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Frontier Issues in Ecological Economics

Frontier Issues in Ecological Economics

Philip Lawn

Ecological economics formally emerged in the late 1980s in response to the failure of mainstream economic paradigms to deal adequately with the interdependence of social, economic and ecological systems. Frontier Issues in Ecological Economics focuses on a range of cutting-edge issues in the field of ecological economics and outlines plausible measures to achieve a more sustainable, just, and efficient world for all.

Chapter 12: Does the Environmental Kuznets Curve Exist? A Theoretical Perspective

Philip Lawn

Subjects: development studies, development economics, economics and finance, development economics, environment, ecological economics


INTRODUCTION Because endorsement for a steady-state economy rests entirely on the presence of ecological and existential limits to growth, ecological economists must always be prepared to investigate new concepts that appear, on the surface at least, to endorse the pro-growth position. One very prominent pro-growth concept that has gathered steam since its popularisation in the 1992 World Development Report (IBRD, 1992) is the so-called Environmental Kuznets Curve (EKC). Not surprisingly, the likely existence and policy implications of the EKC have become a hot topic of debate over the past decade. The EKC emerged following the belief that the relationship between per capita real GDP and environmental quality could behave in a manner similar to the relationship between per capita real GDP and income inequality postulated in the mid-1950s by Simon Kuznets (1955). That is, environmental quality would at first deteriorate but later improve as a nation’s per capita real GDP rose in accordance with its rate of economic advancement. Should the EKC exist, its policy implications are significant. While a nation should always aim to minimise the environmental impact per unit of economic activity, the environmental impact of growth should not be of concern since, as real GDP rises over time, environmental quality eventually and increasingly improves. Hence the solution to environmental degradation is the continued growth of a nation’s real GDP, not its curtailment. Many studies have been undertaken to determine the level of truth underlying the EKC hypothesis (Shafik and Banyopadhyay, 1992; Seldon and Song, 1994;...

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