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What the Kuznets curve means for Bangladesh

Simon Kuznets was a very good economist of the early part of last century – we largely owe the concept and calculation of GDP to his work

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It is possible for a country to run out of natural capital. It's also possible for a country to become rich. However, it's not necessary for a country to run out of natural capital when it does become rich. It is that it will do so – but it's not necessary. 

There is one major reason why most countries do not kill off the environment as they become rich. 

That reason is that they become rich. 

Yes, I know, sorry, that sounds a little silly. But it is in fact true.

There's something called the “environmental Kuznets curve”. Simon Kuznets was a very good economist of the early part of last century – we largely owe the concept and calculation of GDP to his work. He noted that things often become worse before they get better.

Specifically, as a place develops, it often becomes much more polluted. The process of getting richer, using simple technologies, simply is polluting. Coal is a much easier entry-level fossil fuel than, say, natural gas, just as one example. 

As a place and people get richer, we seem to have a process by which it becomes cleaner. 

London and coal is one good example. The air in that city has stunk since the 1300s and was at its worst in the late 1940s. Tens of thousands were killed by smogs, deadly fog coming off the river combined with coal dust. 

The air today is cleaner than it has been since that first use of coal 700 years ago.

It isn't that as we get richer the natural technologies we use become cleaner. It is, instead, that we all begin to apply a value to a clean environment. 

As we become richer we're willing to spend more on that environment. In technical terms this means that the environment is a “luxury good,” one that we're willing to spend more of our incomes on as incomes rise.

It's easy enough to see the logic here. When we're so poor that we're scraping to afford the next bowl of rice then we'll not be worrying much about the leather tanners polluting the river.

We're much more worried about the incomes from the shoes being made than we are about that water flowing out to sea. 

We'd all like Dhaka's air to be cleaner but what's the cost of doing that? 

At the moment, making Dhaka's air as clean as some alpine valley would cost more in direct deaths from lack of electricity, transport and so on than would be saved from the pollution. 

Actually, at the current level of technology. entirely clean air in Dhaka would probably mean mass starvation as food could not be delivered. So, we think that cost is too high.

But there will come a level of wealth when we decide that instead of more food, or a bigger apartment, or more energy, what we'd like is cleaner air. As we get richer the amount that we're willing to spend on the environment increases. 

This doesn't, sadly, mean that we can just sit back and it will arrive. 

It will always be true that we the people will face concentrated and special interests. There will be those who would prefer to keep polluting because they profit from it. At present we might not be willing to face them down – but when we're richer we might be. 

So I'm not saying that campaigns for clean air, or pure water, are a waste of time because those things will just arrive. Absolutely not – instead I mean that at some point of societal wealth, most of us will support those campaigns and that's when they’ll succeed. 

Societies do get cleaner as they get richer, once they’re over that bump of the first phases of growth. 

This has happened everywhere a society has got rich because in some things people are very much the same. Food, shelter, clothing: Those sorts of things first. Then, once we have them, we'll spend more subsequent income on things like clean air.

This means there is going to come a time when it is actually possible to breathe Dhaka's air during the paddy clearing and burning season. 

Thankfully.

 

Tim Worstall is a senior fellow at the Adam Smith Institute in London

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