Monday, January 4, 2016

The Environmental Kuznets Curve after 25 Years

This year marks the 25th anniversary of the release of the working paper: "Environmental Impacts of a North American Free Trade Agreement" by Gene Grossman and Alan Krueger, which launched the environmental Kuznets curve industry. I have a new working paper out whose title capitalizes on this milestone. This is my contribution to the special issue of the Journal of Bioeconomics based on the workshop at Griffith University that I attended in October. It's a mix between a survey of the literature and a summary of my recent research with various coauthors on the topic.

Despite the pretty pictures of the EKC in many economics textbooks, there isn't a lot of evidence for an inverted U-shape curve when you look at a cross-section of global data:

Carbon emissions from energy use and cement production and sulfur dioxide emissions both seem to be monotonically increasing in income per capita. Greenhouse gas emissions from agriculture and land-clearing (AFOLU, lower left) or particulate concentrations (bottom right) just seem to be amorphous clouds. In fact, we do find an EKC with an in sample income turning point for PM 2.5 pollution, but only when we look at changes over time in individual countries. Interestingly, Grossman and Krueger originally applied the EKC to ambient concentrations of pollutants and it is there that it seems to work best.

The paper promotes our new "growth rates" approach to modeling emissions. Here are graphs of the growth rates of pollution and income per capita that exactly match the traditional EKC graphs above:

There is a general tendency for declining economies to have mostly declining pollution and vice versa, though this effect is strongest for energy-related carbon emissions. The graphs for sulfur and AFOLU GHG emissions are both shifted down by comparison. There is a general tendency unrelated to growth for these pollutants to decline over time - a negative "time effect". Growth has a positive effect though on all three. PM 2.5 (lower right) is a different story. Here economic growth eventually brings down pollution. We don't find a significant negative time effect.

I first got interested in the EKC in November 1993 when I was sitting in Mick Common's office at the University of York where I'd recently started as a post-doc (though I was still working on my PhD). He literally drew the EKC on the back of an envelope and asked whether more growth would really improve the environment even if the EKC was true. I did the basic analysis really quickly but then it took us another couple of years to get the paper published in World Development.


  1. Loved the post you have shared here with us its so interesting and and informative. Thanks for sharing here with us.

  2. As said Homemade Detox Cleanse, Thanks for sharing this interesting and informative post.
    in line with your statement that "Despite the pretty pictures of the EKC in many economics textbooks, there isn't a lot of evidence for an inverted U-shape curve when you look at a cross-section of global data",
    I would present to you my recent article in the Journal of Environmental Planning and Management that uses cross-sectional data on water footprint and finds no evidence of the bell-shaped relationship.
    Sebri, M., 2015. Testing the Environmental Kuznets curve hypothesis for water footprint indicator: a cross-sectional study. Journal of Environmental Planning and Management. Available at: