Environmental Kuznets Curves:
Environmental Wealth And Spending
Author(s)
B. Cushing-Daniels & B. A. Kaiser
Abstract
The existence of an environmental Kuznets curve (EKC) – a pattern of pollution
that rises and then falls with higher levels of real gross domestic product per
capita – remains controversial. Previous research fails to address simultaneity
concerns. We match empirical evidence on EKCs with theoretical underpinnings
and investigate the roles of endowments, spending, and technology. Income
elasticity of demand for environmental quality may vary with output levels.
Varying separability of pollution and production across goods may mask the
presence of EKCs. Demand and supply must be contextualized by the resource
endowment. We describe a model of the connection between collective
environmental provision (government spending) and economic prosperity using
data at the US state level. We examine the inverse of the traditional EKC: the
relationship between state spending on natural resources and the environment
and real gross state product, enabling identification of demand and supply
components of the environmental quality-economic growth tradeoff. Our results
suggest non-linear income effects for environmental quality and support the
hypothesis that at higher incomes, environmental quality is a luxury good. An
EKC is best described as a moving frontier of what people have (endowment),
what people want (demand), and what is feasible (technology/ supply). In this
light, the puzzle of where and when we witness EKCs should be considerably
demystified.
Keywords: environmental Kuznets curve.
1 Introduction
Much of the research on income and environmental quality tests specifically for
the existence of an environmental Kuznets curve (EKC) – a pattern of pollution
Keywords
environmental Kuznets curve.
Related Book
Other papers in this volume
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