By Liam Mannix
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Consider the following graph.
What story does it tell? Planet-warming, civilisation-threatening carbon dioxide emissions in the wealthiest countries – that includes us – appear to have peaked and are now falling.
But in the world’s upper-middle-income countries, which include China and Brazil, emissions are sharply increasing. And in the next quartile, lower-middle countries such as India are slowly increasing emissions.
What explains these differences? There is a range of answers, and a country is not defined by its income quartile.
But some economists return to an intriguing mechanism: the so-called Environmental Kuznets Curve.
In short, as countries get richer they first pollute more and then they pollute less. Australia seems to be sliding along that curve.
This story is complex, of course. But within it, there is cause for both optimism and pessimism about what is to come.
Sliding along the curve
As economies develop, they have historically put more strain on the environment. More tanneries, factories and power plants, more chemicals dumped in the groundwater and more pollutants into the atmosphere.
Not long ago, we assumed this relationship continued forever: as we got richer, environmental suffering became more acute.
But researchers looking carefully at the concentration of pollutants in the air found something different.
“Once a country reaches a certain level of economic development, like Australia, the trend begins to reverse,” says Dr Kris Ivanovski, a La Trobe University economist who has studied the phenomenon in Australia.
But why?
“If you’re worried about keeping a roof over your head, finding your next meal, environmental concerns get pushed down the hierarchy,” says Associate Professor Rebecca Colvin, who studies the politics of climate and energy policy at the Australian National University.
Only when people’s basic needs are met can they worry about other things, such as clean air. And education tends to rise with income, which in turn increases environmental awareness.
So people increase their demands to protect the environment, which – in a democracy – increases pressure on governments for pro-environment policies. Witness how the vote share of the Greens has grown in recent years.
And wealthier societies have better access to low-emissions technologies. Their economies also tend to shift from being dominated by dirty manufacturing to cleaner services industries.
Researchers see this happening in Australia. Since the 1970s, our economic growth has become increasingly untied to greenhouse gas emissions.
A 2019 paper in Energy Economics found most Australian states crossed the “tipping point” – when further economic growth starts reducing harm to the environment – about 2010. Queensland, WA and the NT are the laggards.
In a paper published last month in Heliyon, a team of researchers looked for signs of a Kuznets Curve in Australia’s financial system – essentially our banks and share market. These institutions matter if you want to beat the climate crisis, as most solutions require a lot of money.
Their work shows that as our wealth increases, our financial system increasingly allocates money to less-environmentally destructive investments.
The other side of the curve
This all feels very optimistic to me. As our economy grows, we will inevitably cut the damage we do to our environment.
There are a few problems.
First, the curve bends in both directions. While rich countries might now be reducing emissions as they grow, less-developed countries will increase them as they develop.
The challenge the world faces is keeping rich countries on the curve, while helping less-wealthy countries get off it. Growing sustainable, low-carbon economies is something no country has yet managed to do. It’s an enormous ask.
Second, assuming you can simply grow your way out of the climate crisis raises the risk that you do irreversible damage to the environment as you get there.
Third, the Kuznets Curve seems to apply most strongly to visible pollutants – the stuff that dirties the air and water – and less so to carbon dioxide, which does its damage invisibly.
And fourth, there’s plenty of scepticism about the curve’s determinism, particularly in a country such as Australia, where our enormous fossil fuel exports heavily influence politics and policy.
Professor Robyn Eckersley, a leading researcher on the politics of the climate crisis at the University of Melbourne, says Australia may succeed in reducing its domestic emissions – but if it continues to allow its exports to fuel rising emissions in developing countries, we get nowhere.
“As global growth continues, it is impossible for global emissions to go down in absolute terms. And that’s because we’re exporting our emissions elsewhere.”
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