Climate Change and Agriculture - The Oxford Topic of Food, Politics, and Society - page 459

Expanding the Environmental
Kuznets Curve
The most controversial of the links in the argument for synergies between desir-
able outcomes in environmental protection, agricultural improvements, and poverty
reduction is from reduction of poverty to improved environmental outcomes. Early
empirical evidence identified a decidedly nonlinear relationship between economic
growth and a number of pollutants in the early 1990s (reviewed in Grossman and
Krueger 1995). Graphing pollution or damage against income produced an inverted
U-shaped curve: For poorer countries, economic growth appears to lead to increases
in some forms of environmental damage. As growth continues, however, the damage
begins to reverse itself so that increased income is associated with better environmen-
tal outcomes. Because of its similarity with Kuznets' hypothesized relationship between
inequality and income—in which inequality increases at lower levels of national income
but improves with higher levels of income—this relationship has been called the
Environmental Kuznets Curve (EKC).
The EKC generated considerable controversy. Even as this relationship was being
introduced, Grossman and Krueger (1995) were quick to emphasize that this is not
an automatic relationship. Although greener technology has a clear role to play and is
connected with economic growth, they argue, policy changes are the more important
factor. A number of other hypotheses will generate similar dynamics. It may be that
environmental quality is a luxury good that people invest in through consumer and
political advocacy, being willing to pay higher prices for goods and service delivered
in eco-friendly ways, and accepting higher direct and indirect taxes to reduce environ-
mental externalities (Jaeger, 1998). Andreoni and Levinson (2001) demonstrate that
the inverted U-shaped curve can be generated by increasing returns to abatement tech-
nology; that is, it is cheaper to abate one unit of pollution the more pollution there is.
A hypothesis that the phenomenon is caused by exporting polluting industries to devel-
oping countries was discounted by Cole's (2004) evidence. Yet another possibility is that
people's discount rates depend on their income and particularly chances of survival; the
more likely it is that I will not live to see the future, the less concern I give for long-run
concerns like environmental sustainability. Improvements in income lead to improve-
ments in survival and, therefore, lower discount rates.
Since the early work, numerous papers have tested the EKC. Some, such as Fodha
and Zaghdoud (2010) in Tunisia, find support for the EKC in some pollutants but not
others. Others support the EKC in some geographic areas but not others, such as Culas
(2012) who finds an inverted U-shaped relationship between deforestation and growth
in Latina America and Africa, but a U-shaped relationship in Asia. Most do not find
a turning point for carbon dioxide (e.g., Fodha and Zaghdoud 2010, He and Richard
2010). Webber and Allen (2010) conclude that the relationship between income and pol-
lution differs by pollutant and process. Consequently, this section of the chapter focuses