Using data over the period 1966–2008, this paper investigates the environmental Kuznets curve (EKC) hypothesis for Mauritius. The conventional inverted-U EKC is not found, instead a long-run quadratic relation implying higher carbon emission as a result of economic growth since the early 1980s is uncovered. The estimated cointegrating equation is used to derive projections for carbon emission up to 2014. These projections may potentially act as benchmarks in assessing the near-term effectiveness of the MID project in reducing carbon emission in Mauritius. In the longer-term however, the MID project should reverse the rising trend in emission without compromising output growth to be considered effective. For this to happen, the authorities should provide incentives to economic agents for the adoption of green technologies. If incentives do not prove effective, the legislation should be amended and toughened accordingly.
Keywords: carbon emission, sustainable development, economic growth, environmental Kuznets curve, EKC, cointegration, error-correction model, Engle-Granger, Mauritius, Maurice Ile Durable