Maria Virginia da Silva Colusso

The essay aims to verify the relationship between environmental degradation and economic growth, based on the Environmental Kuznets Curve hpothesis for the Brazilian Cerrado in 2008. The EKC hypothesis suggests that in a firts stage and in accordance with the production priorities of a (may say developing) country, economic growth increases environmental degradation untill the point where the expansion of the economy starts induce a decrease in degradation, thereby forming an inverted “U” curve. The region in study is the second largest biome in the country (the fisrt is the Amazon Forest), of a great biological, economic and water supply importance for Brazil. It is the richest savannah in biological diversity in the world. The need to better observe this sensitive area is the precarius situation that its forest is found, mostly because of the agricultural exploration, affecting several animal and plant endemic species. So, it was defined as dependent variable of the tested model the deforested area of the municipalities’ Cerrado and as explanatory variables the GDP per capita and its quadratic form, population density, the planted area (of some specified agricultural products) and the cattle (the number of animals). Since geographic location is a highly relevant factor to environmental economics, it was decided to consider its spatial effects, therefore spatial econometric methods were used. Thus, the analysis is done through exploratory analysis of spatial data and then the EKC model is estimated by the ordinary least squares method (without consider spatial effects) and models with spatial effects such as spatial lag model, spatial error model, spatial Durbin model (lag and error) and spatial cross-regressive model. The results support the hypothesis of the inverted “U” in
cases of the spatial lag and spatial error models, indicating that initially deforestation increasing is associated with income growth and later this trend turns down: after the inflection point, the continued increases of the income contributes to reduce the environmental degradation. Also, regions considered clusters and outliers of higher deforestation and economic activity were observed and, once highlighted, can get better attention and tratment. in view of the results that were found, a cubic form of the per capita GDP wil be insert and tested to observe if deforestation turns to increase during time while income continuous to grow.