Could Economic Growth Propel Costa Rica to Lessen its Environmental Debasement? Environmental Kuznets Curve (1990-2021)

Abstract

According to the goals proposed and ratified by the Paris Agreement on 2015 and by the United Nations Conference on Climate Change in 2021, the world should attempt to maintain the global average temperature well below 2° above pre-industrial levels in the long run and to restrain the temperature increase to 1.5°C above pre-industrial levels. One country undertaking bold and charismatic environmental action is Costa Rica. Since the late 1960s, this country has implemented both avant-garde policymaking and practices in the environmental field.As a means of contributing with the analysis and understanding of how to determine this country’s effectiveness and efficiency in its environmental efforts, this research aims to analyze the relationship between Costa Rica’s CO2 emissions per capita with economic growth, expressed via Gross Domestic Product (GDP) per capita (constant 2015 dollars). Thus, the Environmental Kuznets Curve (EKC) hypothesis will be tested to determine if Costa Rica is a good example. Using the database from the World Bank’s (2023) World Development Indicators and from Global Change Data Lab (2023) as a basis of analysis and through the application of quantitative correlational analysis with a type of longitudinal nonexperimental design with time-series data from the year 1990 to the year 2021, it is argued that increases in CO2 emissions per capita are influenced positively with a statistical significance at a 5% error margin by GDP per capita (constant 2015 US dollars), and by energy consumption per capita. Alternatively, CO2 emissions per capita are influenced negatively with statistical significance at 5 % error margin respectively by GDP per capita squared (constant 2015 US dollars) and land use change per capita. However, these results cannot be confirmed with reliability and robustness because of the ambivalence and ambiguity present in the proposed model as a consequence of the likelihood of the presence of multicollinearity among the variables and the lack of normality of the dependent variable.  Despite the initial promising results of a high goodness-of fit test, an acceptable F-statistic, the lack of heteroscedasticity, and an acceptable result showing no autocorrelation presence, the hypothesis of this study cannot be answered affirmatively. Despite these results, there is room for more research to confirm if the EKC hypothesis continues to be applicable in this country. This study could serve as a reference point for decision-makers regionally and internationally to guide their local environmental efforts towards concrete achievements for obtaining a clean planet in the future.