Environmental Kuznets Curve

Something which I came across recently, which I have to say I hadn't heard of before, is the Environmental Kuznets Curve. The idea is quite straightforward: as income increases, environmental quality deteriorates as there is industrialisation until it reaches some income level or 'turning point', After this environmental pressures begin to lift. This creates an inverted U-shaped relationship between pollutants and per capita income (see below). This (according to Dinda, 2004) is for 2 reasons:

1. After the shift from a clean, agrarian economy to a polluting, industrial one, there is a further move to a clean service economy;
2. People with higher incomes tend to (and are able to) have higher preferences for environmental quality

source: Google images

This challenges the assumption (that I have made in previous posts) that as societies get richer and more people become consumers, environmental degradation worsens. Cropper and Griffiths (1994) examine the effect of population pressures on deforestation in developing countries and find that for example demand for fuelwood initially rises with income but then falls as more 'modern' sources of energy are used. They also find that the denser the population, the higher the income needed to 'offset' its effect on deforestation.

There are some issues I found with it and some that in fact Dinda (2004) does address towards the end of her article. Firstly, for this to work at a global scale – to combat climate change – we'd have to get the entire Earth's population past this 'threshold' (the value of which incidentally no one can agree on) over to the high income end of the spectrum. Even if this were miraculously to happen, what if in the process of doing so, we cause irreversible damage; even if no one were polluting much by that point, that wouldn't help if our atmosphere were already clogged with CO2. Actually Dinda makes the point that most of the world's population would be going from the poor 'pre-industrial economies' to the middle-income 'industrial economies' section, which is when income growth will cause the most environmental damage. Also, Dinda points out that an inverted U-shaped curve is not found for all pollutants, and certainly only ones with short-terms costs, as opposed to stocks of waste or pollutants with long-term, more dispersed costs (like I mentioned above).

So even though it's a comforting idea, especially coupled with the fact that population growth is slowing down, in practice it's not that simple. I definitely wouldn't place all my eggs in that basket.