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Interrelationships between Income, Health and the Environment: Extending the Environmental Kuznets Curve Hypothesis

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Author Info
Gangagharan, L.
Valenzuela, M.R.
Abstract

This study examines the link between the health indicators and the environmental variables for a cross-section of countries widely dispersed in the economic development spectrum. While the environment and income are seen to have an inverted U-shaped relationship (Environmental Kuznets Curve hypothesis), it is also well established that health and environment are positively related. Our study focuses on the implications of this for the relationship between health and income. In the early phases of income growth, the gains in health and the losses in environmental quality could cancel each other out and this challenges the idea that as incomes increase health would always improve. To empirically analyse these issues, we estimate a two-stage least squares model that focuses on the impact of income and the environment on health status, with environment being an endogenous variable. Our results show that the environmental stress variable has a significant negative effect on health status. At the same time, GNP levels and improvements in access to better sanitation and safe water are shown to vary positively with health status variables. We find that the health gains obtained through improved incomes can be negated to a significant extent if the indirect effect of income acting via the environment is ignored. Research findings in this regard would be a useful policy instrument towards maximising both the environmental and health gains that come with economic growth and development.

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File URL: http://www.economics.unimelb.edu.au/SITE/research/workingpapers/wp00_01/740.pdf
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Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 740.

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Length: 35 pages
Date of creation: 2000
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Handle: RePEc:mlb:wpaper:740

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Related research
Keywords: ENVIRONMENT ECONOMETRICS ECONOMIC DEVELOPMENT

Find related papers by JEL classification:
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General

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  1. Torras, Mariano & Boyce, James K., 1998. "Income, inequality, and pollution: a reassessment of the environmental Kuznets Curve," Ecological Economics, Elsevier, vol. 25(2), pages 147-160, May. [Downloadable!] (restricted)
  2. Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
  3. Cropper, Maureen L. & Simon, Nathalie B. & Alberini, Anna & Sharma, P. K., 1997. "The health effects of air pollution in Delhi, India," Policy Research Working Paper Series 1860, The World Bank. [Downloadable!]
  4. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September. [Downloadable!] (restricted)
  5. Gerdtham, Ulf-G. & Sogaard, Jes & Andersson, Fredrik & Jonsson, Bengt, 1992. "An econometric analysis of health care expenditure: A cross-section study of the OECD countries," Journal of Health Economics, Elsevier, vol. 11(1), pages 63-84, May. [Downloadable!] (restricted)
  6. Pritchett, Lant & Summers, Lawrence H., 1993. "Wealthier is healthier," Policy Research Working Paper Series 1150, The World Bank. [Downloadable!]
  7. Rothman, Dale S., 1998. "Environmental Kuznets curves--real progress or passing the buck?: A case for consumption-based approaches," Ecological Economics, Elsevier, vol. 25(2), pages 177-194, May. [Downloadable!] (restricted)
  8. Mody, Ashoka & Roy, Subhendu & Wheeler, David & Dasgupta, Susmita, 1995. "Environmental regulation and development : a cross-country empirical analysis," Policy Research Working Paper Series 1448, The World Bank. [Downloadable!]
  9. Suri, Vivek & Chapman, Duane, 1998. "Economic growth, trade and energy: implications for the environmental Kuznets curve," Ecological Economics, Elsevier, vol. 25(2), pages 195-208, May. [Downloadable!] (restricted)
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