Economic growth and the environment

Question 1

Explain the environmental Kutznets Curve.

Answer 1

It’s a hypothesis to predict what would happen with economic growth and the environment.

No empirical data, just a hypothesis.

Stating: first deterioration environment (increase of environmental impacts + emissions), after a certain level of economic growth less deterioration possible.

Question 2

What does the data show over the past 40 years?

Answer 2

• emissions in a rising curve
• relation emissions vs GDP > higher GDP higher emissions
• paradox: relation between emissions vs GDP, higher GDP = rise of emissions, technological innovations lower the curve over time

Question 3

Explain the growth rates model?

Answer 3

Showing that from an econometric point of view economic growth is unlikely to clean the environment.

Economy grows slower than other problems like emissions, so economic growth effect is not that big.

Slower growth allows other factors to clean up environmental impacts (IT/good policy making)