Environmental Kuznets curve (EKC): Times series evidence from Portugal

Abstract

The paper provides empirical evidence of an EKC – a relationship between income and environmental degradation for Portugal by applying autoregressive distributed lag (ARDL) to times series data. In order to capture Portugal’s historical experience, demographic changes, and international trade on CO2 emissions, we assess the traditional income-emissions model with variables such as energy consumption, urbanization, and trade openness in time series framework. There is evidence of an EKC in both the short and long-run approaches. All variables carry the expected sign except trade openness which has the wrong sign and is statistically insignificant in both the short-run and long-run. Despite the success of Portugal in containing CO2 emissions so far, it is important to note that in recent years, emissions have risen. In order to comply with the 1992 Kyoto Protocol on CO2 emissions, there is need for policies that focus on the top five sectors responsible for about 55 percent of CO2 emissions are due to the extraction of crude petroleum, manufacturing of refined products, electricity distribution, construction, land transport and transport via pipeline services.Cointegration; Causality; Environmental Kuznets Curve