Modelling the Environmental Kuznets Curve of Water Pollution Impact on Economic Growth in Developing Country

Halimahton Borhan, Abdul Rahim Ridzuan, Geetha Subramaniam, Suhaida Mohd Amin, Rosfadzimi Mat Saad


This study attempts to examine the water pollution-economic growth relationship by using the environmental Kuznets curve analysis for the situation in Malaysia. This study estimates a simultaneous equation that is related to the level of pollution, the Gross Domestic Product per capita, and other covariates. Water pollution is measured in terms of Biochemical oxygen demand (BOD), Cadmium (CD) and Arsenic (AS). The per capita Gross Domestic Product was measured quarterly for the period 1996 to 2018. The study output supports the Environmental Kuznets Curve (EKC) hypothesis for all measures of water pollutants examined here. The income equation revealed the negative significant impact of pollution, BOD and physical capital’s favorable influence on income. From these expected outcomes it is clear that Malaysia’s relevant policies should aim primarily to overcome the pollution problems but should not neglect economic growth sustainability. This would include the implementation of policies that do not disregard the needs of economic growth and development; execute strategies that will contribute to a decrease in greenhouse gas emissions; improve public awareness on environmental issues in Malaysia; give additional incentives to industries that comply with policy requirements; implement advanced and tertiary pollution control measures to decrease pollution; implementation of financial incentives to encourage invest in appropriate technology especially sewerage systems; and development of a solid monitoring and inventory system to be implemented by the relevant government authorities.

Keywords: Environmental Kuznets Curve, pollution, Gross Domestic Product

JEL Classifications: O11, Q53, Q54, Q56


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