Estimate the environmental Kuznets curve in Mauritius

This paper attempts to gauge the environmental Kuznets curve ( EKC ) in the instance of Mauritius by taking the function of C emanations and its deductions on the Gross Domestic Product ( GDP ) of the state, together with variables linked straight and indirectly to GDP and C emanation which includes rising prices rates, unemployment and population size. This survey depicts the relationship between economic development and C emanations in Mauritius for the period 1990-2009. The multivariate arrested development techniques approach as the appraisal and attack to cointegration was adopted. This paper examines the informations through differencing techniques in order to do the informations stationary which finally helped us to pull strings the informations efficaciously. After running correlativity techniques, we found that growing and C emanations are extremely correlated and quadratic equation preparation was used in the anticipation modeling. It was deduced that, Mauritius has reached its “ turning point ” . However due to the heavy usage of fuels and high C emanations in Mauritius it is really hard for the state to run into Kyoto Protocol demands. Assorted decisions are drawn out of this paper which includes national income which has the most important impact in environmental debasement, many indexs like unemployment rate, tends to better as states approach in-between income degrees and econometric grounds shows that macroeconomic policies have certain impact on income and C emanations. Similarly forecasted CO2 emanations were derived for different sectors.

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Keywords: Environmental Kuznets Curve, Carbon Dioxide Emissions, Gross Domestic Product, Time Series, Mauritanian Economy.

Introduction

The object of this research paper is to look into through empirical observation the cogency of the Environmental Kuznets Curve hypothesis for Mauritius with a clip span of more than two decennaries.

Harmonizing to the EKC hypothesis as the economic system of one ‘s state develops the debasement of the environment additions, but when the economic system reaches a specific degree of income per capita, known as turning point, pollution starts to worsen. The EKC hypothesis implies that despite the fact that at first phases of development, pollution is ineluctable, in the terminal the economic growing will be one of the solutions to the pollution job.

The construct that economic development will finally take to the betterment of the quality of the environment is really appealing. Growth, which has been accused as the chief cause of the environmental debasement and now is seen as a “ savior ” of the environment has spurred the involvement of policy interior decorators. Alternatively of haltering the growing of the economic system, measures that do economic system to turn even faster is what needs.

Environmental Kuznets Curve

Environmental Kuznets Curve ( EKC ) is the relationship that is assumed to follow the pollution way followed by states as their per capita gross domestic merchandise ( GDP ) grows and describes the relationship between per capita income and of environmental debasement indexs ( Unruth and Moomaw, 1998 ) . In the infant phases of development, the degrees of some pollutants climb with additions in per capita income, while at advanced degrees of development, environmental debasement follows a downward tendency as income per capita is traveling upwards. These consequences give rise to a bell shaped swerve associating economic growing to environmental debasement, redolent of the relationship hypothesized by Kuznets ( 1995 ) between economic and income inequality ( Nahman and Antrobus, 2005 ) . The construct of EKC came from the early 1990s with Grossman and Krueger ‘s ( 1991 ) path-breaking survey of the possible impacts of NAFTA ( North American Free Trade Agreement ) .

Beginnings of the EKC

The environmental Kuznets curve consists of a hypothesized relationship between different indexs of environmental debasement and income per capita. At first phase of economic growing, debasement and pollution addition, but further than some degree of income per capita, the motion displacement, that is for significant high income of the state it leads to higher degrees of economic growing taking to environmental betterment. This means that the impact of environmental index is an upside-down U form map of existent income per capita ( Stern, 2004 )

In other words, the distribution of income becomes more asymmetrical in early phase of income growing and so the distribution moves towards greater equality as economic growing continues ( Kuznets, 1955 ) . This affair between income per capita and income inequality can be represented by a bell-shaped curve. This is viewed as an empirical phenomenon known as the Kuznets Curve ( Dinda, 2004 ) .

Criticism and drawbacks of the Kuznets Curve

The Kuznets Curve has helped in analyzing the relationship between environmental pollutants and GDP of states, but it does hold drawbacks excessively. Even Kuznets ( 1955 ) himself indicated that the Kuznets Curve Theory is non a perfect one and the relationship between income inequality and economic development can non be assumed. He besides declared that batch information in the paper has been speculated and therefore farther research work must be carried out.

The ground behind the development of the Environmental Kuznets Curve

Since the last decennaries, the increasing menace of planetary heating and clime alteration has been of major go oning concern. Administrations such as the United Nations have been seeking to decrease the unfavorable impacts of planetary warming through intergovernmental and binding agreements. After huge dialogues, the understanding viz. the Kyoto protocol was signed in 1997. This protocol has the aim of cut downing nursery gases ( GHG ) that cause climate alteration. The Kyoto protocol recognises restrictions to environmental pollutants and necessitates a timetable for realization of the emanation decreases for the developed states. During 2008 – 2012 periods the demands decrease of the GHG emanations to 5.2 % lower than the 1990 degree. In 2005 it came into force: 178 provinces have signed and approved the protocol since April 2008 ( Halicoglu, 2008 ) . Greenhouse gas emanations peculiarly C dioxide ( CO2 ) emanations, are considered to be the nucleus causes of planetary heating. Consequently, to forestall planetary warming a figure of states have signed the Kyoto Protocol and agreed to decrease their emanation degrees. Galeotti and Lanza ( 1999 ) indicated that some developing provinces refused to subscribe the Kyoto Protocol based on the statement that the industrialization and development procedure should be capable to no restraints, peculiarly for energy production and ingestion.

One likely foundation for this place is the belief that while pollution additions with growing in GDP, it happens a point where pollution goes down. This position calls for a careful analysis of the relationship between economic growing and pollution. This relationship is evidently really complex as it depends on legion different factors such as:

The state ‘s size,

The sectoral construction, including the composing of the demand for energy,

The vintage of the engineering,

The demand for environmental quality,

The degree and quality of environmental protection outgos.

Shafik ( 1994 ) reported that the relationship between economic growing and environmental quality has been a beginning of great dissension for a drawn-out period of clip. On one side it has been observed that greater economic activity inescapably leads to environmental debasement and eventually to possible economic and ecological prostration. At the other side is the position that those environmental nuisances deserving work outing will be tackled more or less automatically as a effect of economic growing.

Previous to 1970, there was a strong belief that the natural stuffs ingestions, energy and natural resources were turning at the same gait as economic system grew. In the early 1970s, the Club of Rome ‘s Limits of Growth position ( Meadows et al. 1972 ) was brazen about the concern for the handiness of natural resource of the Earth. They argued that the finitude of ecological resources would forestall economic growing and advocated for a solid province economic system with 0 growing to avoid dramatic ecological fortunes in the hereafter. This position has been criticised on both conjectural and empirical evidences. Experimental works showed that the ratio of ingestion of some metals to income was falling in developed states during the 1970s, which brought divergency with the anticipations set out in the Limits to Growth position ( Meadows et al. 1972 ) . Natural environment non merely supply natural resources of import for economic development but besides execute the critical map of back uping life, if adult male persist to work environment recklessly, so it would non be able to prolong life any longer.

Environmental Kuznets Curve definition and graphical illustration

The EKC follows the name of Nobel Laureate Simon Kuznets who had unusually hypothesized an upside-down ‘U ‘ income-inequality relationship ( Kuznets, 1955 ) . In the 1990s economic experts detected this relationship between economic growing and environmental debasement. Since so this relationship is known as Environmental Kuznets Curve.

Harmonizing to the EKC theory as a state develops, the pollution additions, but after making a specific degree of economic advancement pollution Begin to diminish. The EKC hypothesis suggests that environmental debasement is something ineluctable at the first phase of economic growing, so a underdeveloped state is forced to digest this debasement in order to develop. In a graphical representation the x-axis symbolize the economic growing which is measured by GDP per capita and the y-axis represents the environmental debasement which is measured by many different pollution indexs like C dioxide, N oxide, sulfur dioxide, deforestation etc.

The forms of the Environmental Kuznets Curves

The relation between income and environmental force per unit area can be sketched in several ways ; foremost, one can separate monotone and non-monotonic curves. Monotonic curves may demo either mounting pollution with lifting incomes, as in the instance of municipal waste per capita or decreasing. But, non-monotonic forms may be more likely in other instances and two types have been recommended, viz. inverted-U and N-shaped curves. The form discovered in experiential research depends on the types of pollutants scrutinised and the theoretical accounts that have been used for illation. Four bad sentiments are presented in favor of an inverted-U curve for ( local ) air pollutants, which are listed as:

Positive income snap ‘s for environmental quality,

Structural alterations in production and ingestion,

Rising information on environmental effects of economic activities as income rises and

More international trade and more unfastened political systems with increasing degrees of income ( Selden and Song 1994 ) .

Others, for illustration Pezzey ( 1989 ) , argued that such inverted-U relationships may non keep in the long tally. They anticipated a alleged N-shaped curve which demonstrated the same form as the inverted-U curve ab initio, but beyond a certain income degree the relationship between environmental force per unit area and income is positive once more. Delinking is therefore considered a impermanent phenomenon. Opschoor ( 1990 ) , for illustration, argued that, one time technological efficiency sweetenings in resource usage or suspension chances have been exhausted or have become excessively expensive, farther income growing will ensue in net environmental debasement. Despite these considerations empirical grounds so far has been mostly in favor of the inverted-U alternatively of the N shaped relationship ( De Bruyn et al. , 1998 ) .

The defects of EKC analysis

A figure of critical surveies of the EKC literature have been published ( e.g. Coodoon and Dinda, 2002 ; Ekins, 1997 ; Fare et al. , 2001 ; Perman and Stern, 2003 ; Stern, 2004 ) .

Theoretical reviews

This subdivision discusses the unfavorable judgments that were raised against the EKC on theoretical ( instead than methodological ) evidences.

One of the chief unfavorable judgments of the EKC theoretical accounts is the premise that environment and growing are non interrelated. In simple words the EKC hypothesis assumes no feedback between income and the pollution of environment.

The cardinal unfavorable judgment of Arrow et Al. ( 1995 ) and other unfavorable judgment was that the EKC theoretical account as presented in the 1992 World Development Report and someplace else assumes that there is no respond from environmental harm to economic production as income is assumed to be an exogenic variable. The declaration is that environmental harm does non decrease economic activity sufficiently to halt the growing procedure and that any irreversibility is non excessively terrible to cut down the degree of income in the hereafter. In other words, there is a theory that the economic system is sustainable. But, if elevated degrees of economic activity are non sustainable, trying to turn fast in the early phases of development when environmental debasement is lifting may turn out counterproductive.

Harmonizing to Ekins ( 1997 ) , consideration in measuring the strength of the appraisal is the dependability of the informations used. However, there is small mark that the information jobs are serious plenty to cast uncertainty on the basic environment-income nexus for any peculiar environmental index, but the consequences in fact imply that this might be the instance.

Stern ( 2004 ) drew his attending to the average – median job. He underlined that early EKC surveies showed that a figure of indexs: 2 SO emanations, x NO, and deforestation, extremum at income degrees around the current universe mean per capita income. A headlong glance at the available econometric estimations might hold lead one to believe that, given likely hereafter degrees of average income per capita, environmental debasement should turn down from the present onward. Income is non yet, usually distributed but really skewed, with much larger Numberss of people below average income per capita than above it. Hence, this shows a average instead than intend income that is the relevant variable.

Another job related with the EKC surveies is the small attending that has been paid to the statistical constituents of clip series analysis. Very few surveies in the yesteryear investigated the presence of unit root in clip series of variables used to look into the cogency of the EKC.

Econometric reviews

Stern ( 2004 ) in a study argued that, the econometric unfavorable judgments of the EKC falls into four chief classs: heteroscedasticity, simultaneousness, omitted variables prejudice, and cointegration issues.

Perman and Stern ( 2003 ) investigated the informations and theoretical accounts for unit roots and cointegration severally. Panel unit root trials designated that all three series – log sulfur emanations per capita, log GDP capita, and its square – have stochastic tendencies. Consequences for cointegration are less definite. About half the single state EKC arrested developments cointegrate but many of these have restrictions with “ wrong marks ” . Some panel cointegration trials point out cointegration in all states and some accepted the non-cointegration hypothesis. However, even when cointegration is found, the signifier of the EKC relationship varies radically across states with many states holding U-shaped EKCs. In instance there ‘s a common cointegrating vector in all states it will be strongly rejected.

Coondoo and Dinda ( 2002 ) carried out an analysis for Granger Causality between CO2 emanations and income in assorted single states and parts. In general, theoretical account that emerged was that causality runs from income to emanations or that there is no important relationship in developing states, while in developed states causality runs from emanations to income. Still, in every instance the relationship is positive so that there is no EKC type consequence.

Waheed et Al. ( 2006 ) research began proving the presence of a unit root in each of the macroeconomic series utilizing the Augmented Dicky-Fuller ( 1979 ) . The ADF trial constructs a parametric rectification for higher-order correlativity by presuming that the series follows an AR ( K ) procedure and adding lagged difference footings of the dependant variable. There had been a propose simple alteration of the ADF attack to build DF-GLS trial, in which the clip series are detrended so that explanatory variables were “ taken out ” of the informations prior to running the trial arrested development. Besides Lopez, ( 2009 ) analysis included a median-unbiased appraisal based on Augmented-Dickey-Fuller ( ADF ) arrested developments with an extension of median-unbiased appraisal to the DF-GLS arrested development of Elliott, Rothenberg, and Stock ( 1996 ) .

Data and Time Series Properties

To analyze the relationship between the GDP of Mauritius and the CO2 emanation in Mauritius the one-year informations that are being used are ; entire CO2 emanation from 1976 to 2008, the existent GDP from 1976 to 2008, the population of Mauritius from 1976 to 2008, rising prices rate of Mauritius and the unemployment rate of Mauritius.

Per Capita CO2 Emission Estimates for Mauritius graph

Figure: Per Capital CO2 Emission Estimate for Mauritius informations from Energy informations book ( 2010 )

From these sets of informations it can be clearly seen that while population was increasing ( Figure 2 ) , during these old ages the existent GDP ( Figure 3 ) has been fluctuating a spot. In mid 1970 ‘s after the independency at that place has been a batch of development and transmutation in the state. The economic system was diversified and more occupations were created. Furthermore, the state received more foreign AIDSs. By the late 1970 ‘s the economic system deteriorated a spot chiefly due to the addition in crude oil monetary value in the universe market and this lead to less authorities subsidies and devaluation of Mauritanian Rupees. Then by late 1980 ‘s, the economic system experienced steady growing and besides a high degree of employment, worsening rising prices and more domestic nest eggs. This period was besides marked by the roar in the sugar industry. Though the development slowed down in the 1990 ‘s there was a gradual development of the local fiscal establishments and at the same clip the domestic information and telecommunication industry boomed. By the start of the twenty-first century there the fiscal services sector became a really of import pillar of the economic system with an increasing figure of seaward endeavors. Finally the economic system developed a batch due to the seafood processing and export during the last 10 old ages.

Figure: Population Estimates for Mauritius from World Bank

Figure: GDP for Mauritius ( without rising prices ) from World Bank

In the short term, existent GDP is affected by rising prices ( Figure 4 ) because the latter causes a rise in general monetary value of goods and services and accordingly this causes a alteration in investings, nest eggs, ingestion and import and export of a state and therefore the GDP of a state are affected excessively. The equation used to cipher existent GDP is ;

GDP =consumption by private individuals+ entire investing + authorities passing excepting rising prices + [ entire exports – sum imports ] ( Wikipedia, 2010 )

Figure: Inflation in Mauritius ( 01/01/1980 – 09/21/2010 ) from the Federal Bank of Cleveland

GDP besides depends on unemployment rate ( Figure 5 ) because harmonizing to this equation

GDP =A compensation of employees + gross lost income + gross operating excess + revenue enhancements less subsidies on production and imports ( Wikipedia 2010 ) . Therefore if unemployment rate additions in a state, the GDP will diminish.

Figure: Unemployment Rate in Mauritius from the index mundi ( 2010 )

While seeking to turn out the relationship between GDP and the CO2 emanation of Mauritius, it can besides be observed how the GDP affects the CO2 emanation in each particular sector of Mauritius. Figure 6 shows how the Energy sector and the Transport sector are the chief subscribers to CO2 emanation from 2000 to 2006.

Figure: CO2 emanations per sector from CSO Mauritius ( 2010 )

Methodology and appraisal techniques:

Harmonizing to the EKC hypothesis, there is a nonlinear quadratic relation that exists between income of a state and C emanations. However, since other variables than income can besides be as the determiners of CO2 emanations, we added other variables which could hold an influence on CO2 every bit good as the income of the state.

Econometricss methods were applied every bit good as clip series processes to understand the informations behavior and stationarity. Unit root proving would be used to prove the proposition that in autoregressive clip series the parametric quantity is ever one. Besides unit root analysis would be used to guarantee that the information for the different estimations that will be used in the theoretical account follow the same mean and discrepancy, if non, differencing and redifferencing techniques would be applied to do the informations stationary. The measure for differencing and redifferencing includes the undermentioned general expression which are used once more to prove the stationarity of the procedures.

Delta y_t = alpha + eta T + gamma y_ { t-1 } + delta_1 Delta y_ { t-1 } + cdots + delta_p Delta y_ { t-p } + varepsilon_t,

The Augmented Dicker Fuller Test ( ADF ) would be applied because the set of informations is a larger one and a complicated set of clip series theoretical account. The ADF trial will be used to prove the void hypothesis of stationarity and to look into the possibility that a clip series is seasonal and fractionally integrated.

The DF-GLS trial will besides be performed before running the arrested development analysis for both univariate mold and multivariate modeling.

Similarly for the specifications of the ADF trial, we will be utilizing the Bayesian Information standards ( BIC ) , the Akaike Information Criteria ( AIC ) and the Ng-Perron Modified AIC ( MAIC ) , were used to prove the consequences for different slowdown lengths severally.

Multivariate arrested development techniques were applied so as to be able to construct the arrested development curve every bit good as the arrested development expression. The multivariate theoretical account arrested development is a individual parametric quantity appraisal theoretical account that attempts to gauge the arrested development result with more than 2 variables.

Similarly, quadratic equation theoretical accounts were developed so as to smooth the Kuznets curve every bit good to be able to develop prediction processs and this was developed through the usage of matrices. The quadratic equation will be used to happen the turning point of the Kuznets curve and foretell how the GDP and Carbon Dioxide degree may change the hereafter.

After running a series of multivariate arrested development analysis we will so be able to invent a expression that would be aid in foretelling and prediction of the future degree of CO2 at different degrees of GDP prognosiss and for different specific sectors such as the Tourism sector, fiscal services, fabrication, building and others. Hence we will be able to foretell the degree of C emanation for different sectors every bit good as we will be able to calculate at a future degree of C emanations what will the GDP of the state be, that is suppose we want to foretell following a certain degree of C emanations from the Tourism sector we will be able to calculate the degree of GDP for that specific period of clip.

Cointegration arrested developments would besides be applied to analyze the dynamic relationship between GDP per capita and CO2 emanations every bit good as other variables added to the multivariate arrested development theoretical account including rising prices rate and the rate of unemployment in Mauritius. We will execute a figure of trials for cointegration of the different variables to the degree of C emanations of Mauritius.

We will besides calculate through the Auto Regressive Disturbance Lag and we will prove autoregression and multicollinearity, which the stairss are shown in the diagram below ; autoregression and multicollinearity, which the stairss are shown in the diagram below ;

Figure: Stairss in clip series patterning

Analysis and Findingss

Stationarity and Unit Root Analysis of CO2 emanations and Real GDP in Mauritius:

In this subdivision test the clip series belongingss of CO2 emanations and GDP were analyzed to see whether they are driven by some procedure and exhibit unit behavior. We foremost tested the stationarity belongingss of the tendencies and we applied a series of unit root trials.

Unit Root trials:

Augmented Dicker Fuller Test ( ADF )

The first unit root trial that would be applied is ADF ( 1979 ) trial. The ADF trial puts up a parametric rectification for higher-order correlativity by presuming that the series follows an AR ( K ) procedure and adding lagged difference footings of the dependant variable to the right-hand side of the trial arrested development ( Waheed et al. , 2006 ) . The unit root hypothesis ( a = 0 ) can be tested harmonizing to the undermentioned theoretical accounts:

In the above theoretical accounts, the term was used to as to take into history the clip lags to suit for a correlativity.

DF-GLS Trial

Elliot, Rothenberg and Stock ( 1996 ) proposed a simple alteration of the ADF attack to build DF-GLS trial, in which the clip series are de-trended so that explanatory variables are “ taken out ” of the informations prior to running the trial arrested development ( Waheed et al. , 2006 ) . Ng and Perron ( 2001 ) argued that this trial is more powerful.

Assorted hypotheses were used to analyse the information and the chief unit trial that was used was the ADF trial. Since the informations tendencies were non following a stationary procedure, clip slowdowns had to be used so as to smooth the information. The clip slowdowns were determined utilizing both the Akaike Information Criteria ( AIC ) and the Schwarz ‘s Bayesian Information Criteria ( BIC ) . These information standards were used so as to be able to invent clip slowdown belongingss for the day of the month tendencies of CO2 and GDP.

The undermentioned figure illustrates the ADF trial for CO2 ;

Figure: ADF for CO2

Figure 8 shows the ADF trial for CO2 and it can be observed that the clip lad lengths taken were two. The AIC and BIC verified that a clip slowdown of two is adequate to be able to do the informations follow a stationary procedure and hence a clip slowdown of two was the optimum lagged difference as per the two information standard.

The undermentioned figure shows the ADF trial for GDP ;

Figure: ADF for GDP

Figure 9 shows the ADF trial for GDP and it can be observed at clip slowdown two the informations went on to follow a stationary procedure. Again, the lagged differences were obtained following the AIC and BIC approach so as to find the optimum slowdowns.

To increase the efficiency and dependability of the ADF trial, the tantamount trial which is the DF-GLS trial proposed by Elliot et Al. ( 1996 ) was besides applied. Under the DF-GLS trial, clip slowdowns were chosen as per the Ng-Perron modified AIC ( MAIC ) , the Schwarz ‘s Criterion ( SIC ) and the Ng-Perron consecutive T attack.

The undermentioned figure, analyses the DF-GLS trial for Carbon dioxide:

Figure: DF – GLS trial for CO2

Figure 10 shows the DF-GLs trial for CO2 and it can be observed that the maximal clip slowdown devised is same as the ADF trial which is two and the minimal SIC and MAIC is one. The MAIC was used, SIC when slowdowns are set to be minimized and when a tendency term is non included.

The undermentioned figure shows the DF-GLS trial for GDP ;

Figure: DF – GLS trial for GDP

Figure 11 shows the DF-GLS trial, whereby minimal clip slowdown entered here is 1 and the SIC and the MAIC excessively is one. Reapplication of these trials indicates that both the variables now follow a stationary procedure.

Univariate Model Equation:

The undermentioned figure shows the regressed CO2 over GDP so as to be able to pull a arrested development curve and to explicate and equation from it.

Figure: Regressed CO2 over GDP

Figure 12 justified the arrested development equation which is as follows:

The above equation is derived from figure 12 and ( X ) represents the figure to be inserted refering GDP so as to be able to acquire the tantamount sum of CO2.

The undermentioned graph shows the existent relationship of CO2 and GDP matched over a period of 20 old ages runing from 1990 to 2010.

Figure: Graph demoing the relationship of CO2 and GDP

The above figure depicts the motion of GDP in respects to CO2 degree of Mauritius over a period of 20 old ages. The figures in the above graph refering GDP are in Millions of rupees while that of CO2 is in metric dozenss.

From Figure 13, it can be deduced that the more GDP rises, the higher is the degree of CO2 emanations. However it can besides be deduced that in some specific minutes, when GDP has fallen, the degree of CO2 even fell. Hence, it can be observed that there is a positive relationship between the degree of GDP and C emanations. Likewise, it should be noted that this graph is a non smoothed one, and the smoothened 1 has been done through a quadratic equation so as to be able to deduce the Kuznet ‘s curve and the turning point of Mauritius, whereby though GDP is lifting but the degree of C emanations will fall. This is discussed in farther subdivisions.

Multivariate Model Equation ;

Under the Univariate theoretical account merely GDP and CO2 were taken as variables, but there are assorted variables that affect GDP and CO2 amongst which are Inflation and Unemployment. Inflation is an of import variable to take into history as it erodes the value of GDP and makes it look to be a larger value. That is why we have taken rising prices in the multivariate modeling so as to be able to see the effects of rising prices on the existent value of GDP.

Similarly, Unemployment as a variable was besides taken into consideration because unemployment has a direct impact on the degree of GDP. The more the flat unemployment is high the lower is the sum of GDP and the lower the rate of Unemployment, the higher is the degree of GDP.

The figures and informations tendencies for both rising prices and unemployment were tested for stationarity and it was found that after ADF test the informations were stationary and as per the AIC and BIC no clip slowdowns were necessary.

The undermentioned figures show the ADF trial for rising prices tendencies in Mauritius:

Figure: ADF trial for rising prices tendencies in Mauritius

As per figure 14, it can be observed that no clip slowdowns were assigned as following the AIC and BIC attack, it was non necessary to include a clip slowdown and hence with 0 clip lags the information was stationary.

The undermentioned figure shows the ADF trial for Unemployment tendencies in Mauritius:

Figure: ADF trial for Unemployment tendencies in Mauritius

As per figure 15, it can be deduced that once more no clip slowdowns were taken into consideration as per the AIC and BIC standards and there was no demand for informations smoothing processs.

The undermentioned figure shows the multivariate theoretical account, taking into history rising prices and unemployment. Likewise, we have broke GDP into two chief sectors, viz. the fabrication and conveyance sector and the building which are the highest subscribers of CO2 and the other sector is the fiscal services sector, existent estate and others.

Figure: Multivariate arrested development

Figure 16 shows the multivariate arrested development equation which is as follows:

Following this equation, appropriate prediction may be made about the degree of CO2 in the chief sectors of Mauritius.

The undermentioned figure shows the relationship between CO2 emanations matched against the GDP of the Manufacturing, Transport and Construction Sector ;

Figure: Relationship between CO2 emanation and GDP of fabrication

The above figure depicts the relationship that exists between CO2 emanations and the degree of GDP in the Manufacturing, Transport and Construction Sector. It can be found that there is an increasing tendency.

The undermentioned figure depicts the relationship between the degree of CO2 emanations and the degree of GDP in the fiscal services sector, existent estate and others including touristry besides.

Figure: Relationship between the degree of CO2 emanation and degree of GDP in Financial services sector, existent estate and others including touristry

Quadratic Equation and Prediction

To explicate a quadratic equation the GDP and CO2 informations were input in Microsoft Excel and a matrix theoretical account was used.

Therefore the quadric equation was derived to be ;

Y= -0.0000000600872 X2 + 0.027229158 X + 295.8429621

To be able to happen the maximal point, i.e. where is the turning point of the quadratic curve ( where the emanation of Carbon Dioxide has reached its extremum ) the above quadratic equation was differentiated.

= 2 ( -0.0000000600872 ) X + 0.027229158 + 0

At turning can be equated to zero, therefore

If = 0

2 ( -0.0000000600872 ) X + 0.027229158 + 0 = 0

Ten =

Ten =226,580.353

Consequently from this value of X i.e. GDP, the twelvemonth at which the turning point took topographic point can be derived by looking at the original set of informations of Year, GDP and CO2.The twelvemonth at which the turning point took topographic point was between 2007 and 2008.

Furthermore to make a curve foretelling the Carbon Dioxide emanation the equation Y= -0.0000000600872 X2 + 0.027229158 X + 295.8429621 was input in the scheduling linguistic communication package MATLAB. The anticipation was done for boulder clay the value of GDP will make 300,000 1000000s.

Figure: Kuznets graph including forecasted

The above diagram shows the spread secret plan of the Kuznets graph, the Quadratic curve and the anticipation portion of the curve is dotted. In the graph, it can be seen that in the beginning with the addition of GDP there has besides been an addition in the C dioxide emanation of Mauritius. As the economic system of Mauritius has been turning the fabrication industry, conveyance industry, touristry sector and other sectors excessively have underwent growing. With more mills puting up and vehicles on the roads, the C emanation of the state has increased systematically. Combustion of fossil fuels is one of the chief causes of C dioxide emanation and coal, crude oil, and natural gas have been to a great extent used during the last decennaries to bring forth energy. At the same clip, with economic growing and increase in GDP, people have started gaining more and therefore they besides consumed more and there have been a batch of alterations in their life styles. The latter contributed in the addition in C emanation. Degree of instruction and literacy rate has besides been an of import factor because better educated people have a inclination to hold better paid occupation and they have a better life manner and their manner of life alterations.

But at the same clip with an addition in instruction degree has besides helped people in going more environment-friendly and environment witting. The Ministry of Environment and Ministry of Education have during the last few old ages carried out a batch of sensitisation runs to do people cognizant about environment and pollution and its effects. New Acts of the Apostless and assorted policies were introduced and implemented in Mauritius refering the environment and its protection. In Environmental Protection Act 2002 provided a legal model to protect and direction of natural environment and its resources. This act was subsequently on amended in 2008. In 2004 the Dangerous Chemical Act which deals with all unsafe chemical substances was implemented in Mauritius. Furthermore, as from June 2008 the authorities of Mauritius introduced the construct of ‘Maurice Ile Durable ‘ . This construct chiefly relates to constructing a green Mauritius and it includes programs like diminishing pollution by utilizing air current and hydro energy alternatively of firing fossil fuels. The run is besides concentrating a batch on sustainable development, which is about continuing the environment and its natural resources for the coevalss to come while at the same clip carry throughing the demands of the people.

At the same clip due to the fiscal crisis which started in 2007 lead to a recession which affected the Mauritius straight and indirectly through the fabric industry, touristry industry, building industry among others. Thus the fiscal crisis may besides be a ground why the degree of C dioxide emanation has started diminishing as from 2007. Another factor responsible for the lessening in C dioxide emanation can be the fact that from 2006 to 2007 the monetary value of crude oil has increased from $ 50 to $ 140. This may hold lead to a little lessening in the usage of crude oil and accordingly the C dioxide emanation excessively was affected.

Policy Deductions

The EKC hypothesis is a really problematic topic and a batch of considerations have been given about whether or non it is valid and in what fortunes it is applicable. Harmonizing to Richmond and Kaufmann ( 2006 ) , it is believed that the turning point, i.e. where pollution starts to diminish even though there is an addition in GDP, can be helpful in the debut of new environmental policies in states. This is so because the EKC hypothesis indicates that high economic growing and a cleaner environment can be achieved at the same clip. One is non ever at the cost of the other. Furthermore one of the best ways to guarantee the lessening in degree of pollution is to increase the wealth of a state.

On the other manus policies should non merely be derived on the footing of the EKC hypothesis. First is it non decidedly certain that the EKC hypothesis is lasting or non. At the same clip the hypothesis should non be taken for granted. Although pollution is a monetary value states have to pay for economic growing. Sometimes the harm of the environment can be excessively much and the consequences can be ruinous and irreversible.

Comparison of Mauritius EKC to that of UK and USA EKC

EKC of Mauritius

The above figures show the EKC curve of UK, EKC curve of USA and EKC curve of Mauritius severally. It can be clearly seen that all three of them are following the same form and have a similar signifier, i.e. at the start there was an addition of C dioxide emanation with the addition in GDP of the state and so it reached a point where the sum of C dioxide emanation was changeless while the GDP kept increasing and eventually at a certain clip the C dioxide emanation started diminishing although the GDP kept increasing.

Restriction of Study and Recommendation

As all other research work this survey excessively has its restrictions. In the equations formulated there were no mistake rectification theoretical accounts. There were besides other factors which affect the GDP of a state apart from unemployment degree and rising prices. For illustration foreign exchange rate could hold been taken into consideration when explicating the multivariate equation. When there is devaluation in a state ‘s currency its exports go more expensive while its imports become inexpensive. This causes a fluctuation in the GDP of a state. Last but non the least the sustainability and “ Maurice Ile Durable ” construct are something excessively new and recent in Mauritius. It is rather hard to quantify it so rapidly and really say that it has caused a alteration in our environment and the degree of C dioxide and pollution emanation.

Decision

The purpose of this research paper was to look into through empirical analysis the cogency of the Environmental Kuznets Curve Hypothesis which supports the position of the early phases of development, pollution is ineluctable but at a peculiar degree the debasement of environment Begin to fall while the GDP degree continue to lift, this is referred to as the “ turning point ” . The turning point for Mauritius has been reached in the twelvemonth 2007-2008. This paper has analyzed the relationship between income growing and C dioxide emanations and it was clearly held that the highest subscriber of C emanations in Mauritius is the Manufacturing and Transport sector which account for a high per centum of the entire emanations. In this flight, there tends to be a contradiction in policy executions by the authorities whereby monolithic investings are being done in the conveyance field and that no commissariats for ecological transit have been mentioned and in which instance it can be of a disadvantage for the state. Hence, EKC hypothesis should non be taken for granted and farther probe demand to be done particularly in the field of policy executions.

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