Testing the Kuznets Curve hypothesis for Qatar: A comparison between carbon dioxide and ecological footprint

Abstract

This paper explores the validity of the Environmental Kuznets Curve (EKC) using two different environment indicators: the carbon dioxide emissions (CO2) and the ecological footprint (EF) in Qatar over the 1980-2011 period. To this end, we investigate the impact of real gross domestic product (RGDP), the square of RGDP, the energy use, the financial development and the trade openness on the CO2 emissions and the EF. We employ the autoregressive distributed lag (ARDL) model with the presence of unknown structural breaks in order to study short-run and long-run elasticity between the variables. The findings infer that there is a long-run relationship among the selected variables with a shift in the cointegration vector in 1991 and 2000. The empirical result indicates that the inverted U-shaped hypothesis is not valid in Qatar when we use the CO2 emissions, whereas the inverted U-shaped held when using the EF. Furthermore, the error correction results confirm that the convergence towards the long-run equilibrium will mostly occur within one year after a short run shock. Generally, the findings suggest that Qatar should invest more in efficient energy and continue sustained its growth. Moreover, more efforts are needed for diversification particularly in technology-intensive and environment-friendly industries to improve environmental quality. 2016 Elsevier Ltd