AIR POLLUTION AND INCOME RELATIONSHIP IN TURKISH PROVINCES: A SPATIAL APPROACH

This paper investigates the existence of the Environmental Kuznets Curve (EKC) for Turkey by considering pollution spillovers among the provinces by using annual data covering the period 1990-2001. Spatial econometrics techniques are employed to account for pollution spillovers. Spatial interactions are measured by means of weight matrices based on contiguity and distance between the neighboring provinces. Our results show that exclusion of spatial heterogeneity among the regions may lead to specification bias in EKC estimations. The significance of pollution spillovers in the spatial estimates suggest that the relationship between pollution and per capita income is also affected by the localities of regions. Our results also imply that environmental quality cannot be sustained at the expense of neighboring regions. Therefore environmental policies should be accommodated by both regional and national policies to achieve sustainable development.