South Pacific Studies Vol.29, No.1, 2008

Environmental Quality and Economic Growth:
The Case of Pacific Island Countries
John ASAFU-ADJAYE

School of Economics, The University of Queensland,
Brisbane, Q4072, Australia

Abstract
The aim of this paper is to investigate the relationships between environmental quality and economic
growth for Pacific Island countries. According to the Environmental Kuznets curve (EKC) hypothesis,
environmental quality is high at low levels of economic development. However, as countries develop,
environmental quality worsens until it starts to improve at higher levels of economic development. Whereas
several empirical papers have tested this hypothesis for both developed and developing countries, this is thefirst study to address this issue for Pacific Island countries. The results of both graphical and polynomial
regression models indicate that an EKC relationship exists for Kiribati, New Caledonia, PNG, and theSolomon Islands. However, this is not the case for Fiji and French Polynesia. The finding of an EKC
relationship does not imply that economic growth by itself will solve environmental problems. In order toachieve a significant improvement in environmental quality, there is a need for governments to increase
expenditures on environmental management, as well as on public education and awareness.
Keywords: economic growth, environmental quality, environmental curve Kuznets hypothesis, PacificIsland Countries

Introduction
Does environmental quality improve as a country develops? This question has
been the source of intense debate since Grossman and Krueger’s landmark paper on theenvironmental impacts of the North American Free Trade Agreement. In that study,
the authors concluded that there is an inverted U-shaped relationship between pollution
levels and income growth (GROSSMAN and KRUEGER 1991, GROSSMAN 1993). That is,there is an increasing level of pollution for people living in lower income countries.
However, as incomes rise, pollution levels decline. This phenomenon has now come tobe known as the environmental Kuznets curve (EKC) hypothesls after Nobel laureate
Simon Kuznets who proposed a similar relationship for income inequality and income
levels (KUZNETS 1955). The existence (or non-existence) of an EKC has significant
policy implications. If true, it lends support for the view expressed by various people
that as countries develop they will experience a cleaner environment (BECKERMAN
1992, BARTLETT 1994). It also provides justification for the view that pollution is a
Received: 5 October 2006
Accepted: 31 October 2008

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South Pacific Studies Vol.29, No.1, 2008

necessary evil for countries at an early stage of development and that economic growthis the key to solving environmental problems.
The EKC debate has generated a considerable amount of empirical studies, someof which are reviewed in the next section. However, to date, none of these studies havespecifically considered the case of Pacific Island countries. The term ‘Pacific Island
Countries (PICs)’ as used in this study refers to the developing countries and territories
in the Pacific Islands region and excludes the two OECD countries, Australia and New
Zealand (Fig. 1).

Fig. 1. Map of Pacific Island countries, Australia and New Zealand.
Source: http://www2.hawaii.edu/~ogden/piir/micro.html#FSM

As can be seen from Table 1, the PICs are diverse in terms of land area,
population, resource endowment and economic attainment. For example, the largest
country in the region in terms of population and land area is Papua New Guinea (PNG)
with a population of over 5.7 million and a land area of 461,690 sq km. On the other
hand, the smallest is Tokelau, an atoll state with a population of only 1,500 and a landarea of just 12 sq km. The PICs face unique socioeconomic problems arising fromtheir smallness in terms of size. Most of the PICs are not only small but are themselves
made up of a number of small islands, which result in a number of disadvantages.
These disadvantages include a narrow range of resources and high population density,
which increases the pressure on already limited resources. There is also a tendency forexcessive exploitation of natural resources, causing premature resource depletion.

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45

Table 1. A List of Pacific island countries and territories

Country/Territory

Political status

Land area
Population(sq km) (2004 estimate)

Geographic
Type

American Samoa

US territory

240

57,000High islands andatollsCook Islands

Independent, New
Zealand-affiliated180

19,000High islands andatollsFederated States ofIndependent, US- affiliatedMicronesia

702

109691High islands andatollsFiji

Independent

18,376

840,000

High islands
and a few minor
atollsFrench Polynesia

French Territory

3,521

252,692

High islands andatollsGuam

US Territory549

166,773High islands

Kiribati

Independent726

97,813

Predominantly
atollsMarshall Islands

Independent, US- affiliated720

61,218AtollsNauru

Independent

21

13,287

Raised coralislandNiue

Independent, New Zealandaffiliated

258

2,166

Raised coralislandPalau

Independent, US- affiliated475

20,000High islands andatollsPapua New Guinea Independent

461,690

5,771,947

High islands
and a few minor
atollsSolomon Islands

Independent

29,785465,793219,246

High islands
and a few minor
atollsTokelau

New Zealand territory

12

1,500

AtollsTonga

Independent kingdom

696

101,982

High islands

TuvaluIndependent26

10,900AtollsVanuatu

Independent

12,189207,331High islands anda few atolls

Samoa

Independent

2,934

183,746

High islands

Source: McGregor (1999).

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South Pacific Studies Vol.29, No.1, 2008

Another characteristic of the PICs is that they tend to have high degrees ofendemism and levels of biodiversity, but the relatively small numbers of the various
species impose high risks of extinction and create a need for protection. Due to thesmall size, isolation and fragility of island ecosystems, biodiversity in these countries
is among the most threatened in the world today.
In view of the unique problems facing the PICs, the objectives of this paper areto empirically examine the relationships between environmental quality and economic
growth in order to determine whether or not an EKC exists, and to discuss the policy
implications. Due to limitations of data, we are only able to consider one indicator ofenvironmental quality, namely, CO2 emissions for the following PICs: Fiji, French
Polynesia, Kiribati, New Caledonia, PNG and the Solomon Islands.
The remainder of the paper is organised as follows. To set the context for thepaper, Section provides some information on the structure of production in the PICs.
Section 3 provides a brief review of the EKC literature, while Section 4 describes
the methodology used and the data sources. The empirical results are presented anddiscussed in Section 5, while the sixth section discusses the policy implications. The
final section contains the summary and conclusions.

The Structure of National Output in the Pacific Island Countries
The majority of the PICs (with the exception of French Polynesia) may beclassified as lower middle income countries with per capita GDPs of less than
US$4,000. The per capita GDPs for 2004 range from US$555 (Kiribati) to US$14,670(French Polynesia). The average per capita GDP (2004) for the sample of countries
used in this study is US$2,874. As can be expected, most of the PICs are reliant
on agriculture for to provide export income and employment. In countries such as
PNG, Fiji and the Solomon Islands, there are large subsistence sub-sectors within
the agricultural sector. Figs. 2a-2e shows time series data of the key components ofnational output for periods from 1965-2006 for a selected number of PICs for whichdata were available.

Fig. 2a. Fiji: Value added share of GDP.

Fig. 2b. Kiribati: Value added share of GDP.

ASAFU-ADJAYE : Environmental Quality and Economic Growth in Pacific Island Countries

Fig. 2c. PNG: Value added share of GDP.

47

Fig. 2d. Tonga: Value added share of GDP.

Fig. 2e. Vanuatu: Value added share of GDP.

It can be seen that in all the countries, except PNG, agricultural value added asa percentage of GDP has declined over time. For example, in Fiji, agriculture has
decline from 35% of GDP in 1965 to 15% in 2006, and in Tonga, it has declined from
50% in 1975 to 26% in 2006. However, in PNG, agriculture’s contribution to GDP has
declined at a slower pace from 43% in 1965 to 36% in 2006. The figures also show thatthe level of industrialisation in the Pacific region is very low. Apart from the bigger
countries (i.e. Fiji and PNG), the share of industry in GDP for the remaining countries
is less than 15%. In the PNG, the share of industry in real GDP has increased from
19% in 1965 to 45% in 2006, while in Fiji it has remained static over time at about
26% of GDP. What is not shown in these figures is that tourism, which is classified asservices, is increasingly contributing a greater share of output in countries such as Fiji,
New Caledonia and Vanuatu.

Brief Review of the Literature
The basic premise of the EKC hypothesis is that at very low levels of economic
growth, environmental effects are low. However, as development proceeds, the rate ofpollution increases. At higher levels of economic development, various factors (e.g.
structural change, improved technology) cause pollution levels to decline. An example

48South Pacific Studies Vol.29, No.1, 2008of an EKC for sulphur dioxide is shown in Fig. 3. A typical feature of the EKC is theinverted U shape which suggests that pollution levels reach a maximum level withrespect to income levels, after which it begins to decline. The maximum level ofpollution is referred to as the ‘turning point’ and forms the focus of the debate about
pollution control.

Fig. 3. A hypothetical EKC for sulphur dioxide.
Source: Asafu-Adjaye (2005)

Various theoretical explanations have been given to explain the EKC relationship.
For example, ARROW et al. (1995) have suggested that as a natural progression ofdevelopment, economies transform from clean agrarian economies to polluting
industrial economies, and then to clean service economies. SURI and CHAPMAN (1998)
have put forward the ‘pollution haven’ hypothesis, which is that more developed
economies are shifting their pollution intensive production processes to the developing
economies. Another explanation for the relationship is that richer countries have ahigher demand for environmentally friendly products, cleaner technologies and also
environmental laws (EKINS 1997). Finally, Stokey (1998) has argued that below acertain threshold level of economic activity, only dirty technology is used. Pollution
continues to increase linearly with economic growth until the threshold is passed andcleaner technologies can be used, resulting in the inverted U-shaped EKC.
To date, empirical support for the EKC hypothesis has been mixed. Following
the initial findings of GROSSMAN and KRUEGER (1991, 1995), further support for
the EKC hypothesis was provided by a number of studies including S HAFIK and
B ANDYOPADHYAY (1992) 1, P ANAYOTOU (1993, 1995), S ELDEN and S ONG (1994),
CROPPER and GRIFFITHS (1994) and COLE et al. (1997). More recent studies have shownthat not all environmental pollutants conform to the EKC. For example, ASAFU-ADJAYE(1998) found that CO2 emissions per capita increased with increasing income. SURI andCHAPMAN (1998) tested the EKC hypothesis by including variables for international
trade and concluded that trade makes a significant contribution to the shape of thecurves but could find no support for the EKC hypothesis. More recent studies have

ASAFU-ADJAYE : Environmental Quality and Economic Growth in Pacific Island Countries

49

questioned the EKC using some of the environmental indicators from the earlier
studies. For example, HARBAUGH et al. (2000) re-examined the empirical evidence for
the EKC for SO2, smoke, and total suspended particulates using data from SHAFIK and
BANDYOPADHYAY (1992) and GROSSMAN and KRUEGER (1995), with the benefit of anadditional ten years of data. They concluded that there is little if any empirical support
for the existence of an EKC for these pollutants. ASAFU-ADJAYE (2003) tested the EKC
hypothesis by analysing the relationship between biodiversity and economic growthusing indicators of species diversity and income per capita as proxies for biodiversity
and economic growth, respectively. He rejected the existence of an EKC and concluded
that economic growth has an adverse effect on biodiversity. Although there have been
numerous EKC studies, few have considered the case of developing countries. Apartfrom this study, the only other developing country based study was conducted by
VINCENT (1998) for Malaysia. He found that none of six pollution-income relationships
estimated using a panel data set for Malaysian states could confirm the existence of an
inverted U-curve.
A number of prominent scholars have criticised studies of the EKC. Prominent
among them are a group of economists, led by Nobel laureate Kenneth Arrow, who
met in Sweden in 1995 to consider the relationships between economic growth andenvironmental quality. They concluded that an inverted U-curve is not evidence that
it will happen in all cases or that it will happen in time to avert the adverse impacts ofeconomic growth (ARROW et al. 1995). Other critiques of EKC studies can be found in
STERN (1998), EKINS (1997) and ROTHMAN (1997).

Methodology
On the basis of the EKC hypothesis, we specify a model in which environmental
quality in a given country is a function of the level of income. As indicated earlier,environmental quality is measured here by CO2 emissions intensity and income level ismeasured by per capita real gross domestic product (GDP). Two equations are therefore
tested:Ei = α0 + α1GDPi + α2GDPi2 + εi
(1)23Ei = α0 + α1GDPi + α2GDPi + α3GDPi + εi(2)Where,
Ei = CO2 emissions intensity (kt/US$);GDP = real per capita GDP (constant US$);εi = random error term, and
α’s = parameters to be estimated.
Equation (1) is a second order polynomial, while Equation (2) is a third orderpolynomial. A polynomial regression function is adopted here to account for the factthat the relationship between environmental quality and income may not be a linear
one. A polynomial function is appropriate when the underlying response function is

50South Pacific Studies Vol.29, No.1, 2008

unknown, in which case the polynomial function provides a good approximation to thetrue function. Scatter plots of the environmental quality-income relationships (shown
below) provide some justification for our choice of the polynomial function.2
The countries included in the sample and the time period for the analysis were
determined by the availability of sufficiently long time series data. Data on the above
variables for carbon dioxide emissions were obtained for the specified periods: Fiji
(1961-2004), French Polynesia (1965-2000), Kiribati (1970-2004), New Caledonia(1965-2000), PNG (1961-2004), the Solomon Islands (1967-2004), Vanuatu (19792004), Samoa (1978-2000), and Tonga (1981-2004). All the data series were obtained
from the online version of the World Development Indicators (WORLD BANK, 2008).
Tables 2a and 2b provide the summary statistics for the nine countries in thesample. Average per capita incomes for the sample are variable, ranging from a highof US$11,648 for French Polynesia to a low of US$602 for PNG. New Caledonia and
PNG have the lowest average population density of 8 persons per sq km, while Tonga
has the highest of 139 persons per sq km. There is also great variability in average total
CO2 emissions and CO2 emissions intensity. The highest average total CO2 emissons of1763 kt is recorded for New Caledonia, while the lowest is 26 kt for Kiribati. In termsof CO2 emissions intensity, the highest average of 2.586 kt/US$ is observed for PNG,
while the lowest of 0.032 kt/US$ is observed for French Polynesia.
Table 2a. Means of the main variables

Indicator

FrenchNew
SolomonFiji
Kiribati
PNG
Polynesia
Caledonia
Islands(1961-04)(1970-04)(1961-04)(1965-00)(1965-00)(1967-04)

GDP per capita(constant 2000 US$)

1648

11648

604

10918

602

687

Population density

34

45

91

8

8

10

Total CO2 emissions
(kt)

644.8

390.6

26.1

1762.79

1614.27116.17CO2 emissions
intensity (kt/US$)

0.379

0.032

0.048

0.165

2.586

0.163

Table 2b. Means of the main variables.

Vanuatu(1979-00)

Samoa(1978-00)

Tonga(1981-04)

GDP per capita (constant 2000 US$)

1235

1194

1333

Population density

16

63

139

Total CO2 emissions(kt)

70.1

122

86.5

CO2 emissions intensity (kt/US$)

0.057

0.102

0.063

Indicator

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51

Results and Discussion
Figs. 4 to 9 provide scatter plots for the environmental quality-income relationshipfor the first six countries in the sample. The trendlines for Fiji (Fig. 4) and French
Polynesia (Fig. 5) indicate that for these countries CO2 emissions intensity increaselinearly with increase in per capita income or economic growth. Clearly, in these twocases an EKC does not exist. For Kiribati (Fig. 6), CO2 emissions intensity has declined
gradually with an increase in economic growth. New Caledonia’s scatter plot exhibits
the classic EKC phenomenon. The best fitting trendline in this case is a second orderpolynomial (quadratic inverted U) with a turning point of about US$9,000 per capita(Fig. 7). If this relationship is true, it would imply that New Caledonia has alreadypassed that point, given its per capita income of US$10,918.
The scatter plot for PNG (Fig. 8) is an S-shaped cubic curve, suggesting that CO2
emissions intensity has increased steadily but has reached a maximum level of US$650
and has started to decline. the results for the Solomon Islands indicate that the best
fitting trendline is a third order (cubic) polynomial function. In this case, the scatterplot reveals that there are two turning points (Fig. 9). CO2 emissions intensity initiallydeclined, and then begun to increase when the country reached an income level ofFig. 4. Fiji: GDP per capita-CO2 emissions Intensity.

Fig. 5. French Polynesia: GDP per capita-CO 2
emissions intensity.

Fig. 6. Kiribati: GDP per capita-CO 2 emissions
Intensity.

Fig. 7. N e w C a l e d o n a : G D P p e r c a p i t a - C O 2emissions intensity.

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South Pacific Studies Vol.29, No.1, 2008

US$500, climbing to a maximum level of about US$750, after which CO2 emissions
intensity began to decline again.

Fig. 8. Papua New Guinea: GDP per capita-CO2

Fig. 9. Solomon Islands: GDP per capita-CO2

emissions intensity.

Fig. 10. Samoa: GDP per capita-CO2 emissions

emissions intensity.

Fig. 11. Vanuatu: GDP per capita-CO2 emissions

intensity.

intensity.

Fig. 12. Tonga: GDP per capita-CO2 emissions intensity.

The last three scatter plots (Figs. 10-12) are for Samoa, Vanuatu and Tonga. The
scatter plots for Samoa (Fig. 10) and Vanuatu (Fig. 11) indicate that generally carbon

ASAFU-ADJAYE : Environmental Quality and Economic Growth in Pacific Island Countries

53

emissions intensity has declined with increase in per capita GDP. The scatter plot for
Tonga (Fig. 12) shows an S-shaped curve similar to that observed for PNG and theSolomon Islands, implying that after increasing linearly with income, CO2 emissions
intensity has started to decline.
These graphical results may be summarised as follows. The findings for theenvironmental quality-income relationship are not uniform for this sample of PacificIsland countries. For Kiribati, New Caledonia, PNG, Samoa, Vanuatu, and the Solomon
Islands, the initial indications are that CO 2 emissions intensity has declined withincrease in economic growth. However, the pattern of the decline is different for eachcountry. In Kiribati, Samoa and Vanuatu, the decline has been gradual with increasing
growth, which runs counter to the EKC prediction that emissions will worsen before
they start to improve. New Caledonia is the only country showing the classic inverted
U-curve. In the case of PNG, Tonga and the Solomon Islands, an EKC appears to exist
with multiple turning points. In these countries, we observe an S-shaped curve, whichappears to indicate that emissions intensity has started to decline. Finally, in the caseof Fiji and French Polynesia, contrary to the EKC hypothesis, CO2 emissions intensity
has shown a tendency to increase with an increase in economic growth. In these twocases, we cannot speculate as to whether there would be a turning point, although in thecase of Fiji, the scatter plot indicates a slowing down of the rate of increase in CO2emissions intensity. To further explore the significance of these preliminary results, we
now turn to the polynomial regression models.
Tables 3a and 3b display the results for the polynomial regressions. The graphicalresults shown earlier were used to select the most appropriate (or best fitting) function
for a given country. Therefore, in the case of Fiji and French Polynesia (Table 3a,columns 1 and 2), a linear function is fitted. “It can be seen that in both cases, thecoefficient on GDP is positive and significant, confirming the linear relationshipbetween income and emissions intensity”. In the case of Kiribati and New Caledonia(Table 3a, columns 3 and 4), second order polynomials are fitted. “The coefficienton GDP2 for Kiribati is negative and significant, confirming the graphical resultthat there has been a linear decline in CO2 emissions intensity as per capita income
has increased”. The coefficient on GDP in the New Caledonia regression is positive
although not significant, while the coefficient on GDP2 is negative and significant. Thisconfirms the graphical finding that there is an inverse U-shaped relationship between
per capita income and environmental quality.
The final set of results (Table 3a, columns 5 and 6) are for PNG and the Solomon
Islands. On the basis of the graphical results, third order polynomials were fitted forthese two countries. The t-statistics for the PNG regression indicate that none of thevariables are significant. However, in the case of the Solomon Islands, they are all
highly significant, indicating that there are multiple turning points in the incomeenvironmental quality relationship. Therefore, overall, the regression results provide
some degree of validity for the graphical results shown earlier.

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South Pacific Studies Vol.29, No.1, 2008

Table 3a. Regression resultsa

Intercept

GDP

GDP

2

GDP

3

Fiji

FrenchPolynesia

Kiribati

New
Caledonia

PNG

SolomonIslands-0.017-0.0220.013-0.045-31.2691.474(-0.411)(-7.062)-0.301(-0.247)(-0.812)-2.4290.002

4.68 x 10-60.00025.2 x 10-50.132

-0.007(9.137)***(17.143)***-1.3991-1.456-0.644(-2.456)***-4.1 x 10-7

-2.9x10-5-0.00020(-1.806)*(-1.742)*(-0.456)(2.677)***0-2.33 x 10-9-0.311(-2.817)***

-

-

-

-

-

-

R2

0.666

0.896

0.689

0.300

0.632

0.600

Adjusted R2

0.651

0.893

0.660

0.258

0.400

0.360

F-Statistic

83.48***

293.86***23.61***

7.09**

9.12***

6.57**

S.E. of regression

0.053

0.004

0.008

0.036

1.032

0.046

Sample size

45

36

35

36

45

39

Notes:
a. t-statistics are in parentheses.
*** significant at the 1% level.
** significant at the 5% level.
* significant at the 10% level.

Table 3b reports the econometric results for Vanuatu, Samoa and Tonga. These
three countries have a relatively shorter time series data compared to the earlier ones.
In all three cases, the coefficient on per capita GDP is negative, although that of Samoa
is not statistically significant. This result indicates that in these countries, there is noevidence that carbon emissions increase linearly with increase in economic growth.
The results for Samoa are not statistically significant based on the very low R2 andinsignificant regression coefficients. However, in the case of Vanuatu and Tonga, thecoefficients on GDP are negative and statistically significant, implying that an increase
in real per capita GDP has led to a decline in CO2 emissions intensity. These results
strongly support the graphical results presented earlier, from which we can conclude
that in these countries economic growth has not necessarily worsened environmental
quality.

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55

Table 3b. Regression results (cont’d)aIntercept

GDP

GDP2

GDP3

Vanuatu

Samoa

Tonga

22.191

2.212

2.134

-2.97

-0.654-2.32-0.053-0.005-0.005(-2.969)***(-0.592)(-2.439)***03.73 x 10-60(2.977)***-0.56(2.585)***0-9.5 x 10-100.000(-0.531)(-2.688)***(-2.984)

***

R2

0.307

0.083

0.763

Adjusted R2

0.213-0.036

0.727

S.E. of regression

0.012

0.012

0.008

Sample size

26

27

24

Notes:
a. t-statistics are in parentheses.
*** significant at the 1% level.
** significant at the 5% level.
* significant at the 10% level.

Policy Implications
In the majority of cases considered in this paper, the evidence suggests thatwith a higher level of economic growth, it is possible to have a reduction in pollution
levels. However, this finding does not imply that economic growth by itself will solve
environmental problems. In fact, in two cases, specifically, Fiji and French Polynesia,
the results indicate that economic growth is actually associated with worsening carbon
dioxide emissions intensity. In order for environmental quality to improve in the PICs,
there is an urgent need for policies to control pollution. The most common form ofpollution control in the PICs is environmental regulation or standards, which is referred
to as the Command and Control approach (ASAFU-ADJAYE 2005). However, in mostof the PICs these regulations have been found to be out of date and ineffective. For
example, in the case of Fiji, the current anti-pollution laws include the public nuisanceprovisions of the Public Health Act of 1936 and the provisions for air pollution under
the Traffic Regulations Act of 1974. However, these laws are rarely enforced and there
are numerous examples of blatant violations. Currently, the only form of pollution
control being exercised is through government and local authority licensing, as well as56South Pacific Studies Vol.29, No.1, 2008

through development compliance requirements for new industries and plants.
In addition to being outdated, the reasons for the ineffectiveness of the current
laws include the following: uncoordinated legislation; overlapping responsibilities andlack of coordination among government agencies; lack of training and resources; low
and ineffective penalties; and insufficient public education and awareness. These issues
are briefly explained below, using Fiji as a case example.
Outdated, fragmented, and uncoordinated legislation
Environmental legislation has been uncoordinated over the past four decades.
The first environmental legislation was related to the management of land under the
Native Lands Trust Act, 1905 and 1940. This was then followed over time by various
legislations with an environmental focus. There are currently about 54 pieces oflegislation, of which about 25 affect environmental management. Examples include thefollowing: the Subdivision of Land Act 1937; Marine Spaces Act 1938; the Quarries
Act 1939; the State Lands Act 1946; the Town Planning Act 1946; the Fisheries Act
1951; the Land Conservation and Improvement Act, 1953; the Forest Act 1953; theWater Supply Act 1955; the Public Health Act 1955; the Mining Act 1965; the Land
Lord and Tenants Act 1976; and the Petroleum Act 1978 (McGREGOR 1999). The
fragmented legislation creates loopholes that make effective prosecution difficult.
Recognising the need for better environmental legislation, the government incollaboration with the World Conservation Union prepared a National Environmental
Strategy for Fiji in 1993. This led the way for the drafting of a Sustainable
Development Bill in 1998. The Bill is intended to provide a legal mechanism for the
management of social, economic, environmental and natural resources in a sustainable
manner. The Bill underwent several discussions in parliament in 2005/06 but
unfortunately it could not be passed into law due to the December 2006 military coup
which suspended parliament.
Overlapping responsibilities and lack of coordination among government agencies
There are a number of government agencies responsible for enforcement of thevarious laws. However, there is no single agency charged with the responsibility formonitoring or coordinating compliance. This often results in duplication of effort byvarious government agencies. For example, in the area of environmental protection,
three government agencies have overlapping responsibilities. These are the Departmentof Environment, the Department of Mineral Resources, and the Department of
Health. Environmental monitoring in mines is carried out by both the Department of
the Environment and the Department of Mineral Resources, although the former is
responsible for approving environmental impact assessments (EPA) for major mining
projects. In addition to the government agencies, there are a number of committees
in Fiji that are concerned with environmental issues. These include the National Oil
Pollution Committee (Marine Department), the Rubbish Dump Committee (Ministryof Housing, Urban development and Environment) and the National Environment

ASAFU-ADJAYE : Environmental Quality and Economic Growth in Pacific Island Countries

57

Steering Committee (Ministry of Housing, Urban development and Environment).
This overlap in responsibilities results in duplication of effort in some areas. Given, thelimited financial resources of government, it is essential to use whatever is available asefficiently as possible.
The Sustainable Development Bill provides a legal framework for: (a)environmental impact assessments; (b) pollution and waste management; (c)conservation and national parks management; (d) integrated natural resource
management; (e) establishment of an effective enforcement and administrative
framework for the Department of Environment. The Bill requires the establishmentof a National Council for Sustainable Development to oversee the implementation
environmentally friendly and sustainable policies. The Minister for Environmentis required to establish a Department of Environment and appoint its Director
to administer the new legislation. The Bill requires the establishment of an
Environmental, Impact Assessment Unit which will assess and examine every
development activity to be undertaken by a Ministry, Department or statutory bodyand other development proposals or projects submitted by other organisations. It
also requires the establishment of a Natural Resource Management Unit within the
Ministry of Agriculture, Forests and Fisheries within two years of the enactment of thelegislation for the function of natural resource inventory, information gathering andmanagement.
Lack of resources and training
One of the major constraints in enforcing and monitoring environmental
legislation in Fiji is lack of adequate financial resources to recruit and train personnel.
Table 4. Fiji: Expenditure Allocations from 2007 National Budget

Priority Sector
Law and OrderFiji Military Forces
Fiji Police Force

Amount (F$ millions)
89.7
69.9

Education

320.6

Health150.8

Agriculture

68.8

Fisheries

1.0

Rural and Regional Development

14.2

Infrastructure

179.9

Women, Social Welfare & Housing

29

Vanua Levu Development

9.4

Culture and Heritage

1.6

Sports1.2

Source: Goverment of Fiji (2007)

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For example in the 2007 Budget, the government identified the following areas aspriority areas in its expenditure program: law and order, infrastructure, education,
health, agriculture, fisheries, and rural and regional development (see Table 4). It
can clearly be seen here that the environment is not seen as a priority area by thegovernment. Although the environment is important, unfortunately, environmental
agencies are not at the top of the priority list when it comes to allocation of thegovernment budget.
Low and ineffective penalties
The current fines for violation of environmental pollution laws are low and do
not pose a significant deterrent to violators. For example, the 1990 Ports Authority ofFiji Regulations provide for a maximum fine of F$400 for pollution offences, while
the cost of cleaning up a chemical spill in Suva harbour could run into millions ofdollars. An Anti-Litter Act came into force in April 1997 under which a person who
breaches the Act can either pay an on-the-spot fine of F$40 or take the option of
paying within 21 days. Failure to pay the fine will result in the offender being taken tocourt where he or she may be required to pay F$100 if found guilty. By comparison,
the fine for littering under Western Australia's Litter Act 1979 ranges from A$200400. Enforcement of Fiji’s Anti-Litter Act has been constrained by several problems
including large size of area to be covered and insufficient number of inspectors, andproblems of properly identifying offenders due to lack of identification cards in Fiji.
The penalties for violation of environmental pollution laws will be increased if the
Sustainable Development Act becomes law. Under the Act, penalties include F$10,000
or an imprisonment of one year for first offence relating to pollution, F$20,000 or two
years for second offence, F$50,000 for five years imprisonment for gross negligenceand F$100,000 or 10 years imprisonment for pollution due to reckless disregard forhuman lives. It is hoped that that the severity of these penalties will act as a significant
deterrent.
Insufficient public education and awareness
Although Fiji has a high adult literacy rate (about 85%), and there have beenenvironmental awareness programs in the past, the public response to environmental
pollution has generally been poor. There is the need for more public awarenessprograms and increase in environmental awareness programs in the curricula in theentire school system.
The way forward
In order for PICs to make more rapid progress towards the declining portion of
the EKC, there is a need for governments to spend more money on strengthening thegovernment agencies responsible for environmental regulation. There is also a needto streamline the functions of government agencies dealing with the environment,
to avoid duplication and minimize inefficiency. There is a need to recruit and train

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more staff in various aspects of environmental planning and management includingcollection, interpretation and analysis of environmental data, as well as implementation,
monitoring and evaluation of environmental regulations. The environmental training
must not be restricted to only environment departments or divisions, It should also be
carried out at different levels such as top level government decision/policy makers,
middle level specialists, policy analysts and planners, industry groups, the generalpublic, and schools. Some of this education and awareness could be carried out inthe print media, TV and radio. For effectiveness, the involvement of community
and industry groups, as well as Non-Government Organisations (NGOs) must be
encouraged.

Summary and Conclusions
The aim of this paper was to investigate the relationships between environmental
quality and economic growth for Pacific Island countries. Specifically, the intention
was to determine whether the environmental Kuznets curve hypothesis exists for thesecountries and to discuss the implications for environmental policy making. According
to the EKC hypothesis, environmental quality is high at low levels of economic
development. However, as countries develop, the environmental quality worsens until
it starts to improve at higher economic levels . While there have been several empirical
papers testing this hypothesis for both developed and developing countries, this is thefirst paper to address this issue for Pacific Island countries.
The analysis of the relationship between environmental quality and economic
growth was conducted using both graphical (scatter plots) and polynomial regression
models. Due to data limitations, the analysis was restricted to only nine Pacific Island
countries, namely, Fiji, French Polynesia, Kiribati, New Caledonia, PNG, the Solomon
Islands, Vanuatu, Samoa, and Tonga. Despite this limitation, the sample provides afairly good representation of the Melanesian, Polynesian, and Micronesian countries
which constitute the PICs. The scatter plots indicated that there was no evidence ofan EKC for Fiji and French Polynesia. In the case of Kiribati, Vanuatu, and Samoa
there was a steady decline in CO2 emissions with increasing growth over time. For
New Caledonia, PNG, the Solomon Islands and Tonga, there appeared to be an EKCtype of relationship. However, only New Caledonia exhibited the classic inverted
U-curve. The rest show S-shaped curvilinear relationships. This implies that emissions
initially declined with growth, but then increased before starting to decline again. The
graphical results were confirmed as significant using on the polynomial regressions.
In cases where an EKC was found, it is important to stress that the patterns of changes
in environmental quality with increase in economic growth were different for eachcountry. This signifies that each country’s situation is different and caution must
therefore be exercised when considering solutions to this problem.
It was noted that the environmental regulations in most of the countries

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for controlling pollution are outdated and ineffective. Also, in some cases theenvironmental legislations are uncoordinated. Various problems were outlined,
including overlapping responsibilities and lack of coordination among government
agencies, lack of legally enforceable criteria for air and water quality, lack oftraining and resources, low and ineffective penalties, and so on. A call was made forgovernments to increase the expenditure on environmental management and on public
education and awareness.
To conclude, a note on the limitations of this study and areas for further researchis necessary. The polynomial regression models used in this study do not sufficiently
explain why the estimated relationship between pollution and income exists. However,
it is highly likely that the difference between the group of countries for which an
EKC exists and those for which it does not lies in factors such as differences inenvironmental regulations, technology, and industrial composition of GDP. Further
research could consider collecting data on these variables, which would enable more
complete models to be developed to shed more light on the relationship for eachcountry.

Notes
1. Shafik and Bandyopadhyay‘s study was the background paper for the United Nations
Development Program’s 1992 World Development Report.
2. The main disadvantage in using a polynomial regression function is that any attempt
to make forecasts or extrapolations beyond the range of the data may result inserious error.

Acknowledgement
This paper was written during my stay at the Kagoshima University ResearchCentre for the Pacific Islands as a visiting researcher. I am grateful for the Centre’s
support and the comments of Centre’s academic staff and others at a seminar organisedon this topic.

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