The Environmental Kuznets Curve and its Implications

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The condition enabling industrialized society to improve environmental conditions is economic wealth. For businesses, having resources and capital makes it possible to research, develop, and deploy sustainable technologies. It’s wealth that enables businesses to scale, leading to price reductions and widespread adoption. Even regulatory compliance requires that the regulated party is sufficiently wealthy. Municipalities depend upon the wealth of taxpayers to support shared systems like water treatment and recycling centers. There’s no doubt that many programs are economically viable on their own, however, with greater economic wealth, existing programs become more effective and new programs can be introduced.

The rationale that increasing wealth eventually improves environmental conditions, was demonstrated in a 1991 study of the North American Free Trade Agreement (NAFTA). It showed that sulfur dioxide, which causes acid rain, first increases as wealth grows. When sufficient wealth is achieved, measured in GDP / capita, the trend reverses. Wealth still increases, but sulfur dioxide decreases.

This theory is called the “Environmental Kuznets Curve,” and it can be applied to today’s most complex environmental topics including emissions, desalinization, waste management, and carbon capture. The advancement of technologies that improve environmental conditions depend on economic wealth and prosperity in society.

The economic growth path is not just the correct theory, it’s superior to legal avenues, which are often suggested as the remedy. Legal avenues though, have proven to be challenging because of the difficulty connecting specific actions of a perpetrator to specific damage to a victim. The implication of the Environmental Kuznets Curve is that the sustainability industry needs to focus on the economic value of sustainability and take a pro-growth view of economy as a solution to sustainability issues.