Monday, June 22, 2015

Population, Economic Growth and Regional Environmental Inefficiency: Evidence from U.S. States

I have a new paper in the Journal of Cleaner Production coauthored with George Halkos and Nikalaos Tzeremes. George was a lecturer at University of York when I was a post-doc there. We haven't previously put out a working paper version of this paper.

In this paper, we apply a conditional directional distance function allowing multiple exogenous factors to measure environmental performance to evaluating the air pollution performance levels of U.S. states for the years 1998 and 2008. The overall results reveal that there is much variation in environmental inefficiencies among the U.S. states. A second stage nonparametric analysis indicates a nonlinear relationship between states’ population size, GDP per capita levels and states’ environmental inefficiency levels.

Our results indicate that environmental inefficiency on the whole decreases with increased population and income per capita but there are limits to this improvement and at high income and population levels the tendency may reverse. In particular, small poor states tend to be environmentally inefficient, whereas large states tend to be more efficient regardless of their level of income. The results show that there is not so much of a trade off between environmental quality and economic development in small and poor US states in the South and Mid-West. As these states grow in income and population they can improve their environmental efficiency. However, large and richer states face more environmental challenges from growth. This may explain the differences in policy across states. For example, California which is already an environmentally efficient state is also a state which has lead in environmental regulation. There are fewer local environmental policies in states across the South and parts of the mid-West. Politicians and populations in these states may see less trade off between environmental quality and development and hence be reluctant to adopt specific environmental policies. These patterns also match recent trends in voting for the Republican and Democratic parties the so-called Blue and Red States. However, there are exceptions to a simplistic analysis along these lines as Texas for example is an environmentally efficient state in our analysis as would be expected from its large population size.

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