Three Essays on Democracy, Economic Development and the Environment

Abstract

The effect of democratic development on the state of the environment is a complex question to which some inconclusive and still unsettled answers have been provided in the literature. This thesis formulates three research questions leading to three individual papers with the overall objective of examining the effects of political and economic development on environmental quality. More specifically, this thesis empirically tests the ‘political’ Environmental Kuznets Curve (EKC) hypothesis as well as the conventional economic EKC through two cross-country studies, and a case study conducted in Indonesia, an emerging democratic country. The first research question is: Does the relationship between the intensity of emissions/concentration of several air and water pollutants and the level of democracy in a jurisdiction take an EKC inverted-U shape? This study finds strong empirical evidence for political-EKC hypothesis for three pollutants: CO2 and BOD emission and ODS consumptions. The second research question is formulated as: “What are the effects of income and democratic development on water withdrawal?” This study provides new empirical evidence that, rather than increase in income, improved democracy may play a more significant role in reducing water withdrawal. The third research question is: “What is the effect of income on environmental quality and on environmental-economic efficiency in an emerging democratic country?” The results highlight that the provinces in the Western Region of Indonesia are much more efficient in terms of environmental-economic efficiency than the provinces in the Eastern Region. Moreover, there is no strong evidence that income helps improving the environmental quality in Indonesia. Additionally, this study finds that population density may reduce the environmental quality, while human development potentially helps improving the environment