Theodore Panayotou examines the possible link between wealth and environmental degradation, something which could have huge policy implications. He introduces readers to the Environmental Kuznet’s Curve which posits that the rate of degradation for a country is not set; there is a trend for degradation to increase along with wealth until a certain level, at which point the relationship becomes negative. Panayotou lists several studies which seem to support this, though there is uncertainty about where, exactly, the turning point is. Along with this issue people also need to keep in mind that even if the model holds true it could still mean great environmental destruction in the short term, some of which may be irreversible. While he calls for more research to explore the model he seems optimistic that the EKC can be an effective way of looking at the relationship between wealth and environmental issues.
Unfortunately Panayotou relies on several assumptions which impede his thinking. He equates GDP, wealth and income when these are not necessarily the same things. Conflating them masks issues of inequality that exist within countries. Furthermore he implicitly equates these three terms with quality of life, assuming it is something which can easily be measured by a monetary value. More basic, his article rests on the assumption that neoliberal capitalism is the only real economic system so that any environmental solutions must lie within it. This is a sadly limiting way of thinking common to development which fails to acknowledge other ways of seeing the world and prohibits truly creative solutions.
- Panayotou, Theodore. “Economic Growth and the Environment”. From Economic Survey of Europe, no. 2 (2003): 45-72