An Analysis of Environmental Kuznets Curve in the Gulf Cooperation Council (GCC) from 1995-2020

Purpose: The main motive of the present study is to investigate the Environmental Kuznets curve hypothesis (EKC) in six Gulf Cooperation Council (GCC) countries from 1995-2020. To attain this aim the time series model is built by utilizing Co2 emission as an environment indicator and GDP per capita, energy consumption and urbanization as economic indicators.

Model Specification / Methodology: Phillips Perron’s (PP) unit root test is applied to check the maximum order of integration among variables. Auto-regressive distributed lag (ARDL) bounds estimation model is applied to test the existence of co-integration among variables.

Findings: The study found that the EKC hypothesis applies to Saudi Arabia, UAE and Qatar after comparing the long run and short-run income elasticities. The results of the Toda–Yamamoto–Dolado–Lütkepohl (TYDL) non-granger causality test showed unidirectional causality between carbon emissions and energy consumption in Kuwait and Qatar. Bidirectional causality is found between economic growth and energy consumption in the UAE while unidirectional causality is from urbanization to energy consumption in Saudi Arabia, Qatar and Bahrain.