Jeffords and Thompson Demonstrate Effects of Minimum Consumption Requirement on Environmental Kuznets Curve

Posted on 1/16/2019 1:14:26 PM

A forthcoming paper by Chris Jeffords and Alexi Thompson, Department of Economics, explores the non-linear relationship between pollution and economic growth when individuals within the economy have a uniform minimum consumption requirement.

Excluding this requirement, the typical non-linear relationship, also known as the Environmental Kuznets Curve, demonstrates that economic growth (measured in income per capita) is positively correlated with pollution; but, at some threshold level of economic growth, further growth is negatively correlated with pollution. Consider the graph of an inverted “U” in the coordinate plane with a measure of pollution on the vertical axis and income per capita on the horizontal axis.

By including a minimum consumption requirement and interpreting it as an adequate standard of living or a subsistence floor (both in the human rights sense), Jeffords and Thompson show that said requirement is costly in at least two ways. First, having a minimum consumption requirement is associated with higher levels of pollution at each level of economic growth. Second, ceteris paribus, more resources are required to reach the point at which further economic growth is associated with reductions in pollution. From a policy perspective, this implies that respecting, protecting, and fulfilling the minimum consumption requirement is financially expensive and imposes direct and indirect costs on the environment. As such, policy-makers will have to consider the unintended consequences associated with meeting such a floor.

The paper, titled “The Human Rights Foundations of an EKC with a Minimum Consumption Requirement: Theory, Implications, and Quantitative Findings,” will be available in a forthcoming volume of Letters in Spatial and Resource Sciences.