An Empirical Investigation of Environmental Kuznets Curve in Nigeria

An Empirical Investigation of Environmental Kuznets Curve in Nigeria

Folorunso Sunday Ayadi (University of Lagos, Nigeria)
Copyright: © 2013 |Pages: 9
DOI: 10.4018/978-1-4666-2646-1.ch022
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Abstract

The possibility of the existence of environmental Kuznet curve (EKC) has been debated extensively in the literature. The reality of EKC is that, by pursuing growth in income, environmental objectives can be simultaneously accomplished without initiating extra intervention tools. Various studies have been conducted on the existence of EKC without any consensus. Therefore, in this paper, the author analyzes whether or not EKC exists and its shape. In this study, the author uses an explanatory variable to in the model, which is population density, showing the level of resilience of the environment to pollution. However, this research found that at the lower stage of income, environmental degradation declined with income growth, rises as income grew further, then declined. However, income did not contribute significantly toward the explanation of environmental degradation like population density. This research found no synergies between addressing poverty and environmental problems in Nigeria. Therefore, complementary environmental policies must be put in place when addressing poverty. Lastly, there are different shapes of the relationship between income growth and various measures of pollution and environmental degradation, and developing countries must recognize that no one size fits all in this relationship.
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Literature Review

Panayotou (2003) gave three reasons why pollution is inverted as income rises. The first is that pollution rises at early stage of industrialization due to reliance on rudimentary, inefficient and pollution induced technologies. When industrialization has advanced, service industries will gain eminence. This will further reduce pollution. Secondly, the decline in pollution as income rises is due to the fact that more affluent people and communities placing more value on cleaner environment by instituting measures to ensure cleaner environment. Thirdly, at the onset of industrialization, the scale effect will escalate pollution. Further along the trajectory, Firms will switch to less polluting industries/technology (composition effect). Lastly, mature companies continue to invest in pollution abatement equipment and technology thereby reducing pollution (technique effect). Panayotou (2003) implies that pollution will increase at the early stage of industrialization due to scale effect. It will reach the turning point due to the composition effect, then decline due to the technique effect.

Grossman and Krueger (1993) were the first to point out the semblance between Kuznets curve and EKC, and literature on EKC is broken down into three main categories. The first is the case of environmental quality rising as income rises. The second is the case of environmental quality first rising and then falling as income rises while the third is the case of continual degradation of the environment as income rises (Kolstad, 2000). Issues covered in the literature include, what the critical turning point is, what institutional reforms to hasten environmental improvement, should economic growth be encouraged to bring about environmental improvement? Most studies have concentrated on whether or not EKC exists and what shape is the EKC, we shall review some of these studies.

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