Searching for Empirical Regularity and Theoretical Structure: The Environmental Kuznets Curve

In the early 1990's the attention of economists was captured by empirical evidence suggesting rising income levels in developing countries could be good rather than bad for the environment. This evidence drove a stake into the heart of those opposing growth on environmental grounds. Ultimately, the view that income growth by itself eventually will be good for the environment also appears to be wrong because a causal relationship between income and environmental quality cannot be demonstrated. The original empirical estimates appear fragile at best compared to the use of more representative datasets, higher quality data, and more appropriate econometric techniques. More plausible stories revolve around good government, effective regulation and diffusion of technological change. These factors tend to be related in a diffuse manner with higher income and suggest it is likely, but not inevitable, that a society will chose to reduce pollution levels as it becomes wealthier.