Pollution and Growth: What Do We Know?

This paper reviews the empirical evidence on the relationship between economic output and various dimensions of air and water quality. Pollution may rise with growth, because an increased scale of economic activity means more emissions, ceteris paribus. Economic growth may be associated with a change in the composition of economic output, however, or in the techniques that are used in production. In the event, growth may lead to an alleviation of some forms of environmental problems. We find that not all measures of environmental quality have been similarly affected by increases in output. Along some dimensions, conditions have improved monotonically with increases in per capita output and the associated rises in standards of material living. For other pollutants there is an inverted-u shaped relationship with output. Finally, for some types of pollution there is no evidence at all that a turning point has yet been reached. The paper goes on to discuss the economic factors that determine the likely pattern for different types of pollutants and the implications of the findings for environmental policy.