Economic Dynamics, Emission Trends and the EKC Hypothesis: New Evidence Using NAMEA and Provincial Panel Data for Italy

Abstract

SummaryThis paper provides new empirical evidence on delinking trends concerning emission-related indicators in Italy. We discuss methodological issues regarding the analysis of delinking and examine the related Environmental Kuznets Curves (EKC) literature to explore and assess the most value added research lines after more than a decade of intensive research in the field. The main contribution of the paper is in providing EKC evidence exploiting environmentaleconomic merged panel datasets at a decentralized level exploiting long time series and rich cross section heterogeneity at both sectoral and provincial level. This crucially augments the unsatisfactory outcomes deriving from cross country analyses, which are less informative for policy purposes since they provide averages for environmental-economic relationships. Two panel datasets: 1990-2000 emissions at province level; and sectoral disaggregated NAMEA emissions sources for 1990-2001 are analyzed. We find mixed evidence supporting the EKC hypothesis. Some of the pollutants in the NAMEA data, such as CO2, CH4 and CO, produce inverted-U shaped curves with coherent within range turning points. Other emission trends for the period under consideration show monotonic or even N shaped (SOX, NOX, PM10) relationship. Other emissions show relatively less robust results, with mixed evidence arising from different specifications. This partially confirms some of the criticisms directed to EKC empirical investigations. However, our analysis shows that probably there is no single EKC dynamic, but rather many EKC dynamics, differing depending on (i) period of observation; (ii) country/area; (iii) emissions/environmental pressures; (iv) sectors. Sectoral disaggregated analysis highlights that an aggregated outcome should hide some heterogeneity across different sectors. Services tend to present an inverted-N shape in most cases. Manufacturing industry shows a mix of EKC inverted-U and N shapes, depending on the emission considered. The same is true for industry (all industries, not only manufacturing): though a turning point has been experienced, N shapes may lead to increased emissions with respect to very high levels of the income driver. The analysis of provincial data shows that inverted-U shaped curves are present for some of the emissions in the SINAnet-APAT database, such as CH4, NMVOC, CO and PM10, with coherent within range turning points. Other emission trends show a monotonic relationship (CO2 and N2O), or in some cases an inverted-N shaped relationship (SOX and NOX). This kind of analysis at macro sector and/or specific sector level appear to be the most promising and robust field of future research for the assessment of EKC dynamics. National studies grounded in geographical heterogeneity, rather than regional/international analysis, and focused on sectoral trends, are more informative for policy making. The implementation of such investigations needs larger datasets than are currently available. We thus point to the need for increasing and continual effort...

Regional and Sector Environmental Efficiency Empirical Evidence from Structural Shift-Share Analysis of Namea Data

“…He finds that the scale effects are not compensated for by eco efficiency gains and negligible reductions result from the other two factors, which resulted in a net 20% increase in CO 2 emissions in the Netherlands in 1987-1998. This study confirms the complementarity and increased value in terms of the information to be derived from decomposition analysis compared to delinking studies that calculate the incomeenvironment dynamic elasticity and the drivers of delinking using NAMEA data (Mazzanti et al, 2008(Mazzanti et al, , 2007. Kagawa and Inamura (2001) applied an I-O SDA model to identify the sources of changes in the energy demand structure, the non-energy input structure, the non-energy product mix and the non-energy final demand of embodied energy requirements in Japan for 1985 to 1990.…”

“…Steenge (1999) provides a policy-oriented analysis related to the possible policy implications of NAMEA. There are also some studies based on a proper environmental economics oriented perspective, for example, Mazzanti et al (2008), which exploit panel data for Italy to assess environmental Kuznets curve dynamics for 1990-2001.…”

“…In other cases (Mazzanti et al, 2008), the integration of NAMEA data could be limited to the inclusion of trade openness indicators among drivers of 'environmental efficiency', in order to infer whether pollution haven hypothesis forces or production specialization in the energy/environment intense sector, prevail. These analyses refer to the old debate around the 'Leontief paradox' which has produced recent interesting insights even in the environmental realm (Dietzenbacher and Mukhopadhay, 2006).…”

“…9 Interestingly, emissions/value added and emissions/employee ratios, both derivable from NAMEA, are used. For comparison, Mazzanti and Zoboli (2009) exploit the former indicator in order to assess the dynamic (1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001) correlation between environmental and economic productivities in Italy using NAMEA, while Mazzanti et al (2008) use the latter per head indicator, for the same period and applied to the same data, which is more in line with the EKC framework which frequently specifies an emission per capita ratio as the objective variable. 10 Which also links to the idea of elasticity between environmental impact and value added if placed in a multivariate statistical framework.…”

Environmental Performance and Regional Innovation Spillovers

“…The first NAMEA was developed by the Dutch Central Bureau of Statistics (De Boo et al, 1993), and earlier contributions such as Ike (1999), Keuning et al (1999), Steenge (1999), and Vaze and Keuning (1996), Femia and Panfili (2005), Mazzanti and Montini (2009), Mazzanti et al (2008aMazzanti et al ( , 2008b have emphasised the usefulness of NAMEA datasets for econometric investigations into a number of different economic aspects. In the NAMEA tables, environmental pressures, in particular air emissions, and economic data (value added, final consumption expenditures and full-time equivalent job) are assigned to the economic branches of resident units directly responsible for environmental and economic phenomena.…”