Monday, November 19, 2012

Why Growth Is the Environment’s Best Friend


The single best thing we could do to minimize energy’s impact on the environment is to not only maximize our own economic growth but also to help developing countries increase theirs.
Editor’s note: This is part four in a series of essays on energy system dynamics and energy policy.
[The] dirtiest water and air are not found in the rich countries, rather they are found in the developing nations. As pollution is rapidly becoming a global issue, worldwide prosperity should be viewed as the solution to, not the cause of, the problem. — Hans-Joachim Ziock, Klaus Lackner, and Douglas Harrison
Most people know that energy production causes considerable environmental damage. And indeed, energy production, distribution, and use are responsible for much of the damage that humanity inflicts on the environment. Globally, energy production generates prodigious amounts of air pollution, water pollution, habitat destruction, landscape destruction, wildlife mortality, and much more.

But what people are often confused about is the nature of the relationship between energy use and environmental damage over time. Since the time of Paul Ehrlich and The Population Bomb, not to mention Al Gore’s Earth in the Balance, environmental activists have asserted that there is a linear relationship between energy and the environment and that it’s a bad one. In their equation, more humanity, plus more energy use, automatically equates to more damage. As Ehrlich once famously opined about the possibility for unlimited energy for humanity, it would be “like giving a machine gun to an idiot child.” Jeremy Rifkin, another environmental activist, said that “it’s the worst thing that could happen to our planet.”
The Environmental Kuznets Curve
But the above view of the relationship between energy and the environment is both naïve and misleading. Economists have long observed that there is a better way to look at the triad relationship of humans, energy, and the environment, and that is a much more optimistic one, based on observations of how energy’s impact on the environment changes as countries go through development. Rather than displaying a linear relationship between energy use and environmental degradation, the real relationship looks more like an inverted letter U. This relationship is generally called the environmental Kuznets curve, or the environmental transition curve.
Figure 1 is a graphic representation of the Kuznets curve. The bottom axis is economic growth, and the upright axis represents environmental use of a natural resource such as timber, water, or soil. The upright axis might also represent the use of environmental services such as diluting waste products in the air or the service one gets from a river’s ability to break down a certain quantity of waste in a manner that harms neither fish nor people.
As the figure illustrates, for any given environmental resource, society passes through a series of phases. As countries develop, they use natural resources and environmental waste management services to build wealth with which people satisfy their basic needs for housing, food, education, health care, mobility, and so on. If a country grows large enough, a society will often use more than its local environment can sustain. That is the point marked on the figure as PO, the point where overutilization of a resource commences. The horizontal line represents the sustainable-use level of the resource, which should be understood as a dynamic capacity that changes over time, as populations change and as climates fluctuate. It must be evaluated on an ongoing basis. The point of perception (PP), where people notice they are overutilizing a resource, quickly follows, and people take steps to reduce their overuse, both as individuals and as a society. This is the point of action, or PA. Finally, and usually in relatively short order, the overuse ends, and resource use is reduced, one hopes, to the maximum sustainable level (PSUST). Driving environmental resource use to zero, whether it’s the consumption of a given fuel or the use of nature’s waste remediation ability, represents a massive amount of lost economic value that could instead be put to a myriad of good uses, such as alleviating poverty here and abroad or paying for the many entitlements that the United States has adopted over the last century.
Air Pollution and the Kuznets Curve
For an example of the Kuznets curve, let’s take air pollution — the production and use of fossil fuels is a major source of air pollutants around the world. From mining to refining, virtually every step in energy production, conversion, distribution, and, often, use results in the emission of a variety of air pollutants. These pollutants include coarse and fine particulate matter, oxides of nitrogen, sulfur oxides, ozone precursors, and yes, some of the greenhouse gases as well, including carbon dioxide, nitrous oxide, and methane. Air pollution takes a significant toll on human health, causing respiratory and cardiovascular problems in sensitive members of the population. And in the early days of our development, we certainly did foul our air. Who hasn’t heard of the infamous smog of Los Angeles in the 1950s?
But here in the United States, we are long past the point of perception, which began around 1900. And the cleanup began shortly thereafter. As researcher Indur M. Goklany, a student of environmental transitions, points out, “By 1912 the federal Bureau of Mines reported that 23 of the 28 cities that had populations in excess of 200,000 were making some effort to control smoke.” And air pollution levels continue to decline sharply as newer technologies and pollution control devices combine to make our system of energy production cleaner every year. Figure 2 shows how air pollution levels in the United States have improved, even as our energy use continues to increase.
But the situation is far worse in the developing world, where outdoor pollution takes a high toll, and indoor pollution is higher still. According to the World Health Organization (WHO):
More than half of the world’s population relies on dung, wood, crop waste, or coal to meet their most basic energy needs. Cooking and heating with such solid fuels on open fires or stoves without chimneys leads to indoor air pollution. This indoor smoke contains a range of health-damaging pollutants including small soot or dust particles that are able to penetrate deep into the lungs. In poorly ventilated dwellings, indoor smoke can exceed acceptable levels for small particles in outdoor air 100-fold. Exposure is particularly high among women and children, who spend the most time near the domestic hearth. Every year, indoor air pollution is responsible for the death of 1.6 million people — that’s one death every 20 seconds.
Furthermore, according to WHO:
indoor air pollution… [is] the 8th most important risk factor and [is] responsible for 2.7 percent of the global burden of disease. Globally, indoor air pollution from solid fuel use is responsible for 1.6 million deaths due to pneumonia, chronic respiratory disease, and lung cancer, with the overall disease burden (in Disability-Adjusted Life Years or DALYs, a measure combining years of life lost due to disability and death) exceeding the burden from outdoor air pollution five-fold. In high-mortality developing countries, indoor smoke is responsible for an estimated 3.7 percent of the overall disease burden, making it the most lethal killer after malnutrition, unsafe sex, and lack of safe water and sanitation.
The Importance of Understanding the Kuznets Curve
Energy is clearly not environmentally benign — our use of energy pollutes air and water, degrades land and sea, and more. However, understanding the environmental transition curve suggests that as societies continue to develop, their environmental impact will reduce over time. Indeed, the environmental transition curve suggests that the single best thing we could do to minimize energy’s impact on the environment is to not only maximize our own economic growth but also to help developing countries increase theirs, allowing them to switch to ever cleaner, less polluting forms of energy.
Caveats apply, of course — some economists argue that the environmental transition curve does not apply to all pollutants and all societies and that while it might work for local-area pollutants and resource protection, it may not work for global pollutants, such as soot or other greenhouse gases. They fear that certain wealthy countries might bring pollution to other parts of the world, as various businesses are forced to relocate to remain competitive.
That may well be true, but it does not negate the idea of an environmental transition; it simply lengthens the time it takes to turn things around for certain global pollutants, because remediation then becomes dependent on other countries passing through their own environmental transitions.
Kenneth P. Green is a resident scholar at the American Enterprise Institute. This essay is derived from the introduction of Abundant Energy: The Fuel of Human Flourishing, a supplementary text for college students, published by AEI Press.

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