Economic Growth and Environmental Sustainability: The Prospects for Green Growth

By Paul Ekins | Go to book overview

7

Review and critique of the Environmental Kuznets curve hypothesis

7.1

INTRODUCTION

There has been a spate of research in the last few years deriving econometric relationships between income and various indicators of environmental quality. As will be seen, a wide variety of results has been obtained, including for some environmental indicators an inverse U-relationship, where environmental degradation is seen to increase at low incomes, reach a peak and then improve as income increases beyond this threshold. This pattern is sometimes described as a ‘Kuznets curve’, following the observation by Kuznets (1955) that it appeared to describe the relationship between the level of income and income inequality.

The observation of an ‘environmental Kuznets curve’ (EKC) for some environmental indicators has led to a variety of conclusions from the researchers and others about the overall growth-environment relationship, such as:

We find that while increases in GDP may be associated with worsening environmental conditions in very poor countries, air and water quality appears to benefit from economic growth once some critical level of income has been reached.

(Grossman and Krueger 1994 (hereafter GK1994): 18-19)

The evidence suggests that it is possible to ‘grow out’ of some environmental problems.

(Shafik and Bandyopadhyay 1992 (hereafter SB 1992): 23)

We have found, through an examination of air-quality measures in a cross-section of countries, that economic growth tends to alleviate pollution problems once a country’s per capita income reaches about $4,000 to $5,000 US dollars.

(Grossman and Krueger 1991 (hereafter GK1991): 35-6)

Environmental degradation overall (combined resource depletion and pollution) is worse at levels of income per capita under $1,000. Between

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