Environment during growth: Accounting for governance and vulnerability

The conventional environmental Kuznets curve (EKC) model holds that pollution inevitably increases until societies reach middle-income status, because poor countries do not have the institutional capacity or political will to regulate polluters. Some policy makers and researchers have cited the EKC model when arguing that developing countries should grow first and clean up later. However, new evidence suggests that this argument is incorrect because it mistakenly assumes that strong environmental governance is not possible for poor countries. This paper extends the EKC model to include a new measure of environmental governance, as well as a detailed accounting of geographic vulnerability (climate and terrain factors). We find that these two factors can account for much of the observed variation in developing-country air pollution levels. (c) 2006 Elsevier Ltd. All rights reserved.