Validating and Forecasting Carbon Emissions in the Framework of the Environmental Kuznets Curve: The Case of Vietnam

Abstract

This paper examines the environmental Kuznets curve (EKC) in Vietnam between 1977 and 2019. Using the autoregressive distributed lag (ARDL) approach, we find an inverted N-shaped relation between economic growth and carbon dioxide emissions in both the long- and short-run. The econometric results also reveal that energy consumption and urbanization statistically positively impact pollution. The long-run Granger causality test shows a unidirectional causality from energy consumption and economic growth to pollution while there is no causal relationship between energy consumption and economic growth. These suggest some crucial policies for curtailing emissions without harming economic development. In the second step, we also employed the back-propagation neural networks (BPN) to compare the work of econometrics in carbon dioxide emissions forecasting. A 5-4-1 multi-layer perceptron with BPN and learning rate was set at 0.1, which outperforms the ARDL’s outputs. Our findings suggest the potential application of machine learning to notably improve the econometric method’s forecasting results in the literature.

An econometric evaluation of the effects of economic growth, energy use, and agricultural value added on carbon dioxide emissions in Vietnam

“…Vietnam is a developing country that has had significant economic progress during the last four decades (Nguyen et al 2021). Vietnam has also devised techniques for achieving economic growth that is compatible with long-term development.…”

“…Vietnam has transitioned from a low-income country to a lower-middle-income country as one of the world's fastest-growing transitional economies (Nguyen et al 2021). Vietnam's gross domestic product (GDP) increased nearly nine times from 30 billion USD in 1986 to 259 billion USD in 2020 (World Bank 2022).…”

“…It is the 2nd fastest-growing economy in Southeast Asia and 23rd in the world with an annual GDP growth rate of 7% in 2019 (World Bank 2022). However, Vietnam's impressive economic progress is linked to an increase in energy use, which has resulted in a slew of environmental issues (Al-Mulali et al 2015;Tang and Tan 2015;Phong et al 2018;Shahbaz et al 2019;Nguyen et al 2021). The fact that Vietnam's economy is based on fossil fuels such as coal and oil is the primary source of the country's increasing environmental issues (Shahbaz et al 2019;Nguyen et al 2021).…”

Analysis of Spatial Effects in the Relationship between CO2 Emissions and Renewable Energy Consumption in the Context of Economic Growth

“…The relationship between economic growth and the amount of environmental degradation is usually described by the environmental Kuznets curve (EKC) [4][5][6][7]. In the basic version, the curve expresses the dependence between these processes in the form of an inverted "U" shape, that is, an increase in the level of income of states leads to ever greater environmental degradation, and then, when wealth reaches a certain level, the relationship is reversed.…”

“…The Lagrange multiplier tests (the basic versions-LM SE , LM SAR , and the robust ones-RLM SE , RLM SAR ) indicate the legitimacy of supplementing model (1) with spatial connections between the countries. Therefore, the spatio-temporal Durbin model was specified (see Equation(6)). The results of estimation and verification of the model are reported in Table3.…”