Environmental Kuznets curves—real progress or passing the buck ...

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D.S. Rothman / Ecological Economics 25 (1998) 177–194
Fig. 1. Historical shares of GDP per sector for the US and the UK (Data from Maddison (1989, 1995)).
sectional data, respectively, as economic development
proceeds, i.e. income levels increase, the
dominant sector tends to shift from agriculture to
industry and then to services. The first shift is
likely to result in increased environmental impact,
whereas the latter in reduction.
Adding to this seemingly inevitable change in
the structure of economies are improvements in
technology over time and changing demands from
the people within countries as their incomes rise.
The latter effect presumes that environmental
quality is characterized as a ‘normal’ good, i.e. the
demand for environmental quality rises as consumers’
income rises. This will have an impact on
consumers’ preferences, which can have a direct
effect on the structure of the economy via purchases
in the market. Furthermore, consumer
preferences can have a strong indirect impact via
the policy arena by calling for the implementation
of various taxes, tariffs, subsidies and regulations
(Komen et al. (1996) for an empirical example of
work in this area). Finally, to satisfy this increasing
demand for a cleaner environment from the
populace, it is argued that nations have a greater
capacity to remedy environmental problems as
their economies develop, and also more rapid
growth will mean a more rapid turnover of an
older, dirtier technology stock with a newer,
cleaner one 4 .
Many of these effects are implicit in the empirical
work to date on the EKC. Very little explicit
work has been undertaken to separate out the
importance of the effects of changing composition
and changing technology, however. A time trend
intended to capture technology improvements has
also been incorporated in some of the research
(Grossman and Krueger, 1992, 1994; Shafik and
Bandyopadhyay, 1992; Cropper and Griffiths,
4 See Radetzki (1992) and López (1994) for further discussions
on why growth may actually benefit the environment,
and also Diwan and Shafik (1992) for a discussion on why
poor nations borrow against nature rather than against future
income. Sen (1995) comments on the importance of a binding
constraint—subsistence—in determining choices that may
have environmental repercussions.