The Ecological Opportunity
- Science, Innovation, Technology and Entrepreneurship series
Edited by Blandine Laperche, Nadine Levratto and Dimitri Uzunidis
Chapter 11: Formation and Deformation of the Environmental Kuznets Curve for CO2 Emissions
Thomas Jobert and Fatih Karanfil INTRODUCTION The Kuznets curve (following the work of Simon Kuznets on economic development in the 1950s) describes an inverted U-shape relationship between the level of development across countries and income inequality. In 1991, Grossman and Krueger proposed to implement this idea in the field of environmental economics, and Panayotou (1993) was the first to coin the term Environmental Kuznets Curve (EKC). The EKC implies that during the early stages of economic development economic agents do not care about the environment and that environmental quality tends to worsen with increasing income. However, when basic needs are satisfied and income reaches a threshold level (the turning point) at which worries about the environment increase, this trend is reversed. Thus, beyond the threshold level, economic growth improves environmental quality and, in particular, reduces pollution. There exists therefore an inverted U-shape relationship between pollution and economic development. Much ink has flowed since the seminal paper by Grossman and Krueger (1991). The literature dealing with the EKC has been enriched by many notable contributions which were then summarized in some excellent review articles such as Noury (2007), Müller-Fürstenberg and Wagner (2007) and Kijima et al. (2010). As an introduction, we will discuss briefly how this literature has evolved and show the broad avenues of research that have been explored. Studies examining the ‘pollution haven’ hypothesis constitute a major field of investigation in the EKC literature. This hypothesis postulates that industrial activity (pollution intensive manufacturing) in developed countries is...
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