Environmental Kuznets Curve Hypothesis: Before and After Sustainable Development Goals

Abstract

The Environmental Kuznets Curve (EKC) hypothesis is an idea that examines the inverse “U” curve relationship between environmental degradation and economic development. This study contributes to analyzing the application of EKC hypothesis in G20 participating countries, as well as the relationship between the variables of gross domestic product (GDP), foreign direct investment (FDI), population, and renewable energy on environmental degradation represented by ecological footprint variables in the same area by comparing the period before and after the implementation of the SDGs. This study uses the panel data regression method for the period 2011-2018, where data is obtained from the World Bank and the Global Footprint Network. The results show that from 2011-2018 the EKC hypothesis formed an inverted U-curve. This study also shows that before the SDGs (2015) the variables of GDP, FDI, population, and renewable energy had an effect on increasing the value of the ecological footprint. Meanwhile, after the implementation of the SDGs program, the variables of GDP, FDI, population, and renewable energy contributed to reducing the value of the ecological footprint, which indicated a decrease in people’s dependence on natural resources. Where the GDP variable has a positive and significant effect and the renewable energy variable has a negative and significant effect. While FDI and population variables have a positive but insignificant effect. Keywords: EF, EKC, FDI, GDP, GDP2, POP, RE, SDGs