Exploring the existence of Kuznets curve in countries' environmental efficiency using DEA window analysis

Abstract

This paper, using data envelopment (DEA) window analysis and generalized method of moments (GMM) estimators, examines the existence of a Kuznets type relationship between countries' environmental efficiency and national income. Specifically, it measures the environmental efficiency of 17 OECD countries by constructing environmental efficiency ratios for the time period 1980-2002. The analysis with the application of dynamic panel data reveals that there isn't a Kuznets type relationship between environmental efficiency and income. Allowing for dynamic effects we find that the adjustment to the target ratio is instantaneous. We also find that increased economic activity does not always ensure environmental protection and thus the path of growth is important in addition to the growth itself.Environmental efficiency ratios DEA window analysis EKC Panel data