“energy, polluting emissions, and economic development in tunisia,” by rania ben hamida, amina...

7/30/2019 Energy, Polluting Emissions, and Economic Development in Tunisia, by Rania Ben Hamida, Amina Feki, and Sa

1/15

THE JOURNAL OF ENERGY

AND DEVELOPMENT

Rania Ben Hamida, Amina Feki,

and Sami Hammami,

Energy, Polluting Emissions, and

Economic Development in Tunisia,

Volume 37, Number 1

Copyright 2012


2/15


3/15

these lines is Tunisia, which is one of the high-growth economies in the Middle

East and North African area yet lacks sufficient energy supply to satisfy its

growing demand. Tunisia looks like many nations around the world with a young

population, growing economy, increasing domestic energy consumption, and the

need to balance economic development with environmental concerns. In recentyears, Tunisia has begun to pay greater attention to environment-related issues, in

part as a result of its insertion into the world economy that has compelled the

nation to strive toward meeting certain environmental norms. Thus, for this study

we will be looking at the issues surrounding energy consumption, polluting

emissions, and economic development as they relate to the case of Tunisia.

Literature Review

The study of the relationship between the level of development of a country and

the quality of its environment has witnessed evolution over time and largely has

been debated by economists. A disagreement has emerged between these econ-

omists whose ideas can be split into two different camps: strong durability and

weak durability.

Weak durability is adopted by the neo-classicists who believe that it is possible

to substitute natural capital with artificial capital, which, in turn, legitimizes the

exploitationand even the exhaustionof natural resources. These neo-classicistshave reacted to the Club of Rome declarations, which stipulated that, if current

growth rates and the degradation of the environment are kept unchanged, the global

natural resource base will be exhausted and future growth will be hindered. The neo-

classicists agree, here, with the classicists about the unavoidable stationary state that

makes any economic growth impossible or unsustainable in the long run, and they

have asserted that economic growth is the best solution for all the countries all over

the world. These ideas motivated many economists to analyze the Environmental

Kuznets Curve (ECK), which is inspired by the inversed-U-shaped curve existing

between the level of economic development of a country and the level of equitabledistribution of wealth. When applied in the environmental arena, this hypothesis

shows that a developing country creates the conditions leading to a deterioration in

environmental quality, which stabilizes only when a minimum level of development

has been reached.

Some economists have defended the EKC hypothesis. Among them is W.

Beckerman, who affirmed that economic growth usually leads to the deterioration

of the environment in the beginning of the process and, at its end, the only and best

way to have an improved environment in most countries is for them to become

wealthier.2

G. Grossman and A. Krueger have demonstrated that for the majorityof the environmental indicators studied, economic growth brings about an initial

phase of deterioration followed by a phase of amelioration.3 The frequency of

THE JOURNAL OF ENERGY AND DEVELOPMENT116


4/15

polluting emissions increases before a country reaches the per-capita income

threshold of U.S. $8,000.

S. Bimonte has concluded that economic growth is a necessary condition to

approach environmental matters, yet there exists other variables, such as the

distribution of income, education, and the accessibility to information, which canplay a fundamental role in determining the quality of the environment.4 Bimonte

has not focused on calculating the level of income that corresponds to the tran-

sition point; rather, he has focused on determining the quality of the environment

that corresponds to this transition point, i.e., the minimum level of environmental

quality that a country is ready to accept.

D. Stern and M. Common have found that the per-capita sulfur emissions

follow a monotone function of per-capita income when they use a global sample

and a function of inversed income if they adopt a sample from countries with

higher income levels.5

M. McPherson and L. Nieswiadomy have evaluated the EKC for the threatened

birds and mammal species from 113 countries for the year 2000.6 The results show

the possibility of an EKC for the species that were studied and those that were

threatenedmainly on islands and where the freedom of movement of these

animals was limited. The birds also were threatened in places witnessing political

upheavals, while mammals were found to face greater threats in certain Muslim

and communist countries.

T. Selden and D. Song have examined the EKC-type relationship for fourimportant air pollutants: suspended particles, sulfur dioxide (SO2), nitrogen oxides

(NOx), and carbon monoxide (CO).7 They have found that the per-capita emissions

for the different pollutants draw an inversed-U-type curve with the gross domestic

product (GDP). They have suggested that the frequency of the polluting emissions

will decline in the long run but will follow the same upward tendency for the first

few decades.

Other economists have criticized the EKC hypothesis, among them is D. Stern,

who has asserted that there are statistical and econometric insufficiencies in many

empirical works and that, if more accurate data and more appropriate econometrictechniques were used, the curve would not be proved.8

D. Stern and M. Common have criticized the idea that sulfur dioxide would be

one of the pollutants that show an EKC with a peak corresponding to the income

level of developing nations.9 They have concluded that the composition of the

panel has a determining impact on the validity of the EKC and thatif the de-

veloping countries are better taken into considerationthe existence of an EKC

will be challenged.

S. de Bruyn et al. have tried to verify the EKC for four post-industrial nations.

They detected a monotone increasing relationship for only one country; therefore,they have denied the existence of an EKC even in the cases of high-income

countries.10

TUNISIA: ENERGY, EMISSIONS, & DEVELOPMENT 117


5/15

The second school of thought on the issue follows the strong durability ap-

proach, which perceives the environment as a basis for any human activity or,

rather, as a limited natural capital consisting of a set of resources at the be-

ginning of the production cycle and, at its end, it consists of receptive surround-

ings. Thus, supporters of strong durability believe that the hypothesis of weakdurability, which envisions the environment as a luxury reserved for rich

countries, has been disproven. Hence, the strong durability approach has re-

versed the traditional positions of the environment and development factors: the

exogenous variable is now the capacity of the environment to produce resources

and to absorb waste materials, while the endogenous variable has become the level

of development.

In the mid-1990s, M. Wackernagle and W. Rees developed a composite in-

dicator, called the ecological imprint, capable of combining the impacts of the

use of resources and pollution on society.11 These authors think that the economy

is a kind of industrial metabolism that needs to eat resources and this con-

sumption becomes waste, which will ultimately be eliminated. The measurement

unit used in this study is the surface of the biologically productive land, which will

be divided by the number of inhabitants (hectare/inhabitant).

We can assert that the main quality of the ecological imprint is that it allows for

the comparison between different countries and for the ability to systematically

attribute the ecological impact to the consumer and not to the producer. On the

basis of the criticism directed toward using GDP as the sole variable to express thedevelopment level of nations, in the 1990s the United Nations Development

Program suggested a new conceptthe human development index (HDI). The

HDI focuses on three universal dimensions: (1) the capacity of enjoying a long and

healthy life, (2) the right to education and to acquire knowledge, and, last but not

least, (3) access to material resources that are necessary to reach a decent standard

of living. These three components are expressed in terms of GDP. It is obvious that

during the last 15 years, the ecological imprint and the HDI have succeeded in

attracting an ever-increasing audience.

Empirical Validation

The Energy and Environmental Situation in Tunisia: Tunisia is a country

with limited natural resources confronted not only with continually increasing

domestic energy demand but also with geopolitical and geo-economic upheavals

that this sector has experienced. The energy sector is strategic and indispensable to

Tunisian socioeconomic development, where the energy balance has started to

show a deficit after having maintained a surplus for a period of four decades.Figure 1 shows the trend of Tunisian demand outstripping resource supply.

According to predictions, Tunisias energy needs will continue to increase at



6/15

a steady pace, which can be partially explained by the improvement in citizens

standard of living, whereas the national production is decreasing, which means

that any durable development in Tunisia should rely, in the years to come, on new

growth sources.

Figure 2 provides an overview of Tunisias greenhouse gas emissions bysource; it highlights that the energy sector is the largest, man-made contributor to

greenhouse gas emissions. As a developing country, Tunisia is not committed to

a reduction of greenhouse gas emissions as stipulated by the Kyoto Protocol, but it

is alarming to see that the level of per-capita carbon dioxide emissions has in-

creased dramatically over time.12

Model, Data, and Methodology

Model and Data: For most countries in the worldas is the case for Tunisia

energy consumption is the main source of polluting emissions and, according to

Figure 1NATIONAL RESOURCES AND DOMESTIC DEMAND FOR PRIMARY

ENERGY IN TUNISIA, 19902010

(quantity in thousand tons of oil equivalentKtoe)

Source: Compiled by the authors based on data from Tunisia, National Agency for Energy

Conservation (ANME), The National Agency for Energy Conservation Report, 3rd edition (Tunis,

Tunisia: ANME, June 2011).



7/15

the EKC hypothesis, there is a non-linear, quadratic relationship between the level

of development of a nation and these polluting emissions. Hence, the study of

the long-term relationship among carbon dioxide (CO2) emissions, energy con-

sumption, and the per-capita income can be formulated as follows:

Ct b0 b1GDPt b2GDP2t b3Et 1

where Ct represents per-capita carbon dioxide emissions (measured in metric tons

per inhabitant); GDPt is the gross domestic product per inhabitant (expressed in

constant prices, in U.S. dollars, on the year 2000 basis); GDPt2, is the square of the

GDPt; and Et is the per-capita global energy consumption (measured in the

number of kilograms of oil equivalent per inhabitant). The data were collected

from the Climate Analysis Indicator Tool and the World Banks World De-velopment Indicators for the period from 1974 to 2005. The parameters b1, b2, and

b3, are Cts long-term elasticity with respect to GDPt, GDPt2, andEt, respectively.

Figure 2SOURCES OF GREENHOUSE GAS EMISSIONS IN TUNISIA, 19902009

(quantity in kilo tons of carbon dioxide equivalent)

Source: Compiled by the authors based on data from Tunisia, National Agency for Energy

Conservation (ANME), The National Agency for Energy Conservation Report, 3rd edition (Tunis,

Tunisia: ANME, June 2011).



8/15

According to the EKC hypothesis, the b1 sign is expected to be a positive

one, showing that the economic growth is accompanied by an intensification of

pollution, whereas the b2 sign is supposed to be negative, reflecting the existence

of a turning point at which time the polluting emissions start to decline. The third sign,

b3, is expected to be positive, showing that Et andCt are following the same trends.Figures 3, 4, and 5 show that LCt and LEt evolve according to the same tra-

jectory and that the three series have a general upward trend.13 Therefore, we can

say that there is not a non-linear, quadratic relationship but rather a monotone

increasing relationship among the three series; empirical validation will either

confirm or disprove this hypothesis.

Econometric Methodology

The objective of the empirical estimation, first, is to check for the existence of

a long-term relationship between the growth level in Tunisia as reflected by the

GDPt, Et, and the quality of the environment represented by Ct. Our second aim is to

verify whether the Tunisian case confirms the EKC hypothesis; thus, we in-

corporated the variable GDPt2 in order to detect the existence of a quadratic, non-

linear relationship and to determine the per-capita threshold income. This empirical

estimation requires three steps. We start by testing the order of integration of the

series by using two unit-root tests, namely, the augmented Dickey-Fuller test (ADF)

Figure 3EVOLUTION OF THE LOGARITHM OF PER-CAPITA CARBON DIOXIDE EMISSIONS

(LCt), 19752005

Source: Authors calculations based on data from the World Development Indicators (Wash-

ington, D.C.: World Bank, 2008).



9/15

and the Phillips-Perron test (PP), both of which have the same null hypothesis. The

series are tested by level and, when a unit-root is found, we test the first difference.The second step consists of applying Johansens cointegration test in order to

check for the existence of any cointegration relationships and, if any relationship is

found, the number of cointegration vectors has to be detected with reference to the

trace test as well as to the maximum Eigen value test. If at least one cointegration

relationship exists, then a long-term relationship is said to be present; otherwise,

we would only focus on the short-term effects.

The third step involves the estimation of the error-correction model according

to Engle and Grangers approach. We have chosen this approach due to the fact

that the study sample is quite restricted and, thus, it can bias the multivariate

approach to cointegration. Moreover, the series supposedly are stationary in the

first difference. The third step involves a two-part approach; the first is the esti-

mation of the following long-term relationship:

LCt a0 a1 LGDPt a2 LGDP2t

a3 LEt zt 2

where zt is the error term. Our objective is to check whether it is stationary or not.

In the second part of this process, we estimate the error-correction model:

DLCt izt1 a0 biP

iDLCt @P

iDLGDPt uP

iDLGDP2tW

PiDLEt t 3

Figure 4EVOLUTION OF THE LOGARITHM OF PER-CAPITA ENERGY CONSUMPTION

(LEt), 19752005





10/15

where t;

BB and^

zt1 is the estimated residual of the long-time relationshiplagged by one period.

After having estimated the error-correction model, we check for the existence

of an EKC-type relationship for the Tunisian case. First, we start with a descriptive

analysis of the GDPt and the Ct average growth rates in order to look for evidence

of an EKCs existence in Tunisia. Next, we determine the per-capita threshold

income that corresponds to the point at which economic growth brings about an

improvement in the quality of the environment. This is done by taking the primary

derivative with respect to the GDPt.

Empirical Results

The two unit-root testsADF and PPresults show that the four series are

stationary in the first difference (table 1). The Johansens cointegration test in-

dicates the existence of a cointegration relationship at the 5-percent level (table 2).

The long-term relationship is defined by equation (4), and the zt is stationary in

level by equation (5).

LCt 20:417 LGDPt 1:321 LGDP2t

1:066 LEt 4

zt LCt 72:72 17:87 LGDPt 1:17 LGDP2t

0:87 LEt 5

Figure 5EVOLUTION OF THE LOGARITHM OF GROSS DOMESTIC PRODUCT PER INHABITANT

(LGDPt), 19752005





11/15

Figure 6 shows that zt is stationary in level; however, we have to double check

this outcome by running ADF and PP tests. Our results found that the ADF level

was 4.53 at the 1-percent level of significance; while the PP level was 4.59 at the

1-percent level of significance. The residual is stationary in level, which confirms

the existence of a long-run relationship; thus, the first hypothesis of our empirical

estimation has been validated.

The estimation of the error correction model is written in equation (6):

dLCt 0:46z t1 0:16

0:29dLC t2 0:51dLC t3

dLC t4 22:44dLGDP t2 26:36dLGDP t3 1:53dLGDP2t2 1:78

dLGDP2t3 0:17dLE t3 0:14dLE t4 6

where ** denotes significance at the 5-percent level, and *** denotes significance

at the 1-percent level.

The relationship between the Ct emissions and the GDPt is positive and sig-

nificant, which indicates that the increase in the growth rate of the country is

accompanied by the intensification of polluting emissions. This leads us to con-

clude that we are witnessing a case of inefficient use of energy in Tunisia. The

Table 1RESULTS OF THE UNIT ROOT TESTS

Variables

Augmented Dickey-Fuller (ADF) Test Phillips-Perron (PP) Test

Level First Difference Level First Difference

LCt 2.47a

(2.96) 2.44a

(1.95) 2.15a

(2.96) 4.93a

(2.96)

LEt 3.49a

(3.57) 3.56a

(2.97) 2.98a

(3.56) 7.30a

(2.96)

LGDPt 3.93a

(1.95) 3.84a

(2.96) 5.89a

(1.95) 5.58a

(2.96)

LGDPt2

1.30a

(2.96) 8.35a

(2.96) 1.35a

(2.96) 8.06a

(2.96)

a

Significance at the 5-percent level

Table 2RESULTS OF JOHANSENS COINTEGRATION TESTS

Trace Test Eigen Value Test

Number of

Cointegrations

Trace

Statistics

Critical

Values

Number of

Cointegrations

lmax

Statistics

Critical

Values

r 0 132.72 55.24 r = 0 90.37 30.81

r 1 42.35 35.01 r = 1 24.25 22.29



12/15

relationship between the Ct and Et emissions is positive but not significant. This

can be explained by the fact that the carbon dioxide emissions are not only sourced

from final energy consumption, which represents the secondary quantity of energyminus the leaks during transport, and the quantities lost by the machines during the

final transformation phase. In addition, we encounter another kind of loss referred

to as fatal losses linked to the thermodynamic principles and to the losses that

can be compensated for by increasing the energy efficiency of the machines used,

which, in turn, releases carbon dioxide.14 In 2002, the Tunisian energy sector,

specifically power generation, was the primary source of emissions with 26 per-

cent, followed by the transportation sector with 24 percent, manufacturing in-

dustries with 20 percent, fugitive emissions accounted for 14 percent, 5 percent

was from the agricultural sector, and 3 percent was tertiary.15

Hence, the final per-capita consumption of energy is not sufficient to rigorously account for the carbon

dioxide emissions.

The relationship between the Ct and the GDPt2 is negative and significant,

which implies that, in the long run, the economic growth and the polluting

emissions will go in opposite directions; this confirms the EKC hypothesis that we

now are going to examine. We start by a descriptive analysis of a study period and

a sub-period.

Table 3 provides the breakdown of per-capita carbon dioxide emissions growth

rates for the sub-periods, while table 4 provides the average growth rate of theTunisian GDP for these same sub-periods. We have divided the study period into

sub-periods of around five years in order to better analyze the Ctvariations. For the

Figure 6THE STATIONARITY OF Zt, 19752005



13/15

Ct emissions, the yearly increase rate is 3.18 percent, while the GDPt variation is

2.68 percent per year on average.

With reference to these two tables, we cana priorivalidate the existence of

an EKC in the Tunisian case. We see that the emission growth rate ofCt was quite

high between 1974 and 1980, which varies in parallel with the growth of the GDPt.

Then this rate varies in an irregular way over subsequent periods until we witness

a significant decline during the 20012005 sub-period. As for the GDPt growth

rate, the figures in table 4 show that it exhibits a constant upward trend.

When it comes to calculating the threshold income, we determine the de-

rivative of the long-term equation with respect to the GDPt:

LCt 20:417 LGDPt 1:321 LFDP2

t

1:066 LEt 7

The thresholdGDP dLCt=dGDPt e20:417= 21:31 8

Thus, based upon the calculations, the thresholdGDPt* = $2,422.96 per inhabitant

(in 2006 the GDPt was $2,513). Because the data for the Ct variable are not available,

for our analysis we can use the estimated variables for the years that follow according

to the average yearly growth rate, which showscontrary to the hypothesisthat the

polluting emissions have a tendency to increase in the near term.

That is why we cannot confirm that the year 2006 can be considered as the turning-point at which time economic growth had begun to bring about an amelioration in the

Table 3PER-CAPITA CARBON DIOXIDE EMISSIONS (Ct) GROWTH RATES IN TUNISIA,

1974 2005

Sub-periods The Ct Average Growth Rate

1974 1980 7.18%

1981 1990 2.14%

1991 2000 3.01%

2001 2005 0.62%

Table 4GROSS DOMESTIC PRODUCT (GDPt) GROWTH RATES PER INHABITANT IN TUNISIA,

1974 2005

Sub-periods The GDPt Average Growth Rate

1974 1980 3.85%

1981 1990 1.53%1991 2000 3.09%

2001 2005 3.48%



14/15

quality of the environment. Thus, we can conclude that Tunisias economic trends

and the overall quality of its environment do not support the EKC hypothesis. Our

results confirm those of previous works assessing the validity of the EKC hy-

pothesis for Tunisia. As for other countries around the world, the EKC has been

verified for certain pollutants, but not for carbon dioxide.For example, we mention M. Fodha and O. Zaghdoud, who studied the relation-

ship between economic growth and two types of pollutantsCO2 and SO2.16 They

demonstrated an increasing, monotone relationship between GDP and CO2 emissions,

and that the EKC-type relationship only is validated for the SO2 emissions.

A. Bsais, in a study of the Kuznets environmental curve and an ecological

evaluation of Tunisia, confirmed that CO2 emissions increase with income due, in

particular, to intensive energy usage, which is primarily from fossil-fuel-based

energy sources.17 As a result, the curvestarting from the reversal threshold

increases again instead of decreasing, and this threshold seems as if it were a point

of inflexion with the mathematical significance of the term.

Conclusion

The empirical results confirm that there is no EKC relationship between eco-

nomic growth and carbon dioxide emissions in Tunisia, but rather an ever-

increasing monotone relationship where the polluting emissions accompany the

economic growth of the country and reflect an inefficient use of energy. As a re-

sult, it is recommended that Tunisia take into consideration the consequences

of the degradation of environmental quality and more actively promote energy

conservation policies and investments in energy efficiency (as of 2010, renewable

energy represented less than 0.5 percent of the total primary energy consumption

in Tunisia.)18 In conclusion, it is important to take into account that our results

depend on the variables that we have chosen for this particular model as well as the

study period. Other variables could be incorporated into future modeling over

a well-defined period of time to further the research on this subject.

NOTES

1World Wildlife Federation (WWF), Living Planet Report 2008 (Gland, Switzerland: WWF,

2008).

2W. Beckerman, Economic Growth and the Environment: Whose Growth? Whose Environ-

ment? World Development, vol. 20, no. 4 (1992), pp. 48196.

3G. Grossman and A. Krueger, Economic Growth and the Environment, The Quarterly

Journal of Economics, vol. 110, no. 2 (1995), pp. 35377.

4S. Bimonte, Information Access, Income Distribution, and the Environmental Kuznets

Curve, Ecological Economics, vol. 41, no. 1 (2002), pp. 14556.



15/15

5D. Stern and M. Common, Is There an Environmental Kuznets Curve for Sulfur? Journal of

Environmental Economics and Management, vol. 41, no. 2 (2001), pp. 16278.

6M. McPherson and M. Nieswiadomy, Environmental Kuznets Curve: Threatened Species and

Spatial Effects, Ecological Economics, vol. 55, no. 3 (2005), pp. 395407.

7T. Selden and D. Song, Environmental Quality and Development: Is There a Kuznets Curve

for Air Pollution Emissions? Journal of Environmental Economics and Management, vol. 27, no.

2 (1994), pp. 14762.

8D. I. Stern, The Rise and Fall of the Environmental Kuznets Curve, World Development, vol.

32, no. 8 (2004), pp. 1419439.

9D. Stern and M. Commons, op. cit.

10S. M. de Bruyn, J. C. van den Bergh, and J. B. Opschoor, Economic Growth and Emissions:

Reconsidering the Empirical Basis of the Environmental Kuznets Curve, Ecological Economics,vol. 25, no. 2 (1998), pp. 16175.

11M. Wackernagle and W. Rees, Notre empreinte ecologique, Ecosocie te (1990), p. 207.

12The Kyoto Protocol requires a total reduction in greenhouse gases of at least 5 percent with

respect to their 1990 levels during the commitment period ranging between 2008 and 2012.

13LEt and LCt are the per-capita energy consumption logarithm and the per-capital carbon di-

oxide emissions logarithm, respectively.

14

Jean-Marie Chevalier, Les 100 mots de le nergie (Paris: Presses Universitaires de la France,Que sais-je series, 2008), available at http://www.puf.com/Que_sais-je:Les_100_mots_

de_l%27%C3%A9nergie.

15Nejib Osman, Developpement propre: autre source de financement de la maitrise de

lenergie, Revue Tunisienne de le nergie, vol. 65 (2005), pp. 727.

16M. Fodha and O. Zaghdoud, Economic Growth and Environmental Degradation in Tunisia:

An Empirical Analysis of the Environmental Kuznets Curve, Energy Policy, vol. 38, no. 2 (2010),

pp. 1150156.

17

A. Bsais, Courbe Environnementale de Kuznets et appreciation ecologique: le cas de laTunisie, Les Objectifs du Millenaire pour le Developpement et les pays du Maghreb, Centre de

Publication Universitaire (2009), pp. 24974.

18Tunisia, National Agency for Energy Conservation (ANME), The National Agency for Energy

Conservation Report, 3rd edition (Tunis, Tunisia: ANME, June 2011).

http://-/?-http://-/?-http://-/?-http://-/?-

“energy, polluting emissions, and economic development in tunisia,” by rania ben hamida, amina...

Documents