Environmental Kuznets Curves for Air Pollutant Emissions in Italy: Evidence from Environmental Accounts (NAMEA) Panel Data

This paper provides new empirical evidence on delinking and Environmental Kuznets Curves (EKC) for greenhouse gases and other air pollutant emissions in Italy. A panel dataset based on the Italian NAMEA (National Accounts Matrix including Environmental Accounts) for 1990-2001 is analysed. The highly disaggregated dataset (29 production branches, 12 years and nine air emissions) provides a large heterogeneity and can help to overcome the shortcomings of the usual approach to EKC based on cross-country data. Both value added and capital stock per employee are used as alternative drivers for analysing sectoral NAMEA emissions. Trade openness at the same sectoral level is also introduced among the covariates. We find mixed evidence supporting the EKC hypothesis. The analysis of NAMEA-based data shows that some of the pollutants such as two greenhouse gases (CO2 and CH4) and CO, produce inverted U-shaped curves with coherent within-range turning points. Other pollutants (SOX, NOX, PM10) show a monotonic or even N-shaped relationship. Macro sectoral disaggregated analysis highlights that the aggregated outcome should hide some heterogeneity across different groups of production branches (industry, manufacturing only and services). Services tend to present an inverted N-shape in most cases. Manufacturing industry shows a mix of inverted U and N-shapes, depending on the emission considered. The same is true for industry (all industries, not only manufacturing): although a turning point has been experienced, N-shapes may lead to increased emissions with respect to very high levels of the economic driver. In general, EKC evidence is more pronounced for greenhouse gases. The results suggest that analysis at macro sector (whole industry, manufacturing only and services) can be the most promising approach to future research on EKC.