An empirical analysis on the industrial water pollution and economic growth in Algeria

This paper investigates the long termed relationship that exists between the Algerian economic growth and its industrial water pollution during the period 1975-2005. The Biochemical Oxygen Demand per worker (BOD) for Algeria was utilized as the environmental indicator, whereas the GDP per capita was utilized as its economic indicator and using other explanatory variables such as, exports, imports and population growth which may influence the environmental degradation in Algeria. The Auto Regressive Distributed Lag (ARDL) methodology was used to test the Environmental Kuznets Curve (EKC) hypothesis, and its empirical findings suggest that there exists a long term relationship between per worker BOD emissions on one hand and the real per capita GDP (Gross Domestic Product) on the other hand. Accordingly, there is an inverted-U formed relationship that lies between the GDP and the BOD emissions, and the fact that supports the EKC hypothesis is that this relationship stands in both short and long terms. On the other hand, the causality relationship between the BOD emissions and the economic growth turned out to be absent when tested by the Granger Causality test while based on the Vector Error Correction Model (VECM) in the short term. However, in the long term, it represented a uni-directional causality when reversed from the economic growth to BOD emissions.