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Industrial water use, income, trade, and employment: environmental Kuznets curve evidence from 17 Taiwanese manufacturing industries

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Abstract

This paper investigated the relationships between industrial water use, income, trade, and employment for 17 Taiwanese industries from 1998 to 2015. We explored cross-sectional dependent unit root, panel cointegration, and causality tests to estimate their long-term relationships and causal nexus. There existed long-term equilibrium relationships among the variables. The long-term elasticity estimates of industrial water use with respect to income, squared income, trade, and employment are 4.27, − 0.15, 0.22, and 0.92, respectively. The results do not confirm an inverted U-shaped environmental Kuznets curve. A unidirectional causal relationship is found between water use and income, and a bidirectional causal relationship is identified between water use and employment. Exports cause industrial water use. As expected, both employment and exports lead to income. Hence, policy makers should promote investment into water efficiency and water recycling. Various governments reward firms for water efficiency and lower consumption without negative long-term effects on economic growth.

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Notes

  1. Heckscher-Olin factor endowment theory provides an explanation of trade based on the differences in relative factor endowments. A country or region that is well endowed with labor is expected to produce labor-intensive goods in exchange for capital-intensive goods.

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  1. Department of Economics and Finance, Ming Chuan University, 5 De Ming Rd., Gui Shan District, Taoyuan City, 333, Taiwan, Republic of China

    Wen-Cheng Lu

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Correspondence to Wen-Cheng Lu.

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Lu, WC. Industrial water use, income, trade, and employment: environmental Kuznets curve evidence from 17 Taiwanese manufacturing industries. Environ Sci Pollut Res 25, 26903–26915 (2018). https://doi.org/10.1007/s11356-018-2726-3

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