Do Productivity Improvements Move Us Along the Environmental Kuznets Curve?

Janine De Fence (), Nick Hanley and Karen Turner
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Janine De Fence: Department of Economics, University of Strathclyde

No 908, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: The Environmental Kuznets Curve (EKC) hypothesis focuses on the argument that rising prosperity will eventually be accompanied by falling pollution levels as a result of one or more of three factors: (1) structural change in the economy; (2) demand for environmental quality increasing at a more-than-proportional rate; (3) technological progress. Here, we focus on the third of these. In particular, energy efficiency is commonly regarded as a key element of climate policy in terms of achieving reductions in economy-wide CO2 emissions over time. However, a growing literature suggests that improvements in energy efficiency will lead to rebound (or backfire) effects that partially (or wholly) offset energy savings from efficiency improvements. Where efficiency improvements are aimed at the production side of the economy, the net impact of increased efficiency in any input to production will depend on the combination and relative strength of substitution, output/competitiveness, composition and income effects that occur in response to changes in effective and actual factor prices, as well as on the structure of the economy in question, including which sectors are targeted with the efficiency improvement. In this paper we consider whether increasing labour productivity will have a more beneficial, or more predictable, impact on CO2/GDP ratios than improvements in energy efficiency. We do this by using CGE models of the Scottish regional and UK national economies to analyse the impacts of a simple 5% exogenous (and costless) increase in energy or labour augmenting technological progress.

Keywords: Scomputable general equilibrium models; technical progress; energy efficiency; labour productivity; environmental kuznets curve (search for similar items in EconPapers)
JEL-codes: D57 D58 Q41 Q43 R15 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2009-01
New Economics Papers: this item is included in nep-agr, nep-eff, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Do Productivity Improvements Move Us Along the Environmental Kuznets Curve? (2009)
Working Paper: Do productivity improvements move us along the environmental Kuznets C urve? (2009)
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