Agriculture-induced environmental Kuznets curve: the case of China

Abstract

This study investigates the long-run equilibrium relationship among carbon dioxide (CO2) emissions, real income, energy consumption, and agriculture, thus testing the existence of the agriculture-induced environmental Kuznets curve (EKC) hypothesis in the case of China for the period of 1971-2014. The level relationship among the variables in the conducted model is confirmed by the bounds test approach under the autoregressive distributed lag (ARDL) mechanism. Error correction model under the ARDL mechanism suggests that short-run values of CO2 emissions converge to its long-run equilibrium level by 73.8% speed of adjustment every year by the contribution of energy consumption, real income, and agriculture. ARDL estimation results suggest that real income and energy consumption have a positive, elastic impact; agricultural development has positive, inelastic impact on CO2 emissions where squared real income has a negative and inelastic impact on air pollution. Conditional Granger causality test results reveal that there are unidirectional causalities running from real income, squared real income, energy consumption, and agricultural development in long run as well as in the short run.