Does equitable income distribution influence environmental quality? Evidence from developing countries of ASEAN-4

This paper investigates income distribution-environment nexus in the context of countryspecific time series data from four member states of the Association of South East Asian Nations (ASEAN-4), namely Malaysia, Indonesia, Philippines and Thailand. The short run and long run effects of income inequality, economic growth, domestic investment, trade openness and energy consumption on Carbon Dioxide (CO2 ) emissions were examined by using Autoregressive Distributed Lag (ARDL) estimation. The annual data used in this study covers the period from 1971 to 2013. More equitable income distribution results in better environmental quality for Indonesia and Thailand but leads to a worsening environment in the case of Malaysia. Meanwhile, no significant relationship was detected between income distribution and environmental quality in Philippines. It was also found that domestic investment and energy consumption have beneficial effects on the environmental quality in Indonesia whereas trade openness and the expansion of the economy (GDP) will have a detrimental effect on its environment. However, these variables have shown mixed results in the case of Indonesia, Philippines and Thailand. The main contribution of this study is the introduction of income distribution as a new determinant for environmental quality for these ASEAN-4 countries, thus giving new insights for policymakers to propose better policy recommendations on achieving sustainable growth