Wednesday, 10 January 2018

Environmental Kuznets curve - alive and well.

I first heard of this basic correlation decades ago, when I read that this was a likely explanation for e.g. rules on cars emissions being strictest in the wealthiest countries - California and Germany - and it therefore seems obvious to me.

Tim Worstall put a name to this phenomenon four years ago* (I didn't realise that all these basic observations need to be named after somebody, but hey, useful shorthand), explained by the ever helpful Economics Help as follows:

The environmental Kuznets curve suggests that economic development initially leads to a deterioration in the environment, but after a certain level of economic growth, a society begins to improve its relationship with the environment and levels of environmental degradation reduces.

Various possible explanations are offered, the most salient one is this:

9. Diminishing marginal utility of income

Rising income has a diminishing marginal utility. The benefit from your first £10,000 annual income is very high. But, if income rises from £90,000- £100,000 the gain is very limited in comparison. Having a very high salary is of little consolation if you live with environmental degradation (e.g. congestion, pollution and ill health). Therefore a rational person who is seeing rising incomes will begin to place greater stress on improving other aspects of living standards.

There then follow some counter-arguments and limitations, the least plausible of which is probably this:

5. Countries with the highest GDP have highest levels of CO2 emission. For example, US has CO2 emissions of 17.564 tonnes per capita. Ethiopia has by comparison 0.075 tonnes per capita. China’s CO2 emissions have increased from 1,500 million tonnes in 1981 to 8,000 million tonnes in 2009.

Well no, that's just choosing three countries at different stages on the curve, it is not comparing like with like. Taking GDP per capita figures for PR China from here and population figure from here...

1981 - 1.5 kg CO2 and $1,000 GDP per capita
2009 - 6 kg CO2 and $8,000 per capita

The 'CO2 intensity' per $1 of output has therefore fallen by half.

Question: which effect will win out - higher GDP or lower CO2 per $ GDP (taking CO2 as a proxy for pollution - it is not harmful to humans, animals or plants, but is a good way of measuring how fast we are using up natural resources)? And if it's lower CO2 per $ GDP, when?

Answer: it is happening already.

6 March 2017, China pledges to cut pollution and boost food safety

24 October 2017, China Has Shut Down Up to 40% of Its Factories in an Unprecedented Stand Against Pollution

2 January 2018, China, Moving to Cut Emissions, Halts Production of 500 Car Models

And the one that really caught the headlines here because it affects us directly:

1 January 2018, Toxic plastic to be 'burned in Britain' due to China import ban:

Hundreds of thousands of tonnes of toxic plastic could be burnt in Britain rather than recycled due to a Chinese import ban, officials have warned... But the new ban, imposed as part of a drive towards self-sufficiency and in order to prevent environmental contamination, means councils will be forced to send the majority of the waste for incineration or landfill unless alternative markets are found.

So PR China has had enough and wants to move to cleaner, more upmarket/value added activities. It is highly unlikely that there will be mass incineration or landfilling of plastic over here, there will be too much of an outcry, so either we will use less plastic (like the 5p plastic bag tax, which appears to have worked, see also Landfill Tax) or we will incinerate it in such a way as to minimise pollution/use it for generating electricity and/or there will be more people employed sorting the stuff. All of which are wins, from a purely environmental point of view.

* Damn and blast! I finished this article, did a Google search on that link and it turns out that he has written an earlier article with pretty much exactly the same title and content as this. So see it as an update.


Bayard said...

"But the new ban, imposed as part of a drive towards self-sufficiency and in order to prevent environmental contamination,"

is probably responsible for Theresa May getting up on her hind legs and spouting about more responsible use of plastics in a PPB.

Mark Wadsworth said...

B, indeedy, but this is all part of the same general trend.

People have been writing about the Pacific Gyre for a few years, the UK had the plastic bag tax, Twattenborough did his TV programme, PR China got fussy about importing, May said something or other about disposable coffee cups... who's to say what caused what?

Bayard said...

Agreed, but the timing is suspicious.

I was just wondering today how much extra I would be prepared to pay to buy my fizzy water in re-useable plastic bottles.

Mark Wadsworth said...

B, her sudden conversion to eco warrior is a pure coincidence, surely? Not making the best of a bad job?

And... How much extra?

Bayard said...

If someone famous hasn't said "There's no such thing as a coincidence in politics", then it's about time they did.

"And... How much extra?"

I'm still thinking about it. Somewhere between the cost of bottled water now (8.5p/l) and the cost of making it using a Sodastream (say £25 for a second hand machine £25 for enough gas to make 60l, 10 year payback on the machine and a consumption of 3l a week gives 45p/l approx).

Mark Wadsworth said...

B, or do like I do, re-use plastic bottles until they fall to bits, fill them up with tap water from a Brita filter ('cause I is posh).

Bayard said...

Ah, but I only buy bottled water for the fizz.