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

  • Gangagharan, L.
  • Valenzuela, M.R.

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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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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  1. Susmita Dasgupta & Ashoka Mody & Subhendu Roy & David Wheeler, 2001. "Environmental Regulation and Development: A Cross-country Empirical Analysis," Oxford Development Studies, Taylor & Francis Journals, vol. 29(2), pages 173-187.
  2. Gene M. Grossman & Alan B. Krueger, 1994. "Economic Growth and the Environment," NBER Working Papers 4634, National Bureau of Economic Research, Inc.
  3. 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.
  4. Panayotou T, 1993. "Empirical tests and policy analysis of environmental degradation at different stages of economic development," ILO Working Papers 292778, International Labour Organization.
  5. Agras, Jean & Chapman, Duane, 1999. "A dynamic approach to the Environmental Kuznets Curve hypothesis," Ecological Economics, Elsevier, vol. 28(2), pages 267-277, February.
  6. Nicole Mellington & Lisa Cameron, 1999. "Female Education and Child Mortality in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(3), pages 115-144.
  7. 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.
  8. Marzio Galeotti & Alessandro Lanza, 2000. "Desperately Seeking Environmental Kuznets," Development Working Papers 137, Centro Studi Luca d\'Agliano, University of Milano.
  9. Kakwani, N., 1993. "Performance in living standards : An international comparison," Journal of Development Economics, Elsevier, vol. 41(2), pages 307-336, August.
  10. Magnani, Elisabetta, 2000. "The Environmental Kuznets Curve, environmental protection policy and income distribution," Ecological Economics, Elsevier, vol. 32(3), pages 431-443, March.
  11. 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.
  12. 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.
  13. 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.
  14. Scruggs, Lyle A., 1998. "Political and economic inequality and the environment," Ecological Economics, Elsevier, vol. 26(3), pages 259-275, September.
  15. Pritchett, Lant & Summers, Lawrence H., 1993. "Wealthier is healthier," Policy Research Working Paper Series 1150, The World Bank.
  16. 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.
  17. 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.
  18. Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
  19. 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.
  20. 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.
  21. Fred Pampel & Vijayan Pillai, 1986. "Patterns and determinants of infant mortality in developed nations, 1950–1975," Demography, Springer, vol. 23(4), pages 525-542, November.
  22. Subbarao, K & Raney, Laura, 1995. "Social Gains from Female Education: A Cross-National Study," Economic Development and Cultural Change, University of Chicago Press, vol. 44(1), pages 105-28, October.
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