Common Tragedies

Thoughts on Environmental Economics

Will the EKC hold for non-democratic governments?

Posted by Daniel Hall on September 21, 2007

Reader Greg leaves an interesting comment in response to my post on the environmental Kuznets curve (EKC) hypothesis:

This may be me misunderstanding, but one problem I have with EKC is that it seems like an economic explanation of a primarily political phenomenon. … [Y]our explanation seems like an argument that rising incomes allow different preferences to be expressed in the marketplace. It seems to me, though, that the primary thing that actually moves environmental quality, at least over the past forty years, is government regulation (including, obviously, market-based regulations).

I certainly agree with Greg that regulation has been the major driver of improved environmental quality in the developed world. In terms of his comment about the EKC being an economic explanation of this political phenomenon, I have a couple things to say. The first is that for researchers the EKC hypothesis is an observation, not an explanation; it is a question of empirics, not theory. Indeed, one of the slightly odd things about the EKC literature is how replete it is with caveats that the authors are not forwarding a theoretical explanation. The second thing is to acknowledge that this is not very satisfactory; people want to know why something happens. Just saying that an empirical relationship exists but refusing to explain it is — I suspect — a big part of why some people think economists are BOR-ING! Since to my mind being boring is far worse than being wrong, I will wade into murky waters and speculate on why.

I tend to think of the EKC relationship — where it exists — as being driven by preferences for environmental quality, which increase with rising income. Historically these preferences have mainly been expressed through government: voting, lobbying, bringing lawsuits, etc., were all processes that created our current environmental regulations.* This was possible because the countries that are now wealthy and post-industrial were also democratic.

This leaves an interesting question: if preferences for environmental quality are expressed mostly through democratic processes, will non-democratic countries follow the EKC curve? China is the example that jumps immediately to mind: will a rising middle class in China demand a better environment? What about an increasingly authoritarian Russia? Or any number of countries with despotic thieves for rulers?

What do readers think? Are there non-democratic regimes that have cleaned up the environment in response to internal pressure? Can countries that industrialize under governments that are either authoritarian or kleptocratic then clean up (without the government being swept out of power)? I am curious to hear others’ thoughts.

*There are also some examples of preferences being expressed in markets; organic food is one.

About these ads

4 Responses to “Will the EKC hold for non-democratic governments?”

  1. Nick said

    It is somewhat difficult to imagine significant environemtnal improvement in less- or non-democratic countries for four resons:

    1. The definition, protection, and enforcement of property rights is generally lower or absent. Without property rights, citizens are less able to define and protect envrionemtal goods and services (EGS) that they own, or that are provided by their property. In addition, weak property rights discourage the development of any markets for EGS.

    2. The same characteristics that discourage markets for environemtnal services (a lack of political freedom, rule of law, protected property rights) discourage market exchange of all kinds – which limits the gains from trade and keeps incomes lower. Since poverty reduction is a larger priorty than environmental improvement (I would guess), I think the envrionment takes a back seat.

    3. Undemocratic (generally politically unstable) governments might lose out on foreign direct investment. This slows the diffusion of new cleaner technolgies, which most corporations bring with them when they set up shop in new countries.

    4. Environmetnal problems are long-term. Non-democracies are gernally too unstable to plan long-term.

    My impression is that demand for env. quality in China (shown through run-up to Beijing) has increased as China’s economy has become more open, and as incomes have risen.

    Or, I’m completely wrong.

  2. greg claxton said

    My impression is that demand for env. quality in China (shown through run-up to Beijing) has increased as China’s economy has become more open, and as incomes have risen.

    I read it differently. It seems more like China has become more interested in environmental quality in response to international pressure and for national ego–”this is what it means to be a superpower.” In the way that it’s promising to green up for the Olympics. Of course, I have no real sense of public pressure in China–probably the two things are working hand in hand.

    It does seem to me that China could probably cut emissions and pollution faster and more dramatically than developed countries by virtue of its non-democratic government. Isn’t that the reputed virtue of such governments–trains running on time and whatnot?

    I’d be curious to know how Cuba is doing. I have an unwatched video at home called “Power of Community” about how Cuba moved away from dependence on foreign oil (which got cut off after the USSR collapsed).

    And thanks for the explanation of how people are talking about EKC.

  3. Nick said

    It does seem to me that China could probably cut emissions and pollution faster and more dramatically than developed countries by virtue of its non-democratic government.

    Fair enough. When you wanna get something done in a hurry, I guess there’s nothing like the power of a centralized authoritarian government.

    But, when the post-Olympic international limelight fades, will the policies still be supported long-term?

    For now, I’m still betting on decentralized and democratic for long-term improvement in env quality. Unless the former Commnuist Bloc countries were an outlier.

  4. greg claxton said

    But, when the post-Olympic international limelight fades, will the policies still be supported long-term?

    Yeah, to be clear, I absolutely prefer the non-totalitarian version–that’s one of the reasons that definitions of sustainability get so mushy–they include things like democratic self-rule that are hard to incorporate into strictly economic definitions like non-declining utility or whatever. My point is just that international pressure can provide motivation China when they won’t let domestic pressure emerge (or, like I said, it may open up space for that domestic pressure to emerge).

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
Follow

Get every new post delivered to your Inbox.

Join 33 other followers

%d bloggers like this: