EKC and the income elasticity hypothesis Land for housing or land for future?

This paper investigates the relationships between land consumption and per capita gross domestic product (GDP) for a panel of 20 Italian regions over the period 1980-2010. It tests for the existence of an EKC. As proxy of land consumption, it uses the supply of new housing, being residential construction the main cause of soil sealing and urban sprawl. To test this hypothesis it runs a panel data regression model. In the considered period, results show the existence of an inverted EKC whereas, on a longer period, a N-shaped curve may be inferred. Contrary to the EKC hypothesis, both fixed effect and random effect model estimates show that higher income does not induce greater environmental awareness or, in different words, that the income elasticity hypothesis holds for housing demand rather than for environment. The paper offers a tentative explanation of this phenomenon. Considering results and the specificity of the resource under consideration, the paper claims for a shift from market to public policy, from private to pro-social preferences, and for independent institutions and exogenous norms.