Jeremy Wallace

If you look at the cross-national statistics for income and inequality, you will find that there is an inverted-U pattern. That is, poor countries have little inequality (i.e. everyone is poor). Rich countries tend to have relatively little inequality (i.e. everyone is rich). It is in middle income countries where you have the most inequality. This inverted-U is the Kuznets Curve, named after the economist Karl Marx, ok, just kidding, after the economist Simon Kuznets. Interestingly, although I am not fully up to date on the literature, it is my understanding that although the cross-national data does indeed exhibit the inverted-U, the actual path of countries vary tremendously. For instance, some countries start out poor but highly unequal and then make steady progress in both dimensions.

The inverted-U shape seems to exist in the environmental world as well. Replace inequality with pollution, and the Environmental Kuznets Curve will make an appearance. The basic intuition is that poor countries don’t produce much and hence don’t pollute, and rich countries can afford to care about the environment and so reduce their pollution, while the middle income countries fill the skies and rivers with toxins.

A couple of related stories have pushed these issues to the fore of my thinking recently.

First, CDT reminded me that China’s 2005 Green GDP statistics were due to be published following the two congresses. The story that seems to be behind the delay is a bureaucratic/political one. The Green GDP program is a joint venture between the State Environmental Protection Agency (SEPA) and the National Bureau of Statistics (NBS). It seems as though the new leader of the NBS is unwilling to put out this document given that it will embarrass those provinces that are not making progress. The CDT interview notes that Ningxia – part of west China and not known as having much of a industrial base – is the worst polluting province (presumably this is in per-capita terms or in year-to-year change) and that Jiangsu is has become China’s green province.

Next, one of the more stimulatingly random sites that I frequent, Salon.com’s How the World Works blog, had a post on the return of salmon to the Thames that also discussed Jiangsu’s green turn (I warned you that it was random). Perhaps Jiangsu’s improved environmental performance demonstrates the Environmental Kuznets Curve at the subnational level. As it has become richer, it has exported dirty manufacturing to poorer areas like Ningxia. The post is more optimistic and notes that Jiangsu has a sulfur dioxide permit trading system.

I am more pessimistic. The NYT has a story today that makes clear how much of production (and hence pollution) that the US and other rich countries have exported to the developing world. Here’s the headline:

In Major Shift, U.S. Imposes Tariffs on Some Chinese Paper

Yes. Paper. It is apparently cheaper for paper to be made in China and then shipped around the world to be used in the US. In fact, I am not an expert on the paper trade, but I am guessing that the raw materials for paper – trees – are being exported from Canada to China where they are made into paper and then the paper is sent back to the Americas to be used in weekly magazines that warn Americans about globalization. How the World Works links to a couple of different papers that are skeptical of the Environmental Kuznets Curve, and I have not gone through them carefully. However, it seems that separating consumption from production can make the statistics look as though rich countries don’t pollute, but the reality is more complicated.

[Note, this argument is related to a point that was made on MarginalRevolution about an Ed Glaeser piece on how cities are environmentally friendly. MR claims that New York City appears to be a cleaner city than it really is since so much of its pollution is exported to New Jersey where land is cheaper. I think that MR’s point is fair but goes too far. City life IS more environmentally sound, especially if those cities are like NYC where people live close enough to work to walk or use public transportation.]

At any rate, the weather here in Beijing was “dusty” not “smoky” today, which is progress, environmentally if not in terms of pleasantness.

Striking patterns in data are interesting and deserve further study, but rarely are the results are as simple as they seem. To someone writing a dissertation, this fact is both worrisome and heartening.