Saturday, November 27, 2010

A Clarification, 14 Years On...

Maybe it is a bit late for this, but quite a few papers I get sent for review cite our 1996 paper in World Development as a rationale for estimating an environmental Kuznets curve model for a single country. We wrote:

"We believe a more fruitful approach to the analysis of the relationship between economic growth and environmental impact would be the examination of the historical experience of individual countries, using econometric and also qualitative historical analysis." (p. 1159)

As should be obvious from the preceding sentence "they will need to take the form of structural models, rather than reduced form equations of the EKC type" it's clear we didn't think that EKC models were very useful (though I know that "structural models" is rather vague). To the degree that they are useful they need to be estimated with a representative sample of countries and getting consistent estimates turns out to not be so straightforward.*

What we were thinking of in terms of individual countries is a proper analysis of what policies lead to reductions in pollution and what factors drove the adoption of those policies. For example, why was Japan one of the first countries to sharply cut sulfur emissions? What can we learn from this as we address our current issues with climate change or biodiversity protection? There is still plenty of scope for research of that sort.

* The simple between estimator seems to work quite well in this paper but that's not always the case.

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