Globalization and rising incomes, critics charge, necessarily yield more environmental harm. In In Defense of Globalization, Jagdish Bhagwati makes an argument for the opposite – that growth, measured by increased incomes, can actually help the environment. This might seem counter-intuitive. After all, as we make more money, we consume more, which means we cause more pollution and create more trash.
But think about it for a second. As people satisfy their basic needs of food, shelter, water, etc., they become less concerned with an extra dollar and care more about things like parks and pretty things.
This bell curve, essentially a Kuznets curve for the environment, demonstrates the idea:
Gene Grossman and Alan Krueger, two economists, found that peak sulfur dioxide levels in various cities around the world were when median income was around $5,000 to $6,000. Once a city made more than this, the locals not only switched to cleaner technology but also became more concerned with the natural environment. Bhagwati adds:
Several historical examples can also be adduced: the reduction in smog today compared to what the industrial revolution produced in European cities in the nineteenth century, and the reduced deforestation of the United States compared to a century ago.
One need only look to China, where pollution is horrible but arguably necessary to get to a certain level of wealth in order to “clean up”. Similarly, Switzerland, the Netherlands, and Scandanavian countries all have very impressive environmental records; these developed countries, over centuries, have reached a point in their GDP where clean water/air and national parks are more desirable than 50 more bucks. However, the marginal difference in income for developed countries is relatively huge for developing countries, so the developing countries are more willing to put up with a degree of environmental harm.
While I personally agree with the idea that growth can help the environment, I think the lingering question is whether that “peak” level of things like CO2 is permissible or whether we must stop pollution from even reaching there.