The Environmental Kuznets curve hypothesis for deforestation in Bangladesh: An ARDL analysis with multiple structural breaks

Abstract

This paper makes a novel attempt to test the validity of the environmental Kuznets curve hypothesis in the context of Bangladesh using deforestation propensities as indicators of environmental adversities and controlling for energy consumption, agricultural land coverage and population growth rate. Using annual frequency data from 1972 to 2018, the short- and long-run elasticity estimates from the autoregressive distributed lag-error correction modeling approach provide statistical support to the nonlinear inverted-U-shaped association between economic growth and deforestation practices in Bangladesh. Thus, the results validate the deforestation-induced environmental Kuznets curve hypothesis in the context of Bangladesh. The elasticity estimates also reveal that energy consumption promotes deforestation activities in the long run but not in the short run. Besides, higher population growth rate and agricultural land expansion are found to account for greater deforestation propensities both in the short and long runs. Furthermore, the vector error correction model and the Hacker and Hatemi-J Granger causality exercises reveal the causal impacts of economic growth on deforestation propensities, both in the short and the long runs. Therefore, the overall results, in a nutshell, indicate a trade-off between economic and environmental welfares during the initial phases of economic growth in Bangladesh which can be anticipated to fade away in the long run. The overall results impose critically important policy implications regarding effective means to reduce deforestation practices in Bangladesh.

Keywords

Deforestation / Environmental Kuznets curve / Economic growth / Energy consumption / Bangladesh

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