Income-Environment Relationship: How different is Asia?

Abstract

This paper shows that there is no rule that the environment has to first deteriorate with economic growth and improve only later. There is no absolute, invariant income-environment relationship (IER) to imply such a rule. This is shown by estimating IER for Asia and comparing it with the same for other regions of the world. It is found that IERs differ widely across regions and across pollutants, and do not usually conform to the shape implied by the Environmental Kuznets’s Curve hypothesis. This indicates that the role of income in explaining pollution dynamics is limited. With appropriate policies, pollution level can be kept low even during the initial stage of economic growth. In particular, policy measures are urgently needed in Asian countries to reduce solid particulate matter in air, and nitrate and arsenic in water.