ECONOMIC-GROWTH AND ENVIRONMENTAL DEGRADATION - THE ENVIRONMENTAL KUZNETS CURVE AND SUSTAINABLE DEVELOPMENT

In this paper we critically examine the concept of the environmental K uznets curve (EKC). It proposes that there is an inverted U-shape rela tion between environmental degradation and income per capita, so that, eventually, growth reduces the environmental impact of economic activ ity. The concept is dependent on a model of the economy in which there is no feedback from the quality of the environment to production poss ibilities, and in which trade has a neutral effect on environmental de gradation. The actual violation of these assumptions gives rise to fun damental problems in estimating the parameters of an EKC. The paper id entifies other econometric problems with estimates of the EKC, and rev iews a number of empirical studies. The inference from some such EKC e stimates that further development will reduce environmental degradatio n is dependent on the assumption that world per capita income is norma lly distributed when in fact median income is far below mean income. W e carry out simulations combining EKC estimates from the literature wi th World Bank forecasts for economic growth for individual countries, aggregating over countries to derive the global impact. Within the hor izon of the Bank's forecast (2025) global emissions of SO2 continue to increase, Forest loss stabilizes before the end of the period but tro pical deforestation continues at a constant rate throughout the period . Copyright (C) 1996 Elsevier Science Ltd