Previous Year Question

The Environmental Kuznets Curve (EKC) represents a hypothesised relationship between per capita income/GDP and environmental degradation.

Its traditional shape is considered to be an Inverted-U.

It can be understood through three stages—

Initial stage:
When per capita income is low and industrialisation begins, production, energy use, resource extraction and pollution may increase rapidly. Thus, environmental degradation rises as income rises.

Turning Point:
At a certain income level, environmental degradation reaches its highest level or peak.

Later stage:
As income and development increase further, cleaner technology, stronger environmental regulation, better institutions, energy efficiency and relatively cleaner economic activities may reduce certain forms of environmental degradation.

Thus, the relationship can be represented as—

Per Capita GDP ↑ → Environmental Loss ↑ → Turning Point → Environmental Loss ↓

This produces the shape—

∩ = Inverted ‘U’

World Bank literature also depicts the Environmental Kuznets Curve as an inverted-U relationship between environmental deterioration and per capita income.

However, an important conceptual caution is that the EKC should not be treated as a universal natural law. The relationship can differ across pollutants, countries and policy settings. The World Bank has also noted that the income-environment relationship can depend on policy choices and institutions; environmental improvement does not automatically result from economic growth alone.