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Preferences, Technology, and the Environment: Understanding the Environmental Kuznets Curve Hypothesis

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  • Florenz Plassmann
  • Neha Khanna

Abstract

We derive a simple expression for the income-pollution path using the standard static model of the environmental Kuznets curve (EKC). This expression makes it straightforward to identify the general characteristics of utility and pollution functions that lead to such a curve. We show that suitable preferences can always lead to an EKC while there is no technology that yields an EKC for all types of preferences, and we derive a sufficient condition for technology that leads to an EKC for almost all types of preferences. Our results hold for a model with multiple goods with different pollution intensities and for a production economy with nonconstant relative price of consumption and environmental effort. We derive our results without assuming specific functional forms and we encompass several other models as special cases. Copyright 2006, Oxford University Press.

Suggested Citation

  • Florenz Plassmann & Neha Khanna, 2006. "Preferences, Technology, and the Environment: Understanding the Environmental Kuznets Curve Hypothesis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 632-643.
    • Handle: RePEc:oup:ajagec:v:88:y:2006:i:3:p:632-643
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2006.00884.x
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    Cited by:

    1. Sushama Murty, 2014. "On the environmental Kuznets curve with fossil-fuel induced emission: Theory and some illustrative examples," Discussion Papers 1406, University of Exeter, Department of Economics.
    2. Dobes Leo & Jotzo Frank & Stern David I., 2014. "The Economics of Global Climate Change: A Historical Literature Review," Review of Economics, De Gruyter, vol. 65(3), pages 281-320, December.
    3. Sushama Murty, 2014. "Necessary and sufficient conditions for an environmental Kuznets curve with some illustrative examples," Discussion Papers 1407, University of Exeter, Department of Economics.
    4. Halkos, George & Tzeremes, Nickolaos, 2011. "A conditional full frontier modelling for analyzing environmental efficiency and economic growth," MPRA Paper 32839, University Library of Munich, Germany.
    5. Kaika, Dimitra & Zervas, Efthimios, 2013. "The Environmental Kuznets Curve (EKC) theory—Part A: Concept, causes and the CO2 emissions case," Energy Policy, Elsevier, vol. 62(C), pages 1392-1402.
    6. Rabeh Khalfaoui & Aviral Kumar Tiwari & Usman Khalid & Muhammad Shahbaz, 2023. "Nexus between carbon dioxide emissions and economic growth in G7 countries: fresh insights via wavelet coherence analysis," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 66(1), pages 31-66, January.
    7. Assunção, Juliano & Rocha, Romero, 2019. "Getting greener by going black: the effect of blacklisting municipalities on Amazon deforestation," Environment and Development Economics, Cambridge University Press, vol. 24(2), pages 115-137, April.
    8. Bi Goli Jean Jacques Iritie, 2015. "Economic Growth and Biodiversity: An Overview Conservation Policies in Africa," Journal of Sustainable Development, Canadian Center of Science and Education, vol. 8(2), pages 196-196, February.
    9. Mohamed M. Mostafa, 2020. "Catastrophe Theory Predicts International Concern for Global Warming," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 18(3), pages 709-731, September.
    10. Katsuyuki Shibayama & Iain Fraser, 2014. "Nonhomothetic Growth Models For The Environmental Kuznets Curve," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(3), pages 919-942, August.
    11. Bidisha Lahiri, 2017. "Dissimilar Relations Between Income and Environmental Quality for Open Economies in a Growth Model," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(1), pages 104-127, January.
    12. Le, Thai-Ha & Chang, Youngho & Park, Donghyun, 2016. "Trade openness and environmental quality: International evidence," Energy Policy, Elsevier, vol. 92(C), pages 45-55.
    13. Kellenberg, Derek K., 2008. "A reexamination of the role of income for the trade and environment debate," Ecological Economics, Elsevier, vol. 68(1-2), pages 106-115, December.
    14. Iritie, Jean-Jacques, 2015. "Economic Growth, Biodiversity and Conservation Policies in Africa: an Overview," MPRA Paper 62005, University Library of Munich, Germany.
    15. Md. Samsul Alam & Sajid Ali & Naceur Khraief & Syed Jawad Hussain Shahzad, 2021. "Time‐varying causal nexuses between economic growth and CO2 emissions in G‐7 countries: A bootstrap rolling window approach over 1820–2015," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 6128-6148, October.
    16. Marco Baudino, 2020. "Environmental Engel curves in Italy: A spatial econometric investigation," Papers in Regional Science, Wiley Blackwell, vol. 99(4), pages 999-1018, August.
    17. Pfeiffer, Birte & Mulder, Peter, 2013. "Explaining the diffusion of renewable energy technology in developing countries," Energy Economics, Elsevier, vol. 40(C), pages 285-296.
    18. Khanna, Neha & Plassmann, Florenz, 2007. "Total factor productivity and the Environmental Kuznets Curve: A comment and some intuition," Ecological Economics, Elsevier, vol. 63(1), pages 54-58, June.
    19. del Río González, Pablo, 2009. "The empirical analysis of the determinants for environmental technological change: A research agenda," Ecological Economics, Elsevier, vol. 68(3), pages 861-878, January.
    20. Ching-Yao Irene Lai & C.C. Yang, 2014. "Scale Effect Versus Induced Policy Response In The Environmental Kuznets Curve: The Case Of U.S. Water Pollution," Contemporary Economic Policy, Western Economic Association International, vol. 32(2), pages 435-450, April.

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