The environmental Kuznets curve (EKC) is a hypothesized relationship between the various indicators of environmental degradation or deterioration and income per capita. In the initial stages of economic growth environmental degradation increases, but beyond a ceratin level of income per capita, which will differ for different indicators, the trend reverses, so that at high income levels economic growth results in environmental improvement. This means that the environmental impact indicator is an inverted U-shaped function of income per capita. The EKC is named for Kuznets (1955) who hypothesized that income inequality first increases and then decreases as economic development proceeds. The presumption is often made that economic growth and trade liberalization are both good for the environment. The risk being that policy reforms which are designed to promote growth and liberalization may be encouraged with little consideration of the environmental consequences , the ekc theory works around this presumption. In the early 1990s the EKC was introduced and made popular with the publication of Grossman and Krueger’s 1991work on the potential environmental impacts of NAFTA, and the World Bank Report in the year 1992.
Empirical evidence of declining pollution levels with economic growth. Studies found that higher economic growth in the United States led to an increase in the use of cars, however at the same time due to regulation policies, levels of air pollution in particular sulphur dioxide levels decreased .
Solar and renewable energy .A good example of how improved technology which comes along with economic growth has reduced potential for environmental degradation is progress in solar technology. In past years, the cost of solar energy has noticeably fallen raising the prospect of clean technology.
De-industrialisation. At first , economic development leads to shifting from farming to manufacturing. This results in a greater environmental degradation. However, rises in productivity and rising real incomes see a third shift from industrial to the service sector. An economy like the UK has seen industrialisation shrink in the share of the economy. The service sector usually has a lower environmental impact than manufacturing.
Role of government regulation. Economic growth and development usually sees an increase in the size of government as a share of GDP. The government is able to implement taxes and regulations in order to solve environmental externalities which harm our health,well being and living standards.
Diminishing marginal utility of income. Rising income has a diminishing marginal utility. The benefit from your first Rs.10,000 annual income is very high. But, if income rises from Rs.90,000- Rs.100,000 the gain is quite limited in comparison. Having a high salary is of little consolation if you live with environmental degradation for e.g. congestion, pollution and ill health. Therefore ,a rational person who is seeing a rise in incomes will start to place greater emphasis on improving other aspects of living standards.
Limitations of Kuznets Environmental Curve
Empirical evidence is a little mixed. There is no surety that economic growth will see a fall in pollutants. Pollution does not only depend on income, but a number of factors. For example, the effectiveness of government regulation, policies , population levels, the development of the economy.
Global pollution. Many developed economies have seen a reduction in the industrial sector and growth in service sector, but they are still importing various commodities from developing countries. In that sense, they are exporting environmental degradation. Pollution may reduce in the UK, US, but countries who export to these countries are risking higher levels of environmental degradation. One example can be seen in terms of deforestation. Higher income countries tend to stop the process of deforestation, but at the same time, they still import and furniture from other developing countries .Nations with the highest GDP have highest levels of CO2 emission. For instance, US has CO2 emissions of 17.564 tonnes per capita. Ethiopia’s C02 emissions is 0.075 tonnes per capita. China’s CO2 emissions has risen from 1,500 million tonnes in 1981 to 8,000 million tonnes in 2009.
Carbon dioxide is the most noteworthy long-lived greenhouse gas on the Earth’s atmosphere .Since the Industrial Revolution anthropogenic emissions primarily from use of fossil fuels and deforestation have quickly increased its concentration in the atmosphere, causing global warming . Carbon dioxide also causes ocean acidification as it dissolves in water to form carbonic acid . Sources of carbon dioxide in Nepal include fuel wood, animal waste ,agricultural residue and hydropower. Nepal also carries potentials of other alternate energy sources like solarpower , solar power and wind power. However, these sources are still in promoting and developing stage. Nepal has to depend almost completely on imports of fossil fuels.
The maximum of carbon dioxide emissions are those stemming from the burning of fossil fuels and the manufacture of cement. They include carbon dioxide produced during consumption of solid, liquid, and gas flaring and gas fuels.
Carbon emissions contribute to climate change, which can have serious consequences for humans and the environment.
The burning of fossil fuels releases carbon dioxide and other greenhouse gases. These carbon emissions incresse global temperatures by trapping solar energy in the atmosphere. This modifies water supplies and weather patterns, alters the growing season for food crops and poses as a threat to coastal communities along with raising sea levels.
A 2015 report by the Asian Development Bank reveals the rise in the trend of climate related disasters. It states East and South Asian countries top the list of the regions affected. It would be wrong to blame all extreme weather events to climate change. Growing evidence states that climate change could be contributing to their increasing frequency and severity. Scientists worldwide acknowledge the link between greenhouse gases (GHG) with global warming and extreme weather events.
For a country like Nepal which has a small share of GHG emission but ranks 4th in terms of relative vulnerability to climate change globally, climate change adaptation is very important along with mitigation efforts. Various approaches like engineered ways of construction of flood levees and culverts, improved flood shelters and flood drainages , rainwater harvesting, efficient irrigation, early warning systems; ecosystem based approaches like floodplain and wetland restoration and conservation, ecological corridors ,green infrastructure etc, are suitable for adaptation. A prototype shift from hazard based approach of adaptation to tackling the underlying causes of vulnerability and developing capacity through fulfilling technological, institutional and financial needs will increase effectiveness of adaptation plans. Kathmandu Valley’s winter inversion that traps vehicle and brick kiln emissions makes it one of the most polluted cities in the world. For example, one survey in January on the outskirts of Kathmandu stated that pollution levels doubled when brick klins went into operation. Acute respiratory infection caused by indoor smoke is a major killer of children in rural Nepal.
I have chosen Nepal as the country and the environmental indicator as Co2 , according to the data both Co2 emissions and the GDP per capita in Nepal is linearly increasing or positively correlated .Growth must be attained in terms of GDP per capita until the income levels reach a turning point .
The gdp per capita (current US dollars ) in Nepal for the past 15 years has been as the following in the year
1999 – 215.981
2000 – 231.426
2001 – 248.618
2002 – 246.308
2003 – 253.72
2004 – 287.40
2005 – 317.089
2006 – 348.361
2007 – 393.884
2008 – 473.844
2009 – 480.72
2010 – 592.184
2011 – 692.117
2012 – 681.793
2013 – 688.617
2014 – 706.239
2015 – 747.16
2016 – 729.122
2017 – 835.08 .
C02 emissions in Nepal in the past years have been as the following in metric tons per capita
1999 – 0.138
2000 – 0.129
2001 – 0.135
2002 – 0.107
2003 – 0.114
2004 – 0.105
2005 – 0.12
2006 – 0.099
2007 – 0.1
2008 – 0.129
2009 – 0.162
2010 – 0.187
2011 – 0.202
2012 – 0.212
2013 – 0.237
2014 – 0.284
The environmental Kuznets curve is a hypothesized relationship between the environmental quality and economic development . Indicators of environmental degradation become more significant as economic growth takes place . This environmental degradation takes place until average income reaches a certain point over the course of development, after that environmental degradation ceases . The EKC states that indicators of environmental degradation first increase , and then decrease with increasing income per capita. In the case of Nepal we have the data for the gdp per capita (in current US dollars) in Nepal from the year 1999 to 2017 and for the environmental indicator we have co2 emissions in metric tonnes per capita from the year 1999 to 2014.
Nepal is a developing nation which has not yet reached average income levels in its course of development . Environmental degradation decreases only with increasing income per capita . Nepal still has a long way to go in that regard as the Nation’s GDP per capita is only 835.08 USD .
According to the EKC enviromnetal degradation indicator is supposed to cease after the nation has reached a certain point in income or gdp per capita . Since , Nepal is yet to reach that point in terms of income levels the ekc cannot yet be applied here .From 1999 to 2007 Nepal has had an inconsistent growth in terms of gdp per capita . However , after 2008 the the gdp per capita has been constantly rising . Only once the certain point of gdp per capita has been achieved can we consider a decrease in an environmental degradation indicator like Co2 emissions. Our data begins from 1999, In the year 2000 , Nepal went through a political turmoil after the Royal massacre .After that event there have been a number of uprisings, the beginnings of a civil war , new parties coming into power and finally in the year 2008 abolition of the monarchy .Especially from 2005 to 2007 due to the “bandhs” declared by the governments wherein factories and vehicles were not allowed to function . Co2 emissions were particularly low .However , after 2008 and the establishment of Nepal as a Democratic Republic and some sort of stability in the nation , Co2 emissions have been rising . Nepal can be regarded as a pre industrial economy which has neither shifted to a manufacturing economy nor a service economy . As the nation is in it’s pre industrial phase .
For environmental conservation , one of the main steps that can be taken is raising awareness among the masses. In regard to Co2 emissions as well as other environmental indicators awareness programs should be supported and conducted by the government . This will help the citizens realize the close relationship we share with the environment .It will in turn help promote environmental friendly behaviour like more frequent use of public transport ,buying local produce in regard to how much C02 has been emitted in order for the product to reach you ,Reusing and recycling products since the carbon footprint of fixing commodities is lower than making them from scratch. I would also suggest that the government seeks public debt and mobilizes it’s financial resources in generating hydropower . This would increase revenue generated by the government as well as reduce Co2 emissions.One of the direct approaches that can be followed is that the government keeps a close tab on emissions and demands reductions to specific levels by specific dates .Increase in the amount of subsidies and incentives given to those industries who use green energy and increase in taxation for those firms which emit Co2.We can also allow firms to transfer emission reduction requirements across a period of time, saving or banking allowances in one year to use in the future years or by borrowing future allowances and using it for the current year. The measures to reduce Green House Gas Emission by the Civil Aviation Authority in Nepal will include from formulation and amendment of Nepalese legislation .
A number of non –governmental organizations both international and national have set up biogas plants in several villages , which cuts out Co2 , distributed fuel efficient cook stoves ,are investigating issues relating to energy and environment , making the masses aware of environmental issues and promoting eco –friendly behaviour and facilitating discussions among key stakeholders. The government should also focus on improving the public transportation system as this would encourage the masses to use public transportation facilities , concepts like carpooling should be encouraged and cycling and walking to one’s destination for shorter distances should be promoted .