Revisiting the concept of environmental Kuznets curve in period of energy disaster and deteriorating income: Empirical evidence from Japan

Abstract

This study investigates the position of the Japanese environmental Kuznets curve in period of natural disaster and deteriorating income following the recent Fukushima energy crisis. The study aim to establish whether the EKC exist in period of energy disaster and deteriorating income. To ensure this, data from 1961 to 2012 was used while the Zivot-Andrew structural break test, the ARDL bounds test were applied, and these were validated using the innovation accounting test. The finding of the study established the existence of inverted-Ushape, suggesting the presence of EKC despite the deteriorating income of the country. With the discovery of the existence of EKC in this study despite the dwindling productivity and revenue in Japan, this study challenged the EKC hypothesis and all existing studies on EKC, by establishing that natural disasters are in themselves strong causative agents for the EKC tounfold and it is immaterial whether the economic fortunes of a country is increasing ordecreasing. The study further discovered energy consumption to be the major contributor of environmental degradation in Japan, while exports declines CO2 emissions, but imports adds to environmental degradation. On the Growth prospects of the Japanese economy after the crisis, the study discovered how energy consumption, exports, and imports contribute 33.55%, 1.027% and 7.126% to the country's economic growth respectively; in return a minimum of 16.24%, 23.89% and 44.18% of CO2 emissions was discovered. The study proposed policy instruments that will help in realizing a balanced environment amidst efficient energy consumption and environmental management among others.