THE ESTIMATION

2.3.2. THE ESTIMATION

The variable represents environment quality is CO2 emissions (metric tons per capita), which are stemming from the burning of fossil fuels and the manufacture of cement. They include carbon dioxide produced during consumption of solid, liquid, and gas fuels and gas flaring (World Bank, 2011).

CO2 emission per capita rate indicates who is being most wasteful. For example, the citizens of Australia, Kuwait and Luxembourg are among the world's worst polluters. The Western countries are leading the way in CO2 emissions. Australia has overtaken the U.S. as the biggest emitter per person of carbon dioxide. The average Australian contributes 20.58 tons of CO2 to the atmosphere each year to cool homes, drive cars and generate electricity with coal. The U.S. fell to second at 19.78 tons per inhabitant a year while Canada was third at 18.81 tons.

The average Chinese person emits 4.5 tons of greenhouse gases a year and a typical Indian 1.16 tons. Because of populations in excess of 1 billion, the aggregate emissions of those two countries makes them the first and fourth-biggest emitters, according to the U.S. Department of Energy, which ranks the U.S. second and Russia third. China and India argue that developed nations such as the U.S., Canada and Australia must cut emissions by 40 percent from 1990 levels in 2020, and that poorer countries need room to raise their greenhouse gases to allow them to develop (Loon and Morales, 2010)

The ranking indicates how much more people in wealthier nations emit than those in large developing countries. That was a key argument used by China and India to push for emissions cuts in the U.S., Europe and Japan as the United Nations aims to write a climate- change treaty in Copenhagen Denmark in 2009. On the other hand, that was disaster meeting in which China managed to block the open negotiations for two weeks, and then ensure that the closed-door deal made it look as if the west had failed the world's poor once again. And sure enough, the aid agencies, civil society movements and environmental groups all took the bait. The failure was "the inevitable result of rich countries refusing adequately and fairly to shoulder their overwhelming responsibility.

Table 2.3 presents the descriptive statistics for variables in Pollution Haven Model.

Table 2.3: Environment Data Description

2.64E+11 Median

1.17E+10

1.69E+10 Maximum

8.82E+08

1.22E+13 Minimum

2.71E+11

-1.85E+09 Std. Dev.

-6.78E+09

1.06E+12 Skewness

8.65E+13 Sum Sq. Dev.

3.82E+12

3.66E+26 Observations

Cross sections

Based on Equation (2.11), estimations are performed. Following the previous section, there are three models are employed: CE model, FE model, and RE model. Among these three models, RE

model seems to be the most efficient since DW test indicates that series correlation doesn’t take place, even though the R2 is the smallest. Those models also have F-statistic for joint model seems to be the most efficient since DW test indicates that series correlation doesn’t take place, even though the R2 is the smallest. Those models also have F-statistic for joint

Table 2.4: Dependent Variable: CO2 emission per capita

CE Model

RE Model

FE model

2619.555 Akaike info criterion

22.86026 Schwarz criterion

24.78422 DW stat

Notes: Numbers in parentheses are t-statistic. *** indicates significance at the 1% level, ** indicates significance at the 5% level.