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Growth and the Environment in Canada: An Empirical Analysis

Standard reduced‐form models are estimated for Canada to examine the relationships between real per capita gross domestic product and four measures of environmental degradation. Of the four chosen measures of environmental degradation, only concentrations of carbon monoxide appear to decline in the...

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Bibliographic Details
Published in:Canadian journal of agricultural economics 2003-07, Vol.51 (2), p.197-216
Main Authors: Day, Kathleen M., Grafton, R. Quentin
Format: Article
Language:English
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Summary:Standard reduced‐form models are estimated for Canada to examine the relationships between real per capita gross domestic product and four measures of environmental degradation. Of the four chosen measures of environmental degradation, only concentrations of carbon monoxide appear to decline in the long run with increases in real per capita income. The data are also tested for the presence of unit roots and for the existence of cointegration between each of the measures of environmental degradation and per capita income. ADF and Phillips‐Perron tests indicate unit roots in the logs of the measures of all variables. The Engle‐Granger test and Johansen's maximum eigenvalue test suggest that a long‐term relationship between per capita income and the measures of environmental degradation does not exist. Causality tests also indicate bidirectional causality, not unidirectional causality, from income to the environment. The results suggest that Canada does not have the luxury of being able to grow out of its environmental problems. The implication is that to prevent further environmental degradation, Canada requires concerted policies and incentives to reduce pollution intensity per unit of output across sectors, to shift from more to less pollution‐producing outputs and to lower the environmental damage associated with aggregate consumption. Nous estimons des modèles de forme reduite afin d'examiner la relation entre le produit intérieur brut par habitant et quatre mesures de dégradation de l'environnement. Il semble que parmi les quatre mesures de dégradation environnementale choisies, seules les concentrations d'oxyde de carbone diminueront à long terme avec l'augmentation du revenu par habitant. Nous avons testé aussi pour des racines unitaires et la cointégration; les tests ADF et Phillips‐Perron indiquent la présence de raciness unitaires dans toutes les variables. Le test de Engle et Granger et aussi le test λmax de Johansen suggèrent l'absence de relation de long terme entre les quatre mesures de dégradation environnementale et le revenu par habitant. De plus, des tests de causalité indiquent que la causalité va dans les deux sens, au lieu d'être unidirectionnelle du revenu à la dégradation environnementale. La conclusion que nous tirons de l'ensemble de ces résultats est que la croissance économique ne peut pas résoudre les problèmes environnementaux du Canada. Plutôt, le pays aura besoin de politiques et d'incitations délibérées pour réduire la polluti
ISSN:0008-3976
1744-7976
DOI:10.1111/j.1744-7976.2003.tb00173.x