Temporal Change in GDP and Biodiversity: A Biodiversity Based Indicator for Testing the Environmental Kuznets Curve

Abstract

This study develops a biodiversity based indicator to examine the relationshipbetween economic growth and ecological outcomes within the EnvironmentalKuznets Curve (EKC) framework. Conventional EKC analyses rely primarilyon pollution based flow variables, which inadequately capture long term ecologicaldegradation. In contrast, this study evaluates the applicability of the EKChypothesis to biodiversity, a structural ecological “stock” that reflects persistentenvironmental change.To address this gap, the study introduces the Temporal Habitat DiversityConstant Ct, a composite indicator integrating species richness, cornerstonespecies populations, and habitat availability. Using country level data for India,Brazil, and Germany over the period 2000–2020, the study analyses the relationshipbetween GDP growth and biodiversity dynamics.The results reveal no consistent evidence of an inverted U-shaped relationshipbetween income and biodiversity. Instead, biodiversity trends diverge across countriesand do not systematically improve with economic growth. The findings suggestthat ecological outcomes are more strongly influenced by institutional frameworksand policy interventions than by income levels alone.These results challenge the general applicability of the EKC hypothesis to biodiversityand highlight the importance of integrating ecological structure into macroeconomicanalysis.