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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/downloads/wpapers-00-01/740.pdf
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Bibliographic Info

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
Date of revision:
Handle: RePEc:mlb:wpaper:740

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Postal: Department of Economics, The University of Melbourne, 5th Floor, Economics and Commerce Building, Victoria, 3010, Australia
Phone: +61 3 8344 5289
Fax: +61 3 8344 6899
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Web page: http://www.economics.unimelb.edu.au
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Keywords: ENVIRONMENT ; ECONOMETRICS ; ECONOMIC DEVELOPMENT;

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References

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  1. de Bruyn, S. M. & van den Bergh, J. C. J. M. & Opschoor, J. B., 1998. "Economic growth and emissions: reconsidering the empirical basis of environmental Kuznets curves," Ecological Economics, Elsevier, vol. 25(2), pages 161-175, May.
  2. Lant Pritchett & Lawrence H. Summers, 1996. "Wealthier is Healthier," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 841-868.
  3. Kakwani, N., 1993. "Performance in living standards : An international comparison," Journal of Development Economics, Elsevier, vol. 41(2), pages 307-336, August.
  4. 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.
  5. 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.
  6. Grossman, Gene M & Krueger, Alan B, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 353-77, May.
  7. Marzio Galeotti & Alessandro Lanza, 2000. "Desperately Seeking Environmental Kuznets," Development Working Papers 137, Centro Studi Luca d\'Agliano, University of Milano.
  8. 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.
  9. Munasinghe, Mohan, 1999. "Is environmental degradation an inevitable consequence of economic growth: tunneling through the environmental Kuznets curve," Ecological Economics, Elsevier, vol. 29(1), pages 89-109, April.
  10. 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.
  11. Kaufmann, Robert K. & Davidsdottir, Brynhildur & Garnham, Sophie & Pauly, Peter, 1998. "The determinants of atmospheric SO2 concentrations: reconsidering the environmental Kuznets curve," Ecological Economics, Elsevier, vol. 25(2), pages 209-220, May.
  12. 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.
  13. Panayotou T, 1993. "Empirical tests and policy analysis of environmental degradation at different stages of economic development," ILO Working Papers 292778, International Labour Organization.
  14. 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.
  15. Cameron, L. & Mellington, N., 1999. "Female Education and Child Mortality in Indonesia," Department of Economics - Working Papers Series 693, The University of Melbourne.
  16. Scruggs, Lyle A., 1998. "Political and economic inequality and the environment," Ecological Economics, Elsevier, vol. 26(3), pages 259-275, September.
  17. Agras, Jean & Chapman, Duane, 1999. "A dynamic approach to the Environmental Kuznets Curve hypothesis," Ecological Economics, Elsevier, vol. 28(2), pages 267-277, February.
  18. 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.
  19. Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
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  21. Magnani, Elisabetta, 2000. "The Environmental Kuznets Curve, environmental protection policy and income distribution," Ecological Economics, Elsevier, vol. 32(3), pages 431-443, March.
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Citations

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Cited by:
  1. Farasat A.S. Bokhari & Yunwei Gai & Pablo Gottret, 2005. "Government Health Expenditures and Health Outcomes," Working Papers wp2005_02_01, Department of Economics, Florida State University, revised May 2006.
  2. Oparinde, Adewale, 2010. "Investigating the relationship between income, health and biomass consumption: a panel data analysis," MPRA Paper 39305, University Library of Munich, Germany.
  3. Shao, Shuai & Yang, Lili & Yu, Mingbo & Yu, Mingliang, 2011. "Estimation, characteristics, and determinants of energy-related industrial CO2 emissions in Shanghai (China), 1994-2009," Energy Policy, Elsevier, vol. 39(10), pages 6476-6494, October.
  4. Nagar, A.L. & Shovon Ray, Amit & Sawhney, Aparna & Samanta, Sayan, 2008. "The Interface between economic development, health and environment in India: An econometric investigation," Working Papers 08/56, National Institute of Public Finance and Policy.
  5. Dinda, Soumyananda, 2005. "A theoretical basis for the environmental Kuznets curve," Ecological Economics, Elsevier, vol. 53(3), pages 403-413, May.
  6. Gürlük, Serkan, 2009. "Economic growth, industrial pollution and human development in the Mediterranean Region," Ecological Economics, Elsevier, vol. 68(8-9), pages 2327-2335, June.
  7. Costantini, Valeria & Monni, Salvatore, 2008. "Environment, human development and economic growth," Ecological Economics, Elsevier, vol. 64(4), pages 867-880, February.
  8. Tanger, Shaun M. & Zeng, Peng & Morse, Wayde & Laband, David N., 2011. "Macroeconomic conditions in the U.S. and congressional voting on environmental policy: 1970-2008," Ecological Economics, Elsevier, vol. 70(6), pages 1109-1120, April.
  9. María José Gutiérrez, 2004. "Dynamic Inefficiency in an Overlapping Generation Economy with Pollution and Health Costs," Economic Working Papers at Centro de Estudios Andaluces E2004/38, Centro de Estudios Andaluces.
  10. Patterson, Murray G., 2006. "Development of ecological economics in Australia and New Zealand," Ecological Economics, Elsevier, vol. 56(3), pages 312-331, March.
  11. Valeria Costantini & Chiara Martini, 2010. "A Modified Environmental Kuznets Curve for sustainable development assessment using panel data," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 10(1), pages 84-122, January.
  12. Wang, Sen & Liu, Can & Wilson, Bill, 2007. "Is China in a later stage of a U-shaped forest resource curve? A re-examination of empirical evidence," Forest Policy and Economics, Elsevier, vol. 10(1-2), pages 1-6, December.
  13. Dinda, Soumyananda, 2004. "Environmental Kuznets Curve Hypothesis: A Survey," Ecological Economics, Elsevier, vol. 49(4), pages 431-455, August.
  14. Donatella Baiardi, 2012. "Innovation and the environmental Kuznets curve: the case of CO, NMVOCs and SOx in the Italian regions," Quaderni di Dipartimento 156, University of Pavia, Department of Economics and Quantitative Methods.
  15. Kenny, Charles, 2005. "Why Are We Worried About Income? Nearly Everything that Matters is Converging," World Development, Elsevier, vol. 33(1), pages 1-19, January.
  16. repec:hal:journl:halshs-00384500 is not listed on IDEAS

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