Abstract
In this paper we offer a possible explanation for the empirical finding that the pollution-income relationship (PIR) for flow pollutants is an environmental Kuznets curve (EKC), i.e. inverted-U shaped, but that the PIR for stock pollutants is monotonically rising. We analyse an overlapping generations model with two pollutants: The flow pollutant causes immediate damages, but the stock pollutant harms the environment only in the future. Hence, a succession of myopic governments lets stock pollution grow with income. In contrast, the flow pollutant follows an EKC whose downturn might be caused by the neglect of future damages and by ever rising stock pollution: Without the stock pollutant the PIR for the flow pollutant can increase monotonically. We also show that the turning point of the EKC for the flow pollutant lies at lower levels of income and of flow pollution if stock pollution is high and harmful. This casts doubts on most empirical EKC studies because they assume that the turning point occurs at the same income level in all countries. However, it is consistent with recent empirical findings that the income level at the turning point of the EKC varies across countries.
Similar content being viewed by others
References
J. Agras D. Chapman (1999) ArticleTitle‘A Dynamic Approach to the Environmental Kuznets Curve hypoThesis’ Ecological Economics 28 267–277
A. Ansuategi E. Barbier C. Perrings (1998) ‘The Environmental Kuznets Curve’ J. C. J. M. Berg Particlevan den M. W. Hofkes (Eds) Economic Modelling of Sustainable Development: Between Theory and Practice Kluwer Academic Publishers Dordrecht 139–164
A. Ansuategi C. Perrings (2000) ArticleTitle‘Transboundary Externalities in the Environmental Transition Hypothesis’ Environmental and Resource Economics 17 IssueID4 353–373
K. Arrow B. Brolin R. Costanza P. Dasgupta C. Folke C.S. Holling B.-O. Jansson S. Levin K.-G. Mäler C. Perrings D. Pimentel (1995) ArticleTitle‘Economic Growth, Carrying Capacity, and the Environment’ Ecological Economics 15 91–95
S. Barrett K. Graddy (2000) ArticleTitle‘Freedom, Growth, and the Environment’ Environment and Development Economics 5 433–456
W. Beckerman (1992) ArticleTitle‘Economic Growth and the Environment: Whose Growth? Whose Environment?’ World Development 20 IssueID4 481–496
R. T. Carson Y. Jeon D. R. McCubbin (1997) ArticleTitle‘The Relationship between Air Pollution Emissions and Income: US Data’ Environment and Development Economics 2 433–450
T. A. Cavlovic K. H. Baker R. P. Berrens K. Gawande (2000) ArticleTitle‘A Meta-Analysis of Environmental Kuznets Curve Studies’ Agricultural and Resource Economics Review 29 IssueID1 32–42
M. A. Cole (1999) ArticleTitle‘Limits to Growth, Sustainable Development and Environmental Kuznets Curves: An Examination of the Environmental Impact of Economic Development’ Sustainable Development 7 87–97
M. A. Cole (2000) Trade Liberalisation, Economic Growth and the Environment Edward Elgar Cheltenham, UK
M. A. Cole A. J. Rayner J. M. Bates (1997) ArticleTitle‘The Environmental Kuznets Curve: An Empirical Analysis’ Environment and Development Economics 2 401–416
S. M. de Bruyn (1997) ArticleTitle‘Explaining the Environmental Kuznets Curve: Structural Change and International Agreements in Reducing Sulphur Emissions’ Environment and Development Economics 2 485–503
S. M. Bruyn Particlede (2000) Economic Growth and the Environment: An Empirical Analysis Economy and Environment Kluwer Academic Publishers Dordrecht, The Netherlands
R. A. Devlin R. Q. Grafton (1994) ArticleTitle‘Tradeable Permits, Missing Markets, and Technology’ Environmental and Resource Economics 4 171–186
S. Dinda D. Coondoo M. Pal (2000) ArticleTitle‘Air Quality and Economic Growth: An Empirical Study’ Ecological Economics 34 409–423
M. Faber F. Jöst R. Manstetten G. Müller-Fürstenberger J.L.R. Proops (1996) ‘Linking Ecology and Economy: Joint Production in the Chemical Industry’ M. Faber R. Manstetten J. L. R. Proops (Eds) Ecological Economics – Concepts and Methods Edward Elgar Cheltenham, UK 263–278
B. A. Forster (1973) ArticleTitle‘Optimal Capital Accumulation in a Polluted Environment’ Southern Economic Journal 39 544–547
R. L. Frey E. Staehelin-Witt H. Blöchliger (1991) Mit Ökonomie zur Ökologie: Analyse and Lösungen des Umweltproblems aus ökonomischer Sicht Helbling Lichtenhahn Basel, Switzerland
B. Friedl M. Getzner (2003) ArticleTitle‘Determinants of CO2 Emissions in a Small Open Economy’ Ecological Economics 45 133–148
R. Gradus S. Smulders (1993) ArticleTitle‘The Trade-off Between Environmental Care and Long-term Growth – Pollution in Three Prototype Models’ Journal of Economics 58 IssueID1 25–51
G. M. Grossman (1995) ‘Pollution and Growth: What do We Know?’, in I I. Goldin L. A. Winters (Eds) The economics of sustainable development Cambridge University Press New York 19–46
G. M. Grossman A. B. Krueger (1993) ‘Environmental Impacts of a North American Free Trade Agreement’, in M Peter M. Garber (Eds) The Mexico-U.S. Free Trade Agreement The MIT Press Cambridge, Massachusetts 13–57
G. M. Grossman A.B. Krueger (1995) ArticleTitle‘Economic Growth and the Environment’ Quarterly Journal of Economics 110 353–377
G. W. Gruver (1976) ArticleTitle‘Optimal Investment in Pollution Control Capital in a Neoclassical Growth Context’ Journal of Environmental Economics and Management 3 165–177
G. E. Halkos E. G. Tsionas (2001) ArticleTitle‘Environmental Kuznets Curves: Baysian Evidence from Switching Regime Models’ Energy Economics 23 191–210
M. T. Heil T. M. Selden (2001) ArticleTitle‘Carbon Emissions and Economic Development: Future Trajectories based on Historical Experience’ Environment and Development Economics 6 63–83
H. Herzog B. Eliasson O. Kaarstad (2000) ArticleTitle‘Die Entsorgung von Treibhausgasen’ Spektrum der Wissenschaft May 2000 48–56
H. Hettige M. Mani D. Wheeler (2000) ArticleTitle‘Industrial Pollution in Economic Development: The Environmental Kuznets Curve Revisited’ Journal of Development Economics 62 445–476
R. J. Hill E. Magnani (2002) ArticleTitle‘An Exploration of the Conceptual and Empirical Basis of the Environmental Kuznets Curve’ Australian Economic Papers 41 IssueID2 239–254
D. Holtz-Eakin T. M. Selden (1995) ArticleTitle‘Stocking the Fires? CO2 Emissions and Economic Growth’ Journal of Public Economics 57 85–101
M. H. Huesemann (2001) ArticleTitle‘Can Pollution Problems be Effectively solved by Environmental Science and technology? An Analysis of Critical Limitations’ Ecological Economics 37 271–287
InstitutionalAuthorNameIPCC (Intergovernmental Panel on Climate Change) (1996) ‘Climate Change 1995: The Science of Climate Change’ Cambridge University Press Cambridge
A. John R. Pecchenino (1994) ArticleTitle‘An Overlapping Generations Model of Growth and the Environment’ Economic Journal 104 1393–1410
A. John R. Pecchenino D. Schimmelpfennig S. Schreft (1995) ArticleTitle‘Short-lived Agents and the Long-lived Environment’ Journal of Public Economics 58 127–141
R. K. Kaufmann B. Davisdottir S. Garnham P. Pauly (1998) ArticleTitle‘The Determinants of Atmospheric SO2 Concentrations: Reconsidering the Environmental Kuznets Curve’ Ecological Economics 25 209–220
D. L. Kelly (2003) ArticleTitle‘On Environmental Kuznets Curves Arising from Stock Externalities’ Journal of Economic Dynamics and Control 27 IssueID8 1367–1390
G. Koop L. Tole (1999) ArticleTitle‘Is there an Environmental Kuznets Curve for Deforestation?’ Journal of Development Economics 58 231–244
E. A. L. Li (1989) ArticleTitle‘An Environmental Cooperation Agreement for the Asia-Pacific Region?’ The Australian Economic Review 32 IssueID2 145–156
C.M. Lieb (2002) ArticleTitle‘The Environmental Kuznets Curve and Satiation: A Simple Static Model’ Environment and Development Economics 7 429–448
Lieb, C.M. (2003), ‘The Environmental Kuznets Curve: A Survey of the Empirical Evidence and of Possible Causes’. University of Heidelberg, Department of Economics, Discussion Paper No. 391. Available at http://www.uni-heidelberg.de/institute/fak18/awi/index_ d. html.
J. Lim (1997) ArticleTitle‘The Effects of Economic Growth on Environmental Quality: Some Empirical Investigation for the Case of South Korea’ Seoul Journal of Economics 10 IssueID3 273–292
J. A. List C. A. Gallet (1999) ArticleTitle‘The Environmental Kuznets Curve: Does One Size Fit All?’ Ecological Economics 31 409–423
J.A. List S. Gerking (2000) ArticleTitle‘Regulatory Federalism and Environmental Protection in the United States’ Journal of Regional Science 40 IssueID3 453–471
D. H. F. Liu B. G. Lipták (2000) Air Pollution Lewis publishers Boca Raton, Florida
K. E. McConnell (1997) ArticleTitle‘Income and the Demand for Environmental Quality’ Environment and Development Economics 2 383–399
D. L. Millimet J. A. List T. Stengos (2003) ArticleTitle‘The Environmental Kuznets Curve: Real Progress or Misspecified Models?’ Review of Economics and Statistics 85 1038–1047
Minliang, Z., C. A. Withagen and H. L. F. de Groot (2001), ‘Dynamics of China’s Regional Development and Pollution: An Investigation into the Existence of an Environmental Kuznets Curve’, Paper presented at the EAERE Conference, Southampton, UK, June 2001. Available at http://www.soton.ac.uk/\sim eaere/conf2001/conf2001.html.
W. R. Moomaw G. C. Unruh (1997) ArticleTitle‘Are Environmental Kuznets Curves Misleading Us? The Case of CO2 Emissions’ Environment and Development Economics 2 451–463
W. Nentwig (1995) Humanökologie: Fakten – Argumente – Ausblicke Springer-Verlag Berlin
E. Neumayer (1998) ArticleTitle‘Is Economic Growth the Environment’s Best Friend?’ Zeitschrift für Umweltpolitik und Umweltrecht 21 IssueID2 161–176
W. D. Nordhaus (1991) ArticleTitle‘To Slow or not to Slow: The Economics of the Greenhouse Effect’ The Economic Journal 101 920–937
T. Panayotou (1995) ‘Environmental Degradation at Different Stages of Economic Development’ I. Ahmed J.A. Doeleman (Eds) Beyond Rio: The Environmental Crisis and Sustainable Livelihoods in the Third World St. Martin’s Press ILO Study Series, New York 13–36
T. Panayotou (1997) ArticleTitle‘Demystifying the Environmental Kuznets Curve: Turning a Black Box into a Policy Tool’ Environment and Development Economics 2 465–484
C. Perrings A. Ansuategi (2000) ArticleTitle‘Sustainability, Growth and Development’ Journal of Economic Studies 27 IssueID1/2 19–54
J. T. Roberts P. E. Grimes (1997) ArticleTitle‘Carbon Intensity and Economic Development 1962–1991: A Brief Exploration of the Environmental Kuznets Curve’ World Development 25 IssueID2 191–198
J. Roca E. Padilla M. Farré V. Galletto (2001) ArticleTitle‘Economic Growth and Atmospheric Pollution in Spain: Discussing the Environmental Kuznets Curve Hypothesis’ Ecological Economics 39 85–99
G. Saint-Paul (1995) ‘Discussion of ‘Pollution and Growth: What do We Know?’‘ I. Goldin L. A. Winters (Eds) The Economics of Sustainable Development Cambridge University Press New York 47–50
R. Schmalensee T. M. Stoker R. A. Judson (1998) ArticleTitle‘World Carbon Dioxide Emissions: 1950–2050’ Review of Economics and Statistics 80 15–27
L. A. Scruggs (1998) ArticleTitle‘Political and Economic Inequality and the Environment’ Ecological Economics 26 259–275
T. M. Selden D. Song (1994) ArticleTitle‘Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions’ Journal of Environmental Economics and Management 27 147–162
T. M. Selden D. Song (1995) ArticleTitle‘Neoclassical Growth, the J Curve for Abatement, and the inverted U Curve for Pollution’ Journal of Environmental Economics and Management 29 162–168
N. Shafik (1994) ArticleTitle‘Economic Development and Environmental Quality: An Econometric Analysis’ Oxford Economic Papers 46 757–773
S. Smulders (2000) ‘Economic Growth and Environmental Quality’, in H H. Folmer H.L. Gabel (Eds) Principles of Environmental and Resource Economics Edward Elgar Cheltenham 602–664
S. Smulders R. Gradus (1996) ArticleTitle‘Pollution Abatement and Long-term Growth’ European Journal of Political Economy 12 505–532
D. I. Stern M. S. Common (2001) ArticleTitle‘Is There an Environmental Kuznets Curve for Sulfur?’ Journal of Environmental Economics and Management 41 162–178
N. L. Stokey (1998) ArticleTitle‘Are There Limits to Growth?’ International Economic Review 39 1–31
M. Torras J. K. Boyce (1998) ArticleTitle‘Income, Inequality, and Pollution: A Reassessment of the Environmental Kuznets Curve’ Ecological Economics 25 147–160
C. Ewijk Particlevan S. Wijnbergen Particlevan (1995) ArticleTitle‘Can Abatement Overcome the Conflict Between Environment and Economic Growth?’ De Economist 143 IssueID2 197–216
G. C. van Kooten E. H. Bulte (2000) ArticleTitle‘The Ecological Footprint: Useful Science or Politics?’ Ecological Economics 32 385–389
M. P. Vogel (1999) Environmental Kuznets Curves: A Study on the Economic Theory and Political Economy of Environmental Quality Improvements in the Course of Economic Growth Springer-Verlag Berlin
P. I. Wu (1998) ArticleTitle‘Economic Development and Environmental Quality: Evidence from Taiwan’ Asian Economic Journal 12 IssueID4 395–412
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Lieb, C.M. The Environmental Kuznets Curve and Flow versus Stock Pollution: The Neglect of Future Damages. Environ Resource Econ 29, 483–506 (2004). https://doi.org/10.1007/s10640-004-1046-x
Accepted:
Issue Date:
DOI: https://doi.org/10.1007/s10640-004-1046-x