Economic Growth and Air Quality in Italy: Testing the Environmental Kuznets Curve Hypothesis

The relationship between environmental degradation and economic growth represents a crucial matter in economic literature. Although economic growth was initially seen as the main cause of environmental degradation, the recent empirical literature has partially mitigated this pessimistic view. Several studies, in fact, have found evidence of an inverted-U shaped relationship - defined as “Environmental Kuznets Curve” (EKC) - between the level of economic activity and the environmental pressure. This work tests the EKC hypothesis for three air pollutants (CO2, SOx and NOx) in Italy using a novel dataset based on Provincial emissions levels. Empirical investigation, conducted through both a panel-data and a cross-section approach, suggests the existence of an EKC for these three pollutants, with an estimated turning point level of income increased over time. More precisely, data confirm the EKC hypothesis for CO2 and NOx emissions in the Centre-Northern Italian Provinces and for SOx emissions in the Southern ones. The different kind of pollutants taken under analysis and, above all, the different level of economic development between the Provinces of North and those of South may explain the results obtained. CO2 and NOx emission abatement costs, in fact, are higher than SOx ones: this could have led to the total absence of an EKC for these two pollutants in the less-advanced Provinces of South.