Environmental Kuznets curve for deforestation in Eastern Europe: a panel cointegration analysis

Deforestation, a major cause of climate change, in Eastern European countries has been an activity coupled with agricultural expansion mainly within the time period of political transition. The present study examines the environmental impact of deforestation and its association with agricultural income as synopsized in environmental Kuznets curve. More specifically, carbon emissions generated by deforestation per hectare (COD)-agricultural income relationship as reflected by the net value added (NVA) per capita of the rural population are studied with the assistance of three panel data models, namely the fully modified ordinary least squares (FMOLS), dynamic ordinary least squares (DOLS) and Poold Mean Group autoregressive distributed lag (PMG-ARDL) cointegration technique. The research findings do not validate the environmental Kuznets curve (EKC) in its traditional form, but they verify the inverse N-shaped trajectory (FMOLS, DOLS), or N-shaped trajectory (PMG-ARDL methodology). The results provide policy makers with motivation to focus on agro-economic expansion based on productivity or use of marginal lands and not on land-use change based on deforestation.