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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. Charles Perrings & George Halkos, 2012. "Who Cares about Biodiversity? Optimal Conservation and Transboundary Biodiversity Externalities," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 52(4), pages 585-608, August.
    2. Sjak Smulders & Lucas Bretschger & Hannes Egli, 2005. "Economic growth and the diffusion of clean technologies : explaining environmental Kuznets," CER-ETH Economics working paper series, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich 05/42, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    3. Hannes Egli & Thomas M. Steger, 2004. "A Dynamic Model of the Environmental Kuznets Curve : Turning Point and Public Poliy," CER-ETH Economics working paper series, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich 04/33, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich, revised May 2005.
    4. Martin F. Quaas & Sjak Smulders, 2008. "Pollution and the Efficiency of Urban Growth," Working Papers, Fondazione Eni Enrico Mattei 2008.75, Fondazione Eni Enrico Mattei.
    5. Edward Barbier, 2002. "The Role of Natural Resources in Economic Development," Centre for International Economic Studies Working Papers, University of Adelaide, Centre for International Economic Studies 2002-27, University of Adelaide, Centre for International Economic Studies.
    6. Ankarhem, Mattias, 2005. "A Dual Assessment of the Environmental Kuznets Curve: The Case of Sweden," UmeÃ¥ Economic Studies, UmeÃ¥ University, Department of Economics 660, Umeå University, Department of Economics.
    7. 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, International Association of Agricultural Economists 25559, International Association of Agricultural Economists.
    8. Khanna, Neha & Plassmann, Florenz, 2004. "The demand for environmental quality and the environmental Kuznets Curve hypothesis," Ecological Economics, Elsevier, Elsevier, vol. 51(3-4), pages 225-236, December.
    9. Martin F. Quaas & Sjak Smulders, 2012. "Brown Growth, Green Growth, and the Efficiency of Urbanization," CESifo Working Paper Series 4044, CESifo Group Munich.
    10. 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, European Association of Environmental and Resource Economists, vol. 29(4), pages 483-506, December.
    11. Managi, Shunsuke, 2006. "Are there increasing returns to pollution abatement? Empirical analytics of the Environmental Kuznets Curve in pesticides," Ecological Economics, Elsevier, Elsevier, vol. 58(3), pages 617-636, June.
    12. James Roumasset & Kimberly Burnett & Hua Wang, 2007. "Is China’s Growth Sustainable?," Working Papers, University of Hawaii at Manoa, Department of Economics 200723, University of Hawaii at Manoa, Department of Economics.
    13. Ryo Horii & Masako Ikefuji, 2014. "Environment and Growth," Working Papers, Fondazione Eni Enrico Mattei 2014.37, Fondazione Eni Enrico Mattei.
    14. Sjak Smulders & Lucas Bretschger & Hannes Egli, 2011. "Economic Growth and the Diffusion of Clean Technologies: Explaining Environmental Kuznets Curves," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 49(1), pages 79-99, May.
    15. Dinda, Soumyananda, 2005. "A theoretical basis for the environmental Kuznets curve," Ecological Economics, Elsevier, Elsevier, vol. 53(3), pages 403-413, May.
    16. David I. Stern, 2003. "The Rise and Fall of the Environmental Kuznets Curve," Rensselaer Working Papers in Economics, Rensselaer Polytechnic Institute, Department of Economics 0302, Rensselaer Polytechnic Institute, Department of Economics.
    17. Kijima, Masaaki & Nishide, Katsumasa & Ohyama, Atsuyuki, 2010. "Economic models for the environmental Kuznets curve: A survey," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 34(7), pages 1187-1201, July.
    18. Khanna, Neha & Plassmann, Florenz, 2007. "Total factor productivity and the Environmental Kuznets Curve: A comment and some intuition," Ecological Economics, Elsevier, Elsevier, vol. 63(1), pages 54-58, June.

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