Environmental Engineering Reference
In-Depth Information
proposition that economic growth improved the environment due to
reasons other than the ones mentioned by Arrow et al. He referred in
his argument to two well-known relationships: (1) the close correlation
between economic growth and the increase in energy consumption and
(2) most of the environmental problems were directly traceable to the
unsustainable use of fossil fuels and/or other materials, such as toxic heavy
metals and chlorinated chemicals, being a potential waste according to the
basic law of conservation.
Stern et al. (1996) critically examined the concept of the EKC and they
concluded that there were three major generic problems to the estimation
and testing of EKCs. First was the assumption of unidirectional relation-
ship from economic growth to environmental quality and no feedback
from the environment to production. Second was the assumption that
international trade associated with development did not af ect environ-
mental quality, while standard trade theory implied that under free trade,
developing countries would specialize in producing labour-intensive goods
and use their natural resources, while developed countries would special-
ize towards human capital and manufacture of capital-intensive goods.
This specialization and the existence of environmental regulation would
reduce environmental degradation in developed countries while increasing
it in developing ones. In other words, developed countries would migrate
polluting activities to poorer countries by increasing substitution towards
importing manufactured goods. They also added that historical experi-
ences of some economies could not be extrapolated to the whole global
economy because once poor countries adopted similar levels of environ-
mental policies, they would be faced with the problem of abating these
activities as there would be no unregulated countries to migrate pollution
to. Therefore, the whole world could not achieve a similar transformation.
Third, the data on environmental problems were patchy in coverage and
poor in quality, and therefore were insui cient to provide conclusions or
to project future trends. They suggested that in order to project future
trends using econometric analysis, they had to take the form of structural
models rather than the generally reduced-form equations used to examine
the EKC hypothesis. Such models would inform choices for policy-makers
and would require policy adjustments in order to sustain environmental
development of the global economy.
Farber (1995) also criticized the notion that economic growth induced
improvements in environmental quality as naive as it was based on obser-
vations of only a limited number of environmental variables, which were
local pollutants, and ignored global pollutants and their impact on the
environment. Moreover, most i ndings resulted from empirical research
and observations using cross-sectional country data. This was very limited
