Dynamic perspective of the evolution of the environmental Kuznets curve in Ecuador and Mexico

Abstract

The Environmental Kuznets Curve (EKC) posits that environmental degradation increases during the early stages of economic development and decreases once a certain income level is reached. Ecuador and Mexico illustrate contrasting patterns within this model: the former relies heavily on natural resources, while the latter has a more diversified economy, albeit with persistent environmental challenges. The aim of this study is to compare the validity of the EKC in both countries during the period 2007–2024 by analyzing the relationship between economic growth and CO₂ emissions through spatial SAR and SEM models. Recent subnational data were transformed into logarithms to capture regional variations and facilitate the interpretation of economic and environmental relationships. The results indicate that Ecuador remains in the ascending phase of the EKC, whereas Mexico shows a trajectory trending toward an inverted U-shape, suggesting that the country may have reached its turning point in certain regions. Furthermore, in Ecuador, pollution reveals a strong spatial interdependence among provinces, mainly associated with the concentration of development in extractive areas. In contrast, although spatial dependence is also observed in Mexico, it is less pronounced and reflects a more dispersed and heterogeneous distribution of pollutant emissions.