Economic Development and Environmental Quality: An Econometric Analysis

The relationship between economic development and environmental quality is analyzed econometrically for a large sample of countries over time. The results indicate that some indicators improve with rising incomes (like water and sanitation), others worsen and then improve (particulates and sulfur oxides), and others worsen steadily (dissolved oxygen in rivers, municipal solid wastes, and carbon emissions). Growth tends to be associated with environmental improvements where there are generalized local costs and substantial benefits. But where the costs of environomental degradation are borne by others (by the poor or by other countries), there are few incentives to alter damaging behavior. Copyright 1994 by Royal Economic Society.