Environmental Engineering Reference
In-Depth Information
proxy the spatial intensity of economic activity, one for cities and the other
one for the entire nation. The variable for spatial intensity of economic
activities in cities was the product of a city's population density and the
per capita GDP of the nation in which the city was located, while that for
the nation was the GDP divided by the nation's area. The result of their
study indicated a U-shaped relationship between both per capita GDP
and atmospheric concentration of SO
2
. The concentration of SO
2
tended
to reduce as per capita income rose from $3000 to $12500, however,
it increased beyond $12500. On the other hand, there was an inverted
U-shaped relationship between spatial intensity of economic activity and
atmospheric concentration of SO
2
with turning points of $6.7 million per
square mile for the nation variable and $153 million per square mile for the
city variable. They suggested that the impetus for policies and technologies
to reduce SO
2
atmospheric concentration was spatial intensity of economic
activity rather than income. This implied that atmospheric concentration
of SO
2
would decline faster than indicated in previous studies, however, it
would depend on the rate of income growth relative to population growth.
They suggested that the inverted U-shape found in previous studies might
be due to the omission of the variables representing changes in the mix
and spatial intensity of economic activity, and therefore the pattern was a
proxy for changes in the mix of economic activity associated with changes
in per capita GDP.
Household preferences and income elasticity of demand
Income elasticity of demand for environmental quality changes as income
rises. One of the explanations given for the downward sloping section of
the EKC is that as per capita income increases, the demand or preference
for environmental amenity also rises. A number of studies attempted
to study the role of preferences in the economic-growth-environment
relationship.
In a study, McConnell (1997) tried to understand the role of prefer-
ences, and in particular income elasticity of demand for environmental
quality in the EKC relationship, by decomposing the reduced-form ef ect
of income changes on pollution. He used panel data of approximately 50
countries from the 1970s to 1990s. The types of environmental indicators
were for ambient urban air and water pollutants, such as sulphur dioxide,
suspended particulates, nitrogen oxides, carbon monoxide, dark matter,
dissolved oxygen, faecal coliform and emissions, in the case of toxic
substances and carbon dioxide. He concluded that:
preferences that were consistent with a high income elasticity of demand were
neither necessary nor sui cient for pollution to grow with income. Simple
