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The environmental Kuznets curve and satiation: a simple static model

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  • Lieb, Christoph M.
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    Abstract

    The environmental Kuznets curve (EKC) is a hypothesis stating that pollution rises with income at low income levels but falls at higher ones. We analyse the EKC in a representative consumer model in which pollution is generated by consumption and can be abated. We show that at low income levels no abatement is optimal and pollution increases with income. Once abatement expenditures are positive, we demonstrate that satiation in consumption is not only sufficient to find an EKC, but a tendency to satiation or in other words the condition that environmental quality is a normal good is even necessary if we assume a standard functional form for the pollution function. Finally, we reconsider the results of two related models of the literature: We verify that the relationship between the income elasticity of demand for environmental quality and the EKC is ambiguous.(JEL: D62, O40, Q20)

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    Bibliographic Info

    Article provided by Cambridge University Press in its journal Environment and Development Economics.

    Volume (Year): 7 (2002)
    Issue (Month): 03 (July)
    Pages: 429-448

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    Handle: RePEc:cup:endeec:v:7:y:2002:i:03:p:429-448_00

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    Cited by:
    1. Stern, David I., 2004. "The Rise and Fall of the Environmental Kuznets Curve," World Development, Elsevier, vol. 32(8), pages 1419-1439, August.
    2. James Roumasset & Kimberly Burnett & Hua Wang, 2007. "Is China’s Growth Sustainable?," Working Papers 200723, University of Hawaii at Manoa, Department of Economics.
    3. Managi, Shunsuke, 2006. "Are there increasing returns to pollution abatement? Empirical analytics of the Environmental Kuznets Curve in pesticides," Ecological Economics, Elsevier, vol. 58(3), pages 617-636, June.
    4. Edward Barbier, 2002. "The Role of Natural Resources in Economic Development," Centre for International Economic Studies Working Papers 2002-27, University of Adelaide, Centre for International Economic Studies.
    5. Hannes Egli & Thomas Steger, 2007. "A Dynamic Model of the Environmental Kuznets Curve: Turning Point and Public Policy," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 36(1), pages 15-34, January.
    6. Sjak Smulders & Lucas Bretschger & Hannes Egli, 2005. "Economic growth and the diffusion of clean technologies : explaining environmental Kuznets," CER-ETH Economics working paper series 05/42, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    7. Khanna, Neha & Plassmann, Florenz, 2004. "The demand for environmental quality and the environmental Kuznets Curve hypothesis," Ecological Economics, Elsevier, vol. 51(3-4), pages 225-236, December.
    8. Kijima, Masaaki & Nishide, Katsumasa & Ohyama, Atsuyuki, 2010. "Economic models for the environmental Kuznets curve: A survey," Journal of Economic Dynamics and Control, Elsevier, vol. 34(7), pages 1187-1201, July.
    9. Khanna, Neha & Plassmann, Florenz, 2007. "Total factor productivity and the Environmental Kuznets Curve: A comment and some intuition," Ecological Economics, Elsevier, vol. 63(1), pages 54-58, June.
    10. Martin F. Quaas & Sjak Smulders, 2012. "Brown Growth, Green Growth, and the Efficiency of Urbanization," CESifo Working Paper Series 4044, CESifo Group Munich.
    11. Martin F. Quaas & Sjak Smulders, 2008. "Pollution and the Efficiency of Urban Growth," Working Papers 2008.75, Fondazione Eni Enrico Mattei.
    12. Ankarhem, Mattias, 2005. "A Dual Assessment of the Environmental Kuznets Curve: The Case of Sweden," UmeÃ¥ Economic Studies 660, Umeå University, Department of Economics.
    13. Burnett, Kimberly M. & Roumasset, James A., 2006. "Environmental Policy Issues for Sustainable Economic Development in China," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25559, International Association of Agricultural Economists.
    14. Christoph Lieb, 2004. "The Environmental Kuznets Curve and Flow versus Stock Pollution: The Neglect of Future Damages," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 29(4), pages 483-506, December.
    15. Dinda, Soumyananda, 2005. "A theoretical basis for the environmental Kuznets curve," Ecological Economics, Elsevier, vol. 53(3), pages 403-413, May.

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