Investigating the non-linear relationship between urbanization and CO2 emissions: An empirical analysis

This study analyzes the non-linear relationship between urbanization and CO2 emissions over the period 1971 to 2014 in Indonesia. The findings unveil an inverted U-shaped relationship between urbanization and CO2 emissions. Urbanization increases CO2 emissions, but after achieving a certain level, it negatively impacts emissions. Economic growth and energy intensity increase CO2 emissions, while trade openness has no significant effect on CO2 emissions. Further, we have validated the robustness of results by using the ecological carbon footprint as a proxy of environmental degradation. The results of the causality test show unidirectional causality running from economic growth to emissions and energy intensity, and feedback effect between urbanization and emissions. Finally, several policy measures are proposed to improve the environment without reducing the urbanization level.