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.:
- Panayotou, Theodore, 1997. "Demystifying the environmental Kuznets curve: turning a black box into a policy tool," Environment and Development Economics, Cambridge University Press, vol. 2(04), pages 465-484, November.
- Rothman, Dale S., 1998. "Environmental Kuznets curves--real progress or passing the buck?: A case for consumption-based approaches," Ecological Economics, Elsevier, vol. 25(2), pages 177-194, May.
- Sagar, Ambuj D. & Najam, Adil, 1998. "The human development index: a critical review," Ecological Economics, Elsevier, vol. 25(3), pages 249-264, June.
- Raghbendra Jha & John Whalley, 2001.
"The Environmental Regime in Developing Countries,"
in: Behavioral and Distributional Effects of Environmental Policy, pages 217-250
National Bureau of Economic Research, Inc.
- Jha, Raghbendra & Murthy, K. V. Bhanu, 2003.
"An inverse global environmental Kuznets curve,"
Journal of Comparative Economics,
Elsevier, vol. 31(2), pages 352-368, June.
- Gene M. Grossman & Alan B. Krueger, 1995.
"Economic Growth and the Environment,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 110(2), pages 353-377.
- 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.
- Gene M. Grossman & Alan B. Krueger, 1991.
"Environmental Impacts of a North American Free Trade Agreement,"
NBER Working Papers
3914, National Bureau of Economic Research, Inc.
- Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
- Grossman, Gene & Krueger, Alan B, 1992. "Environmental Impacts of a North American Free Trade Agreement," CEPR Discussion Papers 644, C.E.P.R. Discussion Papers.
- Carlo Carraro & Gilbert E. Metcalf, 2000.
"Behavioral and Distributional Effects of Environmental Policy Introduction,"
NBER Working Papers
7648, National Bureau of Economic Research, Inc.
- Carlo Carraro & Gilbert E. Metcalf, 2000. "Behavioral and Distributional Effects of Environmental Policy: Introduction," Discussion Papers Series, Department of Economics, Tufts University 0011, Department of Economics, Tufts University.
- P Ekins, 1997. "The Kuznets Curve for the Environment and Economic Growth: Examining the Evidence," Environment and Planning A, SAGE Publishing, vol. 29(5), pages 805-830, May.
- P Ekins, 1997. "The Kuznets curve for the environment and economic growth: examining the evidence," Environment and Planning A, Pion Ltd, London, vol. 29(5), pages 805-830, May.
- Raskin, Paul D., 1995. "Methods for estimating the population contribution to environmental change," Ecological Economics, Elsevier, vol. 15(3), pages 225-233, December.
When requesting a correction, please mention this item's handle: RePEc:pas:papers:2004-03. 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: (Sandra Zec)
If references are entirely missing, you can add them using this form.