Opinion: Environmentalists should hope economy bounces back

Jay Lehr and Tom Harris

It will be tempting for climate activists to tell us that the reduction in economic activity from COVID-19 is an example of what we should be striving for. After all, there have been significant pollution and greenhouse gas emission reductions due to the economic slowdown. Indeed, the emergency is already being presented in some circles as a dry run for the system-wide changes needed to address climate change.

But this is a serious mistake. Environmentalists should hope the economy quickly rebounds. Only when we are affluent do we have the luxury to engage in environmental protection. While poor communities are usually willing to make sacrifices for some very basic components of environmental improvement such as safe drinking water and waste disposal, greater protections are not often instituted. However, as income rises, citizens raise their environmental goals and willingness to pay for a cleaner environment.

As income rises, citizens raise their environmental goals and willingness to pay for a cleaner environment, Lehr and Harris write.

As early as 1943, prominent American psychologist Abraham Maslow showed that once the basic needs of food, clothing and shelter are met in a society, people may demand less critical options such as greater environmental protection. These might deal with such things as cleaner air and rivers, recreation and the setting aside of protected wildlife areas. These less-personal demands are usually more community-focused.

Clearly, with higher incomes citizens place a greater priority on their environment. This is precisely what happened in America following the post-World War II economic expansion.

This powerful correlation between increasing affluence and the emergence of quality-of-life issues was first documented in the 1950s by American economist and statistician Simon Kuznets, the winner of the 1971 Nobel Memorial Prize in Economic Sciences. It led to the development of the Environmental Kuznets Curve, which shows that as development begins, environmental degradation increases until a per-capita income tipping point is reached, after which the environment begins to improve. 

The curve was well illustrated in a study by Grossman and Krueger (1995) that showed that air quality tends to deteriorate until per-capita income reaches between $6,000 and $8,000 per year (in 1985 dollars), after which it begins to improve sharply. A study by D. Coursey in 1992 found that the willingness of citizens to spend and sacrifice for a better environment rose twice as fast as per-capita income. Later research has shown similar relationships for a wide range of countries and various measures of environmental protection. 

There is no single relationship between wealth and environmental improvement for all pollutants, places and times, of course, but the general relationship is always closely adhered to.

Strident environmentalists have long ignored, misunderstood or downplayed these issues. They instead have mistakenly viewed economic growth as the cause rather than the solution to environmental problems.

Factors such as strength of democratic institutions, levels of educational achievement, and income equality also play important roles in environmental protection. However, prosperity obviously has a beneficial effect on these variables. It is essentially a positive feedback mechanism.

In the final analysis, the productivity and wealth of nations depends more on their institutions, laws, incentives and regulations than on their natural resources. Countries where private property rights are defined, protected and tradable have significantly greater per capita wealth, economic growth rates and rising standards of public health along with environmental quality. Clearly, environmentalists should be hoping our economy rebounds quickly after the immediate crisis.

Jay Lehr is senior policy adviser with the Ottawa, Canada-based International Climate Science Coalition (ICSC). Tom Harris is executive director of ICSC.