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Unformatted text preview: 3 The Environmental Kuznets Curve: Seeking Empirical Regularity and Theoretical Structure Richard T. Carson ∗ Introduction Long before the environmental Kuznets curve (EKC), which shows pollution at first increas- ing and then decreasing as income increases (see Figure 1), became enshrined in standard economic principles texts (e.g., Frank and Bernanke 2005), a very different view was set out by Ehrlich and Holden (1971). Much of the science and policy community still subscribes to their famous IPAT equation (I = PAT), which relates Impact (e.g., pollution or natural resource use) to Population, Affluence (often proxied with per capita income), and Technology. 1 The IPAT view generated considerable controversy and lay behind Ehrlich’s best-selling popular book The Population Bomb (1968) and the Club of Rome’s Limits to Growth (Meadows et al. 1972). These books saw population growth coupled with growing affluence as the primary forces driving adverse environmental impacts. They viewed technology as a neutral or even mildly beneficial factor, although some environmentalists such as Commoner (1972) saw it as the main destructive force. Economists engaged this debate with three counterarguments (e.g., Kneese and Ridker 1972; Nordhaus 1973; Solow 1973). The first was that technological progress is a large positive influence that is resource conserving, pollution reducing, and growing at a rate large enough to offset the impacts of population growth and rising affluence. This view was diametrically opposed to the Club of Rome approach in which adverse environmental impact estimates were driven by exponential growth in the use of resources but not technological progress. The second pointed out that the IPAT equation effectively lacked any behavioral response to the increasingly adverse impact being modeled. In the Club of Rome’s world, people choked to death on pollution, froze, or starved in enormous numbers without the explicit and implicit ∗ Department of Economics, University of California, San Diego; e-mail: [email protected] Max Auffhammer, Suzanne Leonard and Lois Winsen provided a number of useful comments. Any remain- ing errors are those of the author. Johanna Bible provided helpful research assistance. 1 In a slightly different form, IPAT is known as the Kaya Identity, which plays a central role in the Inter- governmental Panel on Climate Change (IPCC) estimates of future CO 2 emissions. In these estimates, total CO 2 emissions are a product of population, per capita GDP, energy use per capita, and CO 2 emissions per unit of energy consumed. Review of Environmental Economics and Policy , volume 4, issue 1, winter 2010, pp. 3–23 doi:10.1093/reep/rep021 Advance Access publication on December 22, 2009 C ° The Author 2009. Published by Oxford University Press on behalf of the Association of Environmental and Resource Economists. All rights reserved. For permissions, please email: [email protected] 4 R. T. Carson Per Capita Income...
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