Land consumption and income in Italy: a case of inverted EKC

The EKC hypothesis postulates that the relationship between economic growth and environmental deterioration is represented by an inverted U-shaped function. Its validity has been questioned from several perspectives and a need for public policies has been expressed. This paper uses a heuristic approach to analyze the relationship between per capita income and land consumption, as proxied by the number of Building Permits issued by public authorities. Using data from the Italian regions, we run a panel data regression model to test whether the EKC hypothesis holds. Results confute it, evidencing a U-shaped relationship. In the authors’ opinion, the combined effect of market conditions, lifestyle evolution and institutional and political factors have produced an adverse effect on environment. On this basis, the paper claims that, when social and intergenerational aspects are involved, a balanced mix of market, policies and institutional architecture is needed.