Kuznets Curve - Environmental Kuznets Curves

Environmental Kuznets Curves

The environmental Kuznets curve is a hypothesised relationship between environmental quality and economic development: various indicators of environmental degradation tend to get worse as modern economic growth occurs until average income reaches a certain point over the course of development. Although the subject of continuing debate, some evidence supports the claim that environmental health indicators, such as water and air pollution, show the inverted U-shaped curve. It has been argued that this trend occurs in the level of many of the environmental pollutants, such as sulfur dioxide, nitrogen oxide, lead, DDT, chlorofluorocarbons, sewage, and other chemicals previously released directly into the air or water.

For example, between 1970 and 2006, the United States' inflation-adjusted GDP grew by 195%, the number of cars and trucks in the country more than doubled, and the total number of miles driven increased by 178%. However, during that same time period regulatory changes meant that annual emissions of carbon monoxide fell from 197 million tons to 89 million, nitrogen oxides emissions fell from 27 million tons to 19 million, sulfur dioxide emissions fell from 31 million tons to 15 million, particulate emissions fell by 80%, and lead emissions fell by more than 98%.

However, there is little evidence that the relationship holds true for other pollutants, for natural resource use or for biodiversity conservation. For example, energy, land and resource use (sometimes called the "ecological footprint") do not fall with rising income. While the ratio of energy per real GDP has fallen, total energy use is still rising in most developed countries. Another example is the emission of many greenhouse gases, which is much higher in industrialised countries. In addition, the status of many key "ecosystem services" provided by ecosystems, such as freshwater provision and regulation (Perman, et al., 2003), soil fertility, and fisheries, have continued to decline in developed countries.

In general, Kuznets curves have been found for some environmental health concerns (such as air pollution) but not for others (such as landfills and biodiversity). Advocates of the EKC argue that this does not necessarily invalidate the hypothesis – the scale of the Kuznets curves may differ for different environmental impacts and different regions. If the search for scalar and regional effects can salvage the concept, it may yet be the case that a given area will need more wealth in order to see a decline in environmental pollutants. In contrast, a thermodynamically enlightened economics suggests that outputs of degraded matter and energy are an inescapable consequence of any use of matter and energy (so holds the second law); some of those degraded outputs will be noxious wastes, and whether and how their production is eliminated depends more on regulatory schemes and technologies at use than on income or production levels. In one view, then, the EKC suggests that "the solution to pollution is more economic growth;" in the other, pollution is seen as a regrettable output that should be reduced when the benefits brought by its production are exceeded by the costs it imposes in externalities like health decrements and loss of ecosystem services.

For statisticians, deforestation appears to follow a Kuznets curve. Among countries with a per capita GDP of at least $4,600, net deforestation has ceased to exist. Yet it has been shown that wealthier countries are able to maintain forests along with high consumption by exporting deforestation. For instance, Japan, which is 70% forested, focuses its economy on capital-intensive technological and manufactured goods for export, while purchasing timber that is logged unsustainably and often illegally in the forests of South-East Asia.