Can China Grow Out of Its Environmental Problems?
Eissa, Nada O
Debate on the relationship between economic growth and environmental quality has centered on whether higher per-capita income is a panacea for all environmental “diseases.” The Environmental Kuznets Curve (EKC), borrowed from Kuznets’ inverted-U curve of the relationship between economic growth and the income distribution, shows that the relationship is nonlinear and depends on a country’s level of income. EKC has been widely used for income-pollution analyses. However, EKC studies vary in functional form, specification, study level, and data type, producing conflicting results. Using He and Wang’s (2012) height-adjustment EKC model, this study estimates the relationship between China’s economic growth and environmental quality from 1990 to 2015. Following He and Wang, instead of employing a single standard EKC model, the study compares standard and dynamic models, considering China’s unique administrative structure and environmental policies. The results show that controlling for policy variables improves the standard model’s explanatory power, but only a little. Two pollutants, industrial wastewater, and waste gas have an inverted-N curve relationship to economic growth, while the rest all show a consistent decreasing trend in recent years. Considering the vast disparities in economic development across China’s provinces, policymakers would do well to consider each province’s specific situation and use the EKC model as a macro level reference, rather than a fixed standard, when designing environmental policy.
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