The Impact of Environmental Emissions and Aggregate Economic Activity on Industry: Theoretical and Empirical Perspectives

Cover of The Impact of Environmental Emissions and Aggregate Economic Activity on Industry: Theoretical and Empirical Perspectives
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(26 chapters)

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Pages i-xxiii
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Section I: Theoretical Perspectives

Abstract

Production-related industrial zones, super structures and infrastructures are constructed by the construction industry. Nearly all industries and their environmental emissions are influenced by the construction industry including its sub-industries, companies and their supply chains. Furthermore, cities play an important role in economic growth. Cities are hubs for productivity, production, supply and demand, and innovation with the help of their human capital and built environment (e.g. offices, factories, industrial zones, infrastructures, etc.).

Industrial growth fosters urbanisation which is vital for the supply side in the economy to reach to the human resources. Urbanisation which supports industrial growth obstacles industries’ efficiency due to urbanisation problems (e.g. traffic, air and water pollution, health problems).

Construction industry and its sub-industries affect total factor productivity growth in nearly all industries. Construction industry can be a facilitator industry for economic growth and industrial growth considering total factor productivity growth and environment aspects. All industries’ green and sustainable total factor productivity growth can be supported by rethinking construction industry, its sub-industries and their outputs (e.g. construction materials, built environment, cities) as well as construction project management processes.

This chapter aims to introduce carbon capturing smart construction industry model to foster green and sustainable total factor productivity growth of industries. This chapter emphasises current and potential roles of construction industry, its sub-industries and their outputs in fostering other industries’ growth through green and sustainable total factor productivity growth. It focusses on carbon capturing technologies and design at different levels. Furthermore, this chapter emphasises cities’ role in green and sustainable total factor productivity growth. This chapter provides recommendations for construction industry policies and carbon capturing cities/built environment model to solve urbanisation problems and to foster industrial growth and green and sustainable total factor productivity growth. This chapter is expected to be useful to all stakeholders of the construction industry, policy makers, and researchers in the relevant field.

Abstract

The conflict between economic growth and sustainable development is foregone and there is prodigious literature examining the nature and causes of such trade-off. Keeping with this dispensation, the current chapter examines the dynamics of such trade-off in Ramsey–Cass–Koopmans (R–C–K) optimal growth-theoretic lines. The model developed in the chapter departs from the fundamental feature of R–C–K framework in as much as the capital is considered on a broader spectrum having its marginal productivity being increasing in nature and it considers a centralised economy with the planner maximising discounted utility over per capita consumption (private good) and pollution (public bad) over the infinite horizon of time. The study reveals potential trade-off between consumption and environmental emission quiet emphatically for the developed, developing and less developed countries, in both single equilibrium and multiple equilibrium cases. Besides, the study examines the impact of rise in population growth and fuel price on the steady-state equilibrium with respect to per capita capital, relative intensity of energy usage, emission and consumption using comparative static exercise.

Abstract

The political factors of a country have a high influence over the economic development process. Economic development came at a high cost to the environment, from climate change to biodiversity loss when the government’s development policies disdain environmental aspects. People of lower socio-economic countries are disproportionately affected by environmental hazards related to irresponsible economic development which is sometimes disregarded by the political leaders. These politics-induced economic development causes the degradation of environmental quality and damages the ecological structures and processes upon which it depends, which have ultimately raised the question of environmental sustainability of the future generation. With the name of increasing living standards through frenetic economic activity, the world community has been destroying the natural resources and global ecosystems without conserving for the next generations’ well-being. However, using a qualitative approach, the chapter reflects the correlations among the political determinants and the economic development, and examines the issues that impede environmental sustainability. It explores how politics and economic development have driven environmental degradation and accelerated climate change. The chapter minimises the knowledge gaps in politics, development, and environment nexus by providing a comprehensive account of the dynamic interplay between different variables.

Abstract

The present chapter throws light on the famous and very important issue of using eco-friendly, pollution free technology, named as ‘green technology’ or ‘green capital’ by developing economies in the sphere of environmental economics by using general equilibrium framework and tries to examine its impact on different polluting and non-polluting sectors of the economy. The present chapter has done so by using the concepts of ‘regime change’ and ‘endogenised green capital’ – these are the unique features of this work. Here, the authors have come across interesting outcomes by encompassing trade liberalisation in the form of international green capital immobility and international green capital mobility and it leads to an expansion of the sector that utilises it.

Abstract

Carbon emission is one of the most important problems of today. In this framework, it is important for countries to take the necessary actions to solve this problem. Energy use is one of the most important causes of carbon emissions. Choosing fossil fuels in this process increases the carbon emission problem. Therefore, it is understood that countries should be more sensitive about energy types. In this context, renewable energy (RE) sources are recommended by experts. However, due to some problems of these energy types, it does not seem possible to meet all energy needs from these sources. It is thought that nuclear energy will produce a permanent solution to the carbon emission problem. In this context, it is recommended that the use of nuclear energy be put on the agenda by countries.

Abstract

World has started to observe important level of global warming fostered by the industrial growth which resulted in the increase in CO2 emissions and in the environmental pollution (e.g. water and air) affecting total factor productivity growth. Energy is vital for all industries and their growth. Energy generation and energy intensiveness affect carbon emissions. Energy generation relies on water as water is a vital input to the energy generation. Furthermore, water supply is affected by the energy supply and energy dependence. Water is at the core of the industrial growth. It is vital for all productions. Water scarcity problem is becoming more severe due to the climate change. Some regions and countries are more vulnerable to the water scarcity. Middle East countries face significant water scarcity problem. Among these countries Jordan stands out as one of the most vulnerable countries with respect to water scarcity. This chapter emphasises the importance of green and sustainable total factor productivity. Despite of their recent water policies, Jordan started to experience adverse consequences of severe water scarcity problem. The dependence of and relationship between energy and water are vital pillars of economic growth. There is carbon trade-off in their supply. For this reason, conservation capital policies can affect productivity and efficiency. Middle East has scarce water resources and can be affected due to the climate change. Jordan faces most water scarcity among Middle East Countries. This chapter aims to investigate the interaction between industrial growth and climate change as well as their effects to Jordan’s water resources and economy. Furthermore, this chapter emphasises water scarcity problem and water policies in Jordan. This chapter provides recommendations for preventing environmental degradation and mitigating water scarcity problem of Jordan so that its industrial growth can be sustained and its economic growth can become more resilient to the climate change. This chapter is expected to be useful to academics, policy makers, and politics in the relevant field.

Section II: Empirical Perspectives

Abstract

Using the Environmental Kuznets Curve (EKC) hypothesis as a theoretical framework and applying Estimated Generalised Least Square (EGLS) approach, this chapter examines the impact of energy consumption, economic growth, industrialisation and corruption on carbon dioxide emissions as well as finds out the causal relationship among them using panel data of 10 Asian economies over the period 1980–2019. Our empirical findings from EGLS model suggest that there exists an ongoing rising relationship between CO2 emissions and economic growth both in the short-run and long-run which is opposing to what is claimed by the EKC hypothesis. Moreover, per capita CO2 emissions rise positively with respect to increase in energy consumption, urbanisation, gradual industrialisation and growth in urban population in the long-run. Moreover, countries with adoption of more corruptive practices are found to have causing more environmental degradation through excessive emission of carbon dioxide in the long-run. The study also indicates the existence of unidirectional causalities running from carbon dioxide emission to energy consumption, from industrialisation and urban population growth to per capita CO2 emissions, from industrialisation to GDP growth per capita and bidirectional causality between financial development and economic growth via GDP growth per capita. Therefore, these unidirectional causalities entail that CO2 emission reduction or abatement measures can be applied without having any unpleasant effect on the real industrialisation, energy consumption and urbanisation in selected Asian countries.

Abstract

The increasing threat of global warming and climate change has been a major worldwide concern for more than two decades. As the achievement of sustainable economic growth has gradually become a major global concern both policy makers and researchers have given considerable attention over the years on the link among energy consumption, emissions and economic growth. In this study, following a solovian growth structure, the authors assume that the aggregate output depends on the stock of physical as well as human capital and energy or power. Depending on the sources, the energy can be categorised into cleaner input generated from renewable sources and a dirty input extracted from non-renewable resources having by-products like pollution. This study finds that less-developed countries (LDCs) failing to afford sufficient access to clean energy which in turn has deleterious impact on the human capital which cascades into low level of production, low saving and low per capita output forming a vicious loop. On the other side, the developed nations are better poised with access to clean energy and this is what is reflected in having larger reserve of human capital yielding higher production, higher income, higher saving and higher per capita capital stock in a circular process. This hence posits a clinching picturing divergence in per capital output and income between developed and less-developed nation mediated through degree of access to clean energy and thereof, the capacity to control emission. The convergence situation between the developed and the less-developed nations shows that each ends up with the relative energy mix below the threshold and it is not desirous for the world as a whole. In case of per capita emission, the divergence situation with the global level of emission is bit ambiguous.

Abstract

Higher economic output as measured in gross national product (GNP) may not always imply a higher quality of living. It has been the outcome of the long debate between growth and development of a nation. The aims of economic growth should be reconsidered because it has polluted the environment, wasted natural resources, harmed people’s quality of life, and failed to alleviate socioeconomic problems. It is also a common phenomenon to the economies of the South Asian region. The study is thus conducted to show the existence of long-run relationship and short-run interplays between output efficiency of energy use (GEU) and carbon efficiency of energy use (CEU) in the panel of countries in the South Asian region for the period of 1971–2014. The results show that there is a long-run and short-run association between energy efficiency in output and carbon emission as respectively measured in GEU and CEU. This means that in South Asia, energy consumption leads to an increase in both gross domestic product and carbon emissions. When GEU is used as the independent variable in vector error correction model (VECM), the result reveals that any short-run disequilibrium from the long-run stable connection will be adjusted over time, and the long-run stable relationship will be restored.

Abstract

We all understand the everlasting harmful effects of pollution. A larger proportion of this pollution gets generated from industrial units due to use of backward technologies along with intentional or unintentional economic policies that has allowed such industries to grow over the years. Many of these industries are poor, in many cases, they do not have the ability to install abatement technologies or use emission-free green technologies for their huge cost. In many cases, they do not do so intentionally just to enjoy higher profit and due to faulty planning. But, the pollution generated from such industries makes us all suffer, especially those who live in those industrial areas. They are more exposed to the emission directly. Again, growing consensus among people about pollution has increased the consumption of eco-friendly, less-polluting products which could have a wide-ranging impact on the production techniques and can force the producers to change their production techniques, In this chapter, by applying contingent valuation method (CVM), the authors have looked to capture how far people of two very renowned industrial belts in West Bengal, Howrah and Barrackpore, are willing to contribute to the reduction of such emission level by consuming eco-friendly products and paying the emitting producers to force them to adopt pollution-free technology. The authors have applied close-ended dichotomous choice (DC) bidding technique by using logit regression and have also applied open-ended bidding process by using ordinary least square (OLS) method. In both cases, the authors have found the mean willingness to pay (WTP) is quite high which shows that people are very much willing to move towards using eco-friendly goods and technologies.

Abstract

Pharmaceutical industry is one of the sunrise industries in the Indian manufacturing sector. It has flourished in the recent past. This chapter makes a comparative analysis of the productivity growth of Indian pharmaceutical industry using production function approach and adopting two distinct measures of labour input and also explains whether the growth and productivity is eco-friendly or not. Annual Survey of Industries (ASI) data is considered as data base and the time period 1980–1981 to 2016–2017 is considered which is sub-divided into four periods (1980–1981 to 1989–1990; 1990–1991 to 1999–2000; 2000–2001 to 2009–2010; and rest of the period). The pattern of result for both the measures are more or less in the same direction. A remarkable growth in total factor productivity (TFP) is observed after the initiation of new economic policy for both the method used. So far as the environmental issues are concerned, this industry seems to have been polluting the environment, as per unit use of energy is increasing over time.

Abstract

This chapter empirically investigates the dynamic effects of globalisation on carbon emission in developing countries across the globe, experiencing a high-speed engine of globalisation over the last two decades. The allied existing literature discussed this issue mainly from the angles of economic expansions and integration of the global economy. However, some relevant factors like trade, financial, interpersonal and informational issues and cultural and politics should be highlighted in order to explore their possible influences on the high rate of carbon emission in the developing world under the modern epoch of globalisation. In this regard, this chapter utilises the World Bank World Development Indicators (WDI) (2020) and KOF Globalisation Index (2020) databases on selected 75 developing nations over the period of 2001–2018 to employ the dynamic panel econometric methods. The robust difference in generalised method of moments (GMM) estimates implies that trade is more harmful to high levels of carbon emissions in developing economies than all other components of globalisation.

Abstract

Air pollution affects labour productivity and these effects arise in both indoor and outdoor environments and at varying levels of worker skill. They also arise at levels of air pollution generally considered to be within existing air quality standards and guidelines. Although the damage per individual is small when compared to more extreme events, such as mortality and hospitalisations, the effects are more widespread and may thus represent a significant cost to society. Labour is an essential element in every nation’s economy serving as one of the primary factors of production and India not an exception. Investing in human capital is viewed as a key source of sustained increase in labour productivity and economic growth. On the other hand, environmental regulations are typically considered to be a struggle on the economy. However, improved environmental quality may actually enhance productivity by creating a healthier workforce. At the same time, air pollution may affect labour productivity and can reduce the productivity of workers in physically demanding occupations. This chapter may be an attempt to provide comprehensive estimates of the major air pollutants in different states of India and also tries to identify the linkage between air pollution and labour productivity in case of Indian manufacturing sector.

Abstract

While rapid increase in demand for foods but limited availability of croplands has forced to adopt input-intensive farming practices to increase yield, there are serious long-term ecological implications including degradation of biodiversity. It is increasingly recognised that ensuring agricultural sustainability under the changing climatic conditions requires a change in the production system along with necessary policies and institutional arrangements. In this context, this chapter examines if climate-smart agriculture (CSA) can facilitate adaptation and mitigation practices by improving resource utilisation efficiency in India. Such an attempt has special significance as the existing studies have very limited discussions on three main aspects, viz., resource productivity, adaptation practices and mitigation strategies in a comprehensive manner. Based on insights from the existing studies, this chapter points out that CSA can potentially make significant contribution to enhancing resource productivity, adaptation practices, mitigation strategies and food security, especially among the land-constrained farmers who are highly prone to environmental shocks. In this connection, staggered trench irrigation structure has facilitated rainwater harvesting, local irrigation and livelihood generation in West Bengal. However, it is necessary to revisit the existing approaches to promotion of CSA and dissemination of information on the design of local adaptation strategies. This chapter also proposes a change in the food system from climate-sensitive to CSA through integration of technologies, institutions and policies.

Abstract

The economic growth of any country depends largely on the entrance to international capital inflows, that is, external investment and its optimum allotment to components of different economic sectors. In several ways, foreign direct investment (FDI) helps by creating employment opportunities and rapid economic growth in emerging countries through capital flows in the developed countries and under developed countries. Many factors are affecting the FDI inflows in emerging countries among such determinants environmental issues are play a crucial role. Pollution control, air cleaner, water cleanness, etc., are the part of the environmental regulation in any country. Carbon dioxide (CO2) emission and sulphur dioxide (SO2) emission are major components of air pollution that have been widely used in empirical studies. The study intends to explore the impact of environmental regulations on FDI inflows in emerging countries along with governance factors and the macroeconomic fundamentals like per capita power consumption, trade openness, per capita GDP, etc. Based on the statistical data of 15 emerging countries from 2000 to 2015, the study follows the static panel data approach to empirically find the impact of environmental issues on FDI inflows. The results reveal that significant bonding realise between environmental regulations and FDI inflows in emerging countries. Based on the statistical evaluation however best our knowledge FDI is more attractive where lower regulations are established. For sake of simplicity environmental regulations are crucial to the multinational corporations (MNCs) for investment.

Abstract

Sustainable development calls for concerted efforts towards building an inclusive, sustainable and resilient future for people and planet. The approach that considers sustainable development as the fight against poverty, through the promotion of a sustainable and equitable economy, as the attempt to reduce polluting emissions to promote environmental protection and as the satisfaction of social goals to increase the well-being of populations is adopted. Sustainability development is therefore a complex and subjective concept, considering the three dimensions that define the phenomenon: economic, environmental and social.

The authors have chosen subjective variables, which provide information on the perception of the ‘sustainable development’ in the European countries. Data come from the database of ‘Eurofound’, the European Foundation for the Improvement of Living and Working Conditions. The authors applied a formative measurement model, according to which indicators are considered as the cause of the phenomenon analysed, unlike with the reflective model. To conduct the quantitative analysis, the authors have adopted a non-compensatory approach: Mazziotta and Pareto index which summarising a set of individual indicators that are assumed to be not fully substitutable. The authors place at the centre of the analysis, variables deriving from the perceptive state of the different European populations, offering new hints to measure sustainable development on the basis of subjective assumptions.

Abstract

The emission of greenhouse gasses, deforestation, and global warming occurred for unplanned developmental designs in most of the South Asian countries. The present study intends to make a comparative study between Bangladesh and the Maldives regarding the impact of pollution on economic growth. The developmental process of these two countries has been interrogated due to the absence of implementing the plan of sustainable development properly. These two countries have been chosen due to having dissimilarities of demographic structure and different developmental models. The density of the population in Bangladesh is the height of the South Asian countries. An unplanned developmental process, urbanisation, and industrialisation made the country highly polluted. Albeit foreign direct investment (FDI) and industrialisation helped Bangladesh to be promoted from a least developed country to a developing country, yet question raises about sustainable development. The South Asian tinny island state, the Islamic Republic of the Maldives has a tourist-based economic structure facing environmental disaster. The erosion of lands and growing air pollution have collectively made the island country jeopardised. This chapter will delineate the effects of pollution on economic growth both in Bangladesh and the Maldives. It will further shed light on application of environmental governance in Bangladesh and the Maldives.

Abstract

The study estimates total factor productivity growth (TFPG) and its components of the 4-digit manufacturing industries of chemical and chemical products in India from 1998–1999 to 2017–2018, pre-economic crises period (from 1998–1999 to 2007–2008) and post-economic crises period (from 2008–2009 to 2017–2018) using frontier approaches, that is, data envelope analysis DEA and stochastic frontier approach (SFA). The components of TFPG are technological progress (TP), technical efficiency change (TEC) and economic scale change (SC). It is found that the growth rates of total factor productivity (TFP) in most of the 4-digit industries of chemical and chemical products in India increased during the post-economic crises period (from 2008–2009 to 2017–2018) and the increase in TFPG of them during that period is mainly accounted for by the increase in TP of the same during that period. The TEC of almost all the industries remains the same, however, declined during the post-economic crises (from 2008–2009 to 2017–2018) and SC of them remains very low or even negative during the aforementioned study periods.

Abstract

This study aims to explore twin objectives. Initially, the study scrutinises the consequences of various pollution control acts and protocols signed by India to improve the air quality and then the study involves itself to investigate the aftermath of COVID-19 lockdown on the air quality of highly populated Mumbai city of India. The empirical analysis is facilitated by the application of Poirier’s Spline function approach on the secondary data compiled from the Maharashtra Pollution Control Board (MPCB). The corresponding structural shifting points are identified through the CUSUM of squares (CUSUMQ) test. The empirical results disclose that Kyoto Protocol and lockdown have positively influenced the air quality. This study ends with suitable policy prescriptions.

Abstract

The notion of sustainability broadly builds upon the development of the present without hampering the needs of the future generation. Accordingly, the contemporary development programmes, in general, emphasise on minimising the adverse bearings of climate change and arresting the irreversible ecological degradation following the implementation of the growth-oriented economic models. While such idea of sustainable development is expected to be applied across different sectors, the traditional urban development projects such as the Integrated Development of Small and Medium Towns (IDSMT) (1979), the Mega-City Scheme (1993), and the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) (2005) focussed mainly on physical infrastructure with inadequate emphasis on the ecological aspects and sustainability. However, with the experiences of globalisation and the negative impact of changing climate, the recent urban development initiatives across the world have gone through considerable redesigning, and the idea of eco-city, compact city, sustainable city, etc., have taken the central place in the project proposals. In this connection, the Smart City Mission (SCM) (2015) of the Government of India has emerged as an important initiative to facilitate improvement in the standard of living along with economic growth through the development of urban infrastructure and integration with intelligent technologies. This chapter attempts to understand how the projects under the SCM have incorporated various ecological aspects to transform the cities into liveable and sustainable ones for the future generation. Using secondary data and carrying out a comparative analysis of selected smart city proposals, this chapter finds that there is still a lack of adequate emphasis on ecological sustainability in many smart city proposals. This chapter suggests revisiting the smart city proposals, and initiatives should be made towards the development of urban areas in a sustainable way.

Abstract

In this study, the authors have tried to estimate and examine the relationship between energy intensity (EI), capacity utilisation (CU) and total factor productivity (TFP) of Indian Iron and steel industry for the time period 1980–1981 to 2016–2017. The estimation of TFP and its growth is based on three inputs capital (K), labour (L) and energy (E) using transcendental logarithmic cost function. Besides, capital and labour factor inputs, the estimation of CU also take into account the input, energy. It also considers the variable, price of energy and uses a variable cost (VC) function. This study also takes into account the concept of adjusting total factor productivity growth (TFPG) by CU. From our result, this study observes that CU increased over time. Again, Iron and Steel industry has become energy intensive (increasing EI) over the time period taken up for the study. On the other hand, TFPG has declined in the liberalised era. The preliminary idea that we get from our result is that TFPG is negatively related to the extent of pollution generated by energy intensive nature of the Indian Iron and Steel industry, which is in line with reality. To come out of this situation, we may prescribe the use of green technology and green energy sources for this industry.

Abstract

It is recognised that environmental air pollution is one of the global problems and is a common problem for both developing as well as developed countries. In the era of globalisation, it is the most important global environmental issue. In general, urban air quality is becoming vulnerable especially in the developing countries due to adopting various developmental schemes. Air pollution problem in Kolkata, capital city of West Bengal, is under serious for a long day. As per guidelines of World Health Organization, for residential areas, air pollution level in Kolkata is considerably higher than the standard enumerated. There are several types of air pollutants which are continuously exposing the air of Kolkata. West Bengal pollution control board (WBPCB) has been monitoring ambient air quality (AAQ) for the parameters viz. suspected particulate matters (SPM), respiratory particulate matters (RPM), sulphur dioxide (SO2), nitrogen dioxide (NO2) and lead (Pb) in Kolkata throughout the years. Present study has been designed to determine the vertical floor-wise air quality status of the city of Kolkata and the seasonal variation of the pollutants over the consecutive years from 2011 to 2017. It is demonstrated that the air pollution is the highest in the winter due to dry weather, second is festive season followed by winter due to heavy movement of vehicles and pedestrians for festival shoppings as well as pandel hoppings and then next is summer. But coming to the point of rainy season, this is the lowest due to wetted air or wind of monsoon. This chapter attempts to understand the long-run trend of air pollution as the periodical average value suggests.

Abstract

The unorganised manufacturing sector contributes one third share of overall manufacturing employment and one fifth share of gross value added of the manufacturing sector. Despite its important role in large-scale employment generation, this sector is neglected by the researchers as well as by the policy makers as compared to the focus given on the organised manufacturing sector. The issues of energy intensity, environment emissions and growth of unorganised manufacturing enterprises (UMEs) remain unexplored. The present chapter attempts to estimate the CO2 emission and emission intensity (EI) across UMEs on the basis of NSSO Unit Level data of 62nd, 67th and 73rd rounds. It also analyses the growth of UMEs in relation to CO2 emission and EI. The nature of the sector is very much dispersed. Our study reveals that a portion of unorganised enterprises did not use any energy in their production activities and used manually operated instruments like – handlooms, weaving machines, hand-operated oil and rice mills, etc. The main energy inputs of UMEs are electricity and fuel & lubricants. The CO2 emission is relatively less in UMEs compared to organised manufacturing enterprises. Across the unorganised manufacturing industries, the higher CO2 emission are observed in manufacturing of food product industry and other non-metallic mineral industry. The study found that CO2 EI of UMEs depends on firm-level characteristics like perennial nature, establishment type, urban location and expanding growth status. However, capital intensive UMEs are more polluting.

Index

Pages 357-368
Content available
Cover of The Impact of Environmental Emissions and Aggregate Economic Activity on Industry: Theoretical and Empirical Perspectives
DOI
10.1108/9781803825779
Publication date
2023-02-06
Editor
ISBN
978-1-80382-578-6
eISBN
978-1-80382-577-9