Testing the Environmental Kuznets Curve Hypothesis in Portugal

Abstract

This paper provides empirical evidence of an environmental Kuznets curve (EKC) hypothesis for Portugal by applying autoregressive distributed lag bounds testing approach from 1971 to 2008. In order to capture Portugal's historical experience, demographic changes and international trade on carbon emissions, we augment the traditional income-emissions model with variables such as energy consumption, urbanization, and trade openness in time series framework. Empirical results confirm the evidence of EKC hypothesis in both the short-run and long-run. All variables carry the expected signs except trade openness. Despite the success of Portugal in containing CO2 emissions so far, it is important to note that in recent years, carbon emissions have risen. In order to comply with the 1992 Kyoto Protocol on CO2 emissions, there is need for policies that focus on the sectors responsible for CO2 emissions.Keywords: Carbon dioxide emissions; Energy consumption; Environmental Kuznets CurveJEL Classifications: C32 ; O52 ; Q43 ; Q5