The present paper tests the hypothesis that environmental degradation and per capita income follow an inverted-U-shaped relationship (the so-called Environmental Kuznets Curve) at the Italian Nut3 level over the period 1990-2005. We adopt a spatial econometric approach to account for the localised nature of environmental damage. In this spatially-adapted EKC, we explicitly introduced the role of energy intensive sectors to control for local industrial structure. The experiment brought to light the existence of significant heterogeneity at the Italian Nut3 level and highlighted major differences between geographical clusters from the point of view of “ecological efficiency”.
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