Tunneling Through the EKC: Disentangling the Impact of NRCP in India

Abstract

The relationship between income and environmental pollution has been a major area of research. We have estimated the EKC for water pollutants for 16 major states of India for the time period 1990- 2014. We provide evidence on effectiveness of national river conservation plan (NRCP, 1995) in reducing the pollution across major Indian rivers. Evidence suggests that on average NRCP decreased the level of pollution in major rivers. Apart from the average impact, a policy such as NRCP can also change turning points by changing income pollution relationship. We use numerical derivatives to establish the change in turning point due to change in the value of the coefficients associated with higher order income terms (it is not possible analytically) and provide statistical evidence of change in turning point. There are three effects of institutional changes possible in case of EKC, average effect, change in income pollution relationship (change in turning point) or both of them. We explain how the adverse impacts of change in turning point due to change in income pollution relationship (which we find in case of one of the pollutant) can be compensated by large significant negative average effects of institutional changes.

Keywords: Environmental Kuznets curve; Water Pollutants; Turning Points; Institution; Numerical Derivative

JEL Classification: Q58: Q50; Q52