Does the Environmental Kuznets Curve Exist? A Theoretical Perspective

Abstract

Over the past decade, the existence and policy implications of the Environmental Kuznets Curve (EKC) have been a hot topic of debate. The rationale behind the EKC is quite simple – over the course of a nation’s economic development process (i.e., as per capita real GDP rises over time), environmental quality initially deteriorates but eventually improves as the desire for a clean environment and the wherewithal to obtain it increases. Should the EKC exist, the solution to environmental degradation is not a cessation to growth as ecological economists believe. Rather, it is the continued growth of a nation’s real GDP. A theoretical model previously developed to derive the EKC is extended and employed to determine the level of truth underlying the EKC hypothesis. The revised model indicates that the EKC resembles a third-degree polynomial and not the concave or inverted U-shaped relationship that is presumed to exist between environmental degradation and per capita real GDP. By taking into consideration Pareto optimal versus sub-optimal pathways and safe ecological limits, it is argued that improved environmental quality and continued human development can only be achieved if the notions of sufficiency, equity, and natural capital maintenance are embraced by policy-makers. When you are citing the document, use the following link http://essuir.sumdu.edu.ua/handle/123456789/8723