An Exploration of the Conceptual and Empirical Basis of the Environmental Kuznets Curve.

We examine the conceptual and empirical basis of the environmental Kuznets curve. From both perspectives, the relationship lacks firm foundations. In particular, the empirical relationship is shown to be highly sensitive to the choice of pollutant, sample of countries and time period. This strongly suggests that there is an omitted variables problem. We find that two important omitted variables are education and inequality. Also, we show that the observed relationship is sensitive to the measure of income/welfare used. The paper concludes with a discussion of some policy implications of our findings. Copyright 2002 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia