"Environmental degradation is neither the inevitable price of, nor a desirable path for, economic development

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“Environmental degradation is neither the inevitable price of, nor a desirable path for, economic development.”

 (UNDP, et al, 2005)


        Environmental degradation is now apparent on a global scale.  In addition to the deterioration of what were once considered free goods (such as air and water), escalating scarcity of natural resources, deforestation, desertification and threatened bio-diversity are now commonplace across the spectrum.  There are certainly no reservations over the scale of this degradation, however there is much controversy concerning the apparent environmental degradation – economic development nexus.  

Many have argued that short-term tradeoffs exist in the form of environmental degradation, for superior long-term economic gains.  One of the positions put forward is that environmental degradation is the result and inevitable price of economic development.  This viewpoint is based on the Environmental Kuznets Curve, regarding environmental degradation as the ‘necessary evil’ for achieving ‘economic development’ and suggesting that environmental assets are degraded in the early stages of economic development, only to improve after some income threshold has been passed at a later point.  

In the last decade, extensive literature has argued that a direct link between environmental degradation and economic development is too simplistic and that the nexus is governed by a complex web of factors.  These authors have argued that other explanatory variables should be included in the models, including; inequality (Kaufman et al, 1998), income growth, institutional and political factors (Torras & Boyce, 1998) and international trade (Stern et al., 1996)

The following paper gives an overview of the literature published to date and puts forward a conceptual, methodological and fundamental critique, before concluding with some reflections on the debate.

The Environmental Kuznets Curve (EKC) Hypothesis

The EKC Hypothesis was originally put forward by (and named after) Simon Kuznets (Kuznets, 1955) who was the first to observe the relationship between inequality and per capita income.  Today, this bell shaped curve has been used to explain the relationship between environmental degradation and economic development.  An example of its use is in the analysis of the relationship between indices of air and water pollution and per capita income (as an indicator of economic growth).  Studies by Shafik (1994) and Stern et al. (1996) show clearly how levels may at first increase, and then decrease as per capita income grows.  This evidence supports the view that environmental degradation may not necessarily be the inevitable price of economic development in the long term.

        Munasinghe (1999) describes the EKC hypothesis as an approach that seeks to relate the state of the environment to the stage of development. He argues that Developing countries have much to learn from the experiences of industrialized nations, and by restructuring growth and development they could `tunnel' through any potential EKC - thereby avoiding the transition through the stages of growth that involve relatively high (and even irreversible) levels of environmental harm.

In contrast to Munasinghe, Stern et al. (1996) criticize EKC estimates, arguing that the inference that further development will reduce environmental degradation is dependent on the assumption that world per capita income is normally distributed when in fact median income is far below mean income.         Furthermore, evidence has suggested that incorporating environmental degradation into development plans is a route that will ultimately lead to situations in which the benefits of rising GDP become offset – or even outweighed – by the economic losses resulting from damaged ecosystem failure and the inability to provide crucial services, such as clean air and water.

 (Gangadharan & Valenzuela, 2001).  

In this scenario, ‘environmental degradation is neither the inevitable price of, nor a desirable path for, economic development’ (UNDP, et al, 2005).    As without such services, those affected will suffer greatly in terms of health and well-being, as biased development efforts against the environment and the poor will further complicate the achievement of sustainable development.  

More importantly, it cannot be expected that the same relationship exists between income or ‘economic development’ and different dimensions of environmental degradation.  Shafik (1994) has observed that the EKC relationship can be observed only for specific environmental pressure factors and not for others, “Where environmental quality directly affects human welfare, higher incomes tend to be associated with less degradation.  But where the costs of environmental damage can be externalized, economic growth tends to result in a steady deterioration of environmental quality.  Further criticisms of the EKC hypothesis, are that it fails to include many forms of environmental degradation such as biodiversity loss, desertification or global climate change, each of which may entail irreversible losses; that no amount of income growth can restore.          

Economic Growth and Environmental Degradation

The sustainability of resources and environmental decline were first considered when early economists noted the importance of declining resource quality for economic sustainability.  Today, importance has shifted towards natural resources upon which humans rely.  

Where natural resources consist of environmental systems such as the ozone layer, tropical forests or the global atmosphere.  Although environmental degradation constitutes a major concern, it is not the inevitable price of, nor a desirable path for, economic development.  There are examples of countries which have seen increases in both population and economic activity that have experienced improvements in their environment.  For example, in the past 30 years, the economic output of most western industrialized countries has risen by over 50% and yet the quality of many of their environments has improved.  Devlin & Grafton (1998) note that:

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‘The United States has seen a dramatic decline in the total emissions of lead and carbon monoxide, and levels of total suspended particulates are less than half what they were in the 1940s.  London, at one point known for the poor quality of its air, is now a much healthier place than a generation ago.’

(Devlin & Grafton, 1998: 14)

Nonetheless, in most parts of the world the quality of the environment continues to diminish.  Poor air and water quality, environmental degradation, and threatened biodiversity are becoming commonplace across the spectrum from newly industrialized regions to ...

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This is an excellent discussion of some key ideas related to economic development and environmental degradation. It is highly conceptual, rather than being based on case study information. There is evidence of extensive literature research, and the author shows an awareness of how these ideas relate to other key issues of global significance.