Environmental Engineering Reference
In-Depth Information
reforms could be at the expense of violating ecological thresholds, espe-
cially during the crossing-over stage of the EKC. The author said that eco-
nomic reform was good for both the economy and the environment only if
the reform introduced complementary environmental measures as part of
the reform package in order to address the imperfections associated with
it to mitigate environmental harm. Addressing such imperfections, which
include policy distortions, market failures and institution constraints,
would allow the reform programme to go forward without adverse
impacts on the environment. Finally, the author recommended (1) caution
in introducing policy reforms with great consideration to the timing and
sequencing of the policies introduced and (2) addressing specii c distor-
tions in the economy rather than a wide economic reform programme with
fewer environmental gains.
Panayotou (2000) argued that the EKC relationship between economic
growth and the environment was not optimal or inevitable. He gave three
reasons. First, the environment did not improve because of higher income
levels, but as a result of environmental legislation and institutions due
to the higher demand for better environmental quality. It was the policy
intervention that determined the turning of the shape and height of the
EKC. Second, the damage that could accumulate in a country until the
environmental improvements were realized could exceed by far the present
value of economic growth and better environmental quality. Again envi-
ronmental policy was necessary to mitigate the environmental damage at
early stages of development. Third, the height of the EKC, which rel ected
the environmental damage or what the author called 'environmental price'
as a result of economic growth, was determined by the ef ectiveness of
policies and ei ciency of markets. The higher the externalities, undei ned
property rights and harmful subsidies, the higher the environmental price
as a result of economic growth. In other words, market and policy fail-
ures resulted in unnecessary environmental degradation and economic
inei ciency. Panayotou argued that better management of the resource
base, especially in the presence of ecological thresholds that could be irre-
versible, would result in an optimal economic growth and environmental
improvement.
The process of dematerialization, which was dei ned as the 'unlinking
of income and the use of nature', was examined by Canas et al. (2003).
Dematerialization was related to the concept of strong sustainability:
the maintenance of natural capital. It could mean an absolute reduction
in the use of material (strong dematerialization) or just a reduction in
the material intensity of income (weak dematerialization). They tested the
EKC hypothesis using the direct material input (DMI) per capita as the
dependent variable and per capita GDP as the independent variable for
