Kuznets curve hypothesis

Kuznets curve hypothesis

Subject: Economy/Environment

Context: The scientists at IIT Madras has come to conclusion that in developing countries the environmental Kuznets curve hypothesis does not hold good.

Concept:

About Kuznet Curve hypothesis

• It was given by Nobel laureate Simon Kuznets.
• As a country grows rich, the economic equality suffers initially, but over time, the economic inequality declines.

Environment Kuznet Curve hypothesis:

• The Kuznet curve extension to the environmental impacts of growth and rise and subsequent decline in pollution levels has been said to face similar pattern. According to the hypothesis the growth is actually a cure for environmental problems, rather than being a cause of it

Implications of the Environmental Kuznets Curve

• When an economy is primarily pre-industrial and agrarian, the environment is usually clean and untouched by pollutants from industrial economic activities.
• As the economy shifts towards development and industrialization, the environment is at a higher risk of being harmed by pollution and depletion of natural resources.
• The curve then returns to a cleaner environment when economic growth continues, and people choose to spend their incomes on improving the environment by cleaning water and improving air quality

Observations of scientists

• The scientists calculated environment efficiency in terms of carbon dioxide and sulfur dioxide emissions (the more of these emissions meant less environment efficiency and corelated with the GDP per capita in 15 developing countries including India between 1992 and 2011.
• It found that the environmental efficiency in terms of CO2 per capita exhibits an “inverted N-shaped” (not inverted U) relationship with economic growth, an insignificant impact of growth on efficiency is observed in case of SO2 i.e., to an extent it is a remedy for environmental degradation in terms of CO2 emission, it is not a remedy for SO2 emission.
• It suggests local-level policies like proper planning for urbanization, among others, to control the emission of local pollutants.