Ecological Overshooting along Development Paths: Income Distribution, Demand, and Learning-by-Doing

Economic development and environmental degradation have moved in tandem. Declining emissions intensity has not prevented aggregate emissions from rising. Pollution can keep accumulating after emissions fall because stocks adjust more slowly than flows. We develop a demand-driven framework in which income distribution, market scale, and cumulative learning-by-doing shape environmental outcomes. Because marginal emissions are high at intermediate incomes, middle-class demand drives output and learning while raising emissions, an equity-pollution dilemma. A development path can be feasible in the long run yet overshoot, even when emissions fall from the outset. Overshoot is endogenous to the path, not a scenario input. Distribution, demand, and learning set the level and decline rate of emissions, and hence the timing and magnitude of peak pollution. The composition of demand raises that peak, whereas market scale raises it below a threshold and lowers it beyond, so demand-driven development is both the poison and the remedy of its own transition. Trade globalizes the demand multiplier. Along the catch-up paths considered, poverty exit adds an extensive margin to the e!ective demand base, while the leader’s accumulated pollution narrows the latecomer’s ecological headroom. Green growth is a property of development paths, not endpoints.