Economic growth and environmental quality

• Published in: Management of environmental quality 2007-08, Vol.18 (5), p.568-577
• Main Author: Cialani, Catia
• Format: Article
• Language: English
• Subjects: Economic growth; Italy; Pollution
• ISSN: 1477-7835; 1758-6119
• DOI: 10.1108/14777830710778328

Purpose - The purpose of this paper is to explore the emissions of CO2 in Italy during 1861 to 2002. The Environmental Kuznets Curve (EKC) is applied to explore the relationship between CO2 emission and Gross Domestic Product (GDP) per capita. An Index Decomposition Analysis (IDA) is also applied to investigate changes in emissions between 1990 to 2002. Several factors contribute to change in the emission of CO2. These factors generally include a scale effect, a technological effect and a composition effect.Design methodology approach - The main discussion in the paper is about the exiting of EKC in Italy and how a decomposition analysis can be used to look behind the time series of the environmental accounts.Findings - The findings in the paper indicate the typical inverted "U" form of EKC is not confirmed with our data set for Italy. According our econometric results, there is a positive relationship between economic growth and CO2; following the trend, the maximum emission of CO2 per capita in Italy would be reached when the GDP per capita will be about 26900 US$ (turning point). Basically, two major forces have determined the increase of CO2 pollution in Italy over time: eco-efficiency (pollution per monetary unit of output) and volume effect (volume growth of Value Added).Practical implications - The decomposition method performed in this paper allows us to analyse which sectors are responsible for CO2 emissions and quantify the magnitude of the theoretical factors expected to influence the emission. The method used for the decomposition analysis can also be applied by countries with lack of time series Input-Output data.Originality value - The investigation in the paper of the existing of EKC allows to know at which level of income the CO2 emissions will start decreasing in Italy. The analysis is based on a long time series (141 years). Decomposition analysis can be considered a tool, which helps to detect whether the increase of CO2 is mainly due to economic growth or technological change.