Environmentalist (2011) 31:5966 DOI 10.

1007/s10669-010-9303-8

Environmental Kuznets Curve: the case of Bangladesh for waste emission and suspended particulate matter
Md Danesh Miah Md Farhad Hossain Masum Masao Koike Shalina Akther Nur Muhammed

Published online: 5 January 2011 Springer Science+Business Media, LLC 2011

Abstract Economists have shown the empirical relationships between the economic growth of a nation and its environmental quality using the hypothesis of the Environmental Kuznets Curve (EKC). To understand the EKC phenomena, a study of the literature was undertaken. As waste, waste emission, and suspended particulate matter (SPM) are the active agents of environmental degradation, the study focused on those agents for EKC consideration. Through understanding the different EKC trajectories, an attempt was made to relate the economic development of Bangladesh to the EKC. It is shown that the EKCs for waste, emissions from waste, and SPM follow the conventional EKC trajectory with a turning point related to higher income per capita in most cases. The type of economic policy that Bangladesh should follow to deal with the pollutants and their sources is also shown. The study recommends creating a tunnel in the EKC to lower the turning point in Bangladesh. The study is likely to help stimulate policy development in Bangladesh. Keywords Climate change Greenhouse gas emission Economic growth

1 Introduction Global warming causing climate change is now the greatest potential threat to the environment. The global average temperature has already increased by 0.8C and may increase to 6.4C by 2100 (IPCC 2007). This trend of increasing temperature throughout the world has raised alarms about the possible extinction of the human race. Increased amounts of greenhouse gases (GHG) are considered to be the main cause of global warming. Emissions from waste, especially CH4, are signicant causes of global ` warming (Calabro 2009). The products of incomplete combustion include health-damaging suspended particulate matter (SPM) (Miah et al. 2009). The contribution of SPM to global warming cannot be ignored. Its contribution to environmental degradation in developing countries has, however, been reported by many scientists (for example, Shandilya et al. 2007; Gupta et al. 2006; Gajghate and Bhanarkar 2005 for India; Miah et al. 2009 for Bangladesh). Emissions from wastes causing global warming and waste itself causing environmental degradation have been ` reported by many scientists (for example, Calabro 2009; Kumar et al. 2004; Talyan et al. 2007; Wilson et al. 2006; Troschinetz and Mihelcic 2009; Mohamed et al. 2009; Ayomoh et al. 2008; Shekdar 2009; Giusti 2009, for developing countries, mostly in Asia). Growth in gross domestic product (GDP) or income per capita in a nation seems to be linked to the environmental quality. Where an economy develops by taking resources from the environment, after a period the economy must help the environment in order that both may be sustainable. Abatement activity starts after a substantial amount of capital has been accumulated (Selden and Song 1995). An Environmental Kuznets Curve (EKC) is a hypothesized relationship between economic growth (income per capita)

M. D. Miah (&) M. F. H. Masum Institute of Forestry and Environmental Sciences, University of Chittagong, Chittagong 4331, Bangladesh e-mail: dansforestry@yahoo.com M. D. Miah M. Koike S. Akther Forest Policy Laboratory, Shinshu University, 8304 Minamiminowa-Mura, Kami Ina Gun, Nagano-ken 399-4598, Japan N. Muhammed Institute of Forest Economics, University of Freiburg, Tennenbacher str.4, 79106 Freiburg, Germany

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and environmental quality. The curve indicates that economic growth initially is associated with degradation of environmental quality, but with further growth the relationship is reversed and environmental degradation starts to decline. The relationship takes the form of an inverted U-shape curve, in which environmental degradation rst rises and then falls with increasing income per capita. This paper revisits the EKC for waste emission and SPM. Like other developing countries, Bangladesh is hypothesized to be on the initial upward part of the EKC at this moment, but there is, however, no validly published empirical work on EKCs for Bangladesh. How the EKC behaves for a developing economy is still a matter of argument. The present study aims at relating the results of EKC analysis for waste emission and SPM in other developing countries to the situation in Bangladesh. What will be the fate of the environment in Bangladesh with ongoing economic development? Will Bangladesh follow the inverted U-shape EKC curve in environmental degradation? If so, what economic and environmental policies should be pursued? The ndings of the study will be of importance for environmental development in Bangladesh.

Waste emission and suspended particulate matter

(a)

(b)
Degradation

Degradation

Improvement

Turning point

Second stage First stage

Per capita income

Per capita income

Fig. 1 General environmental Kuznets Curve, a A full trajectory of inverted U-shape EKC; b Straight line of EKC, where no turning point is found

2 Method of the study 2.1 The EKC hypothesis and its background In 1955, Simon Smith Kuznets, a Russian-American economist proposed a hypothesis relating economic growth and income inequality or the Gini Coefcient (Stern 2004; Torras and Boyce 1998). He stated that income inequality may rise at rst with increasing economic growth, but in the long run, it will tend to diminish after a certain point in economic growth. This relationship can be shown as an inverted U-shape Kuznets curve, named after Simon Kuznets. The idea of relating the environment to Kuznets curve emerged in 1991, with Grossman and Kruegers study of NAFTA (Grossman and Krueger 1991; Stern 2004; Bhattarai and Hammig 2001). A curve was produced showing an inverted U-shape relationship between income per capita and environmental degradation. It was named the Environmental Kuznets Curve (EKC) in 1994 (Selden and Song 1994). The EKC shows that environmental degradation rst increases with increasing income per capita, but after a certain point such degradation tends to diminish with increasing income per capita (Fig. 1). Though environmental degradation may rise quickly with a steep slope in the curve, its reduction may have a moderate slope. With income per capita on the X-axis and environmental degradation (a pollutant) on the Y-axis, a hill-shaped curve is

produced. When there is no turning point for any pollutant, a straight line is produced (Fig. 1). In some cases, an N-shaped EKC has been found, e.g. Bhattarai and Hammig (2001) for deforestation and Torras and Boyce (1998) for SOx. This happens when environmental degradation shows sequentially a positive, negative, and then positive relationship to income per capita in an economy. Environmental degradation rst increases with income per capita, but then decreases after a certain point, creating a peak in the curve; with further increase in income per capita, degradation then rises again, producing a trough in EKC. Gangadharan and Valenzuela (2001) described how, in an EKC relationship, the environment is like a luxury good. At the early stage of development, the environment is not really cared for, but when income reaches a certain level, people want to protect it. This relationship is not as automatic as it seems. Grossman and Krueger (1995) stated that it may be an induced policy response. The EKC is generally measured with two models: xed effect (FE) and random effect (RE) models. In the FE model, all other variables remain constant and only changes in emissions are measured with changing income per capita. In the RE model, other additional variables are calculated as changing factors. Different results are obtained with the different models. For example, the RE model produced a higher value for turning point than the FE model in a NOx study (Selden and Song 1994). Again, Grossman and Krueger (1991) found the FE model showed a higher value for turning point. Not only does the turning point vary with the model, but the presence or absence of a hill-shaped EKC also depends on the model. Koop and Tole (1999) found a turning point for deforestation using the FE model, but no statistically signicant turning point using the RE model.

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2.2 Data sources and reviewing methods The study was conducted from August 2008 to August 2009. The data on EKC, behavior of waste and SPM in the EKC trajectory, and the socio-economic status of Bangladesh were collected mostly from authoritative sources available on the Internet. Some facts were cross-checked directly in the ofces of Bangladesh, mostly located at Dhaka and Chittagong. In searching for the most recent information, Scirus,1 Scopus,2 and ISI Web of Knowledge3 were used for reviewing the most relevant scientic articles. Common keywords like economic growth, environmental degradation, global warming, greenhouse gases, EKC, and Kuznets curve were used to search out the specic articles. After selecting all the required articles, they were downloaded from the online sources and printed. Many cross-references were also used. As waste and SPM are important causes of environmental degradation, they were considered in this study as a means to understand the behavior of the EKC. The most important ndings related to those parameters were synthesized, the specic research paradigms were compared, and deviations among the results were analyzed. GDP and income per capita were calculated in US$ for the specic period. The synthesis of original scientic articles on EKC and different types of environmental degradation was related to the situation in Bangladesh using the national income and other drivers of EKC in Bangladesh.

sanitation in most cases improves steadily with rising level of income. The highest turning point for a single pollutant was found in the case of sulfur (Selden and Song 1994). EKCs created using the FE model with data only from developed countries are not true for all countries, especially developing countries, because the parameters are specic to the country and time effects in the selected data sample (Stern 2004). The fate of developing (poor) countries from the viewpoint of the EKC is often argued by experts. The EKC implies that economic growth is the only possible way to reduce pollution. So the question is when a sufcient level of income per capita will be achieved to reach the turning point for pollutants. This is the route for developing countries to avoid having rst to achieve a high level of income per capita before reducing environmental degradation. Munasinghe (1995) proposed an alternate development through a tunnel. He showed three possible paths for economic development as related to environmental damage. The optimal path is the one an economy should look for in order to avoid moderate or severe distortions to the environment (Fig. 2).

4 EKC for waste emission Waste in the environment accelerates environmental degradation, as well as leading to several diseases and death in human beings and other organisms. It also contributes to global warming, as decomposition of waste produces huge amounts of CH4, one of the major greenhouse gases ` (Calabro 2009). According to the IPCC, CH4 contributes 14.3% of total greenhouse gas emissions (IPCC 2007). Gawande et al. (2000) used a generalized negative binomial model to estimate the EKC for toxic waste in

3 General review of the effectiveness of the EKC Many papers have been published on the EKC since 1991, after Grossman and Kruegers study on NAFTA, which shook the economic view of the world. From that point, the basic argument of each paper was whether there was any turning point for environmental degradation or not. It seems fairly clear that when income per capita crosses a certain stage, the nation may attempt to invest in mitigation measures in order to improve the environment (if society is aware of environmental degradation and new technologies). In general, the EKC hypothesis assumes that environmental degradation has no effect on economic growth (Stern 2004). However, most of the primary pollutants like SO2, SPM, NOx, and CO show an inverted U-shape EKC, while secondary pollutants give a straight line (Cole et al. 1997). Increases in municipal waste and CO2 emissions show no relationship to growth of income per capita, whereas access to safe drinking water and
1 2 3

Waste emission and suspended particulate matter

Turning point

Environmentally safe zone

Tunnel

http://www.scirus.com/. http://www.scopus.com/. http://apps.isiknowledge.com.

Per capita income

Fig. 2 Tunneling through the Environmental Kuznets Curve

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62 Table 1 EKC studies for waste and waste emission References Gawande et al. (2000) Gawande et al. (2000) Time period 1992 1992 Countries/cities 3,141 US counties 748 Metropolitan statistical areas of USA 13 OECD countries 123 regions 47 cities in 31 countries 58 countries 39 countries US county level Models Generalized NB Generalized NB

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EKC result

Turning point

Inverted U-shaped $19,375 Inverted U-shaped $19,145

Cole et al. (1997) Mazzanti et al. (2006) Shak (1994)

19701992 19962004, 20002004 19721988

Quadratic in level or logs Straight line N/A Least square dummy Inverted U-shaped 23,000variable 26,000 Quadratic functional Straight line, upward Straight line, upward Inverted U-shape N/A $5,047 N/A $23,000

Grossman and Krueger (1995) 19791990 Shak and Bandyopadhyay (1992) Wang et al. (1998) 1985 1992

Quadratic-level functional Inverted U-shape Quadratic, FE Tobit estimation

N/A not applicable, FE xed effect model

3,141 counties and 748 metropolitan statistical areas of the USA. They found an inverted U-shape EKC, with a turning point at $19,375 for county samples and $19,145 for metropolitan statistical areas (Table 1). Cole et al. (1997) worked with data from 1975 to 1990 for 13 OECD4 countries. They found no evidence for the conventional EKC for municipal waste or methane. Mazzanti et al. (2006) worked with municipal waste production in Italy, using 19962004 data for 20 regions and 20002004 data for 103 provinces. They supported an inverted U-shape EKC with a turning point at 23,00026,000 in income per capita. Grossman and Krueger (1995) used multi-country data with a quadratic-level functional model and found an inverted U-shape EKC with a low income per capita of $5,047 at the turning point. That study concerned the presence of toxic substances in water from waste. Shak (1994) used data from 47 cities in 31 countries for the period 19721988. Using a quadratic functional model, they also found an upward straight line EKC for waste emission. Shak and Bandyopadhyay (1992) studied municipal waste data from 39 countries using a quadratic FE model and also found an upward straight line. Wang et al. (1998) studied hazardous waste at the US County level for 1992; using a probit estimation model, they found an inverted U-shape EKC with a turning point at $23,000 (1,990 dollars). Though the emission of toxic waste generally decreases with increasing income per capita, the trend for municipal waste emission does not seem to follow the conventional EKC. This raises the scenario of abatement programs being implemented only where immediate harm exists. Slowly but consistently increasing municipal waste emission is effectively not being controlled by producers at all levels.
4

Whether this type of pollution, though slow, has a longterm effect or not has not generally been studied yet. Grossman and Krueger (1995), however, looked at municipal waste and estimated the turning point at $5,047, supporting the conventional EKC. Rothman (1998) pointed out that for municipal and packaging waste, the proper economic driver/indicator is not GDP, but rather household consumption. This is a key issue on both conceptual and statistical grounds.

5 EKC for SPM Particulate matter is recognized as solids or liquids that are dispersed in ambient air. SPM are particulates with a particle diameter less than 100 lm that tend to remain suspended in the atmosphere for a long period of time. Respirable SPM are particulates with a diameter less than 10 lm, small enough to be inhaled, so they may enter deep into the human respiratory tract and pulmonary system (Shandilya et al. 2007). These particles are responsible for most of the airborne particle threat to human health because of their small size. They pose a human health hazard, potentially causing heart disease, lung cancer, asthma, atherosclerosis, cancer (as soot particles can contain carcinogenic material), and even death (Brunekreef and Holgate 2002). These particulates also share responsibility for global warming, as increase in SPM directly leads to an increase in GHG emissions. These ne particulates generally arise due to agglomeration of aerosols, gas particles, conversion from gas to particles and mostly originate from combustion (Gupta et al. 2006). Most of the SPM in Bangladesh are the product of the incomplete combustion from traditional biomass burning (Miah et al. 2009).

Organization for Economic Co-operation and Development.

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63 $4,350, but increases again after $10,510 $5,000, but increases again after $11,000

To prepare this table, some data were collected from Winslow (2005) and (Dinda et al. 2000). The (^) marked studies are for dark matter

Stands for Global Environment Monitoring System. It was formed by UNEP (United Nations Environment Program) in 1975 to organize the global set of comparable measures of ambient air and water quality.

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N/A not applicable, FE xed effect model, RE random effect model

Grossman and Krueger (1991) 1977, 1982, 1988

Grossman and Krueger (1991) 1977, 1982, 1988

Grossman and Krueger^ (1991) 1977, 1982, 1988

Grossman and Krueger^ (1991) 1977, 1982, 1988

Table 2 EKC studies for SPM

Grossman and Krueger^ (1995) 1977, 1982, 1988

Selden and Song (1994) Shak (1994)

Torras and Boyce (1998)

Selden and Song (1994)

References

Harbaugh et al.^ (2002)

Dinda et al. (2000)

Grossman and Kruegers (1991) study on EKC for SPM using a cubic RE model showed that SPM is decreasing at low-income levels (Table 2). But the cubic FE model provided negative conclusion for conventional EKC, which means SPM is steadily increasing with GDP per capita. Dinda et al. (2000) took data from 39 cities in 26 countries (among those, 15 countries belong to the high-income group) to study the EKC for SPM. They aggregated data for three different periods (19791982, 19831986, and 19871990) and found a turning point value of $12,500 (1,985 dollars) for commercial areas and $9,500 for residential areas. Shak (1994) studied 16 years of data (19721988) for 47 cities in 31 countries using a quadratic FE model and found evidence for an inverted U-shape EKC with a turning point $3,280 income per capita. Torras and Boyce (1998) employed data for SPM from GEMS5 for up to 52 cities in up to 42 countries for the period 19771991. Using an ordinary least square FE model, they obtained an N-shaped curve showing that SPM content in the atmosphere tends to decrease beyond a per capita gross domestic product of $4,350, but increases again beyond $10,510. Selden and Song (1994) used both RE and FE models in quadratic form and found a turning point of $9,617 for the RE model and $9,811 for the FE model. Grossman and Krueger (1991) studied data for dark matter or smoke using a cubic RE model and found an N-shape curve with a peak and trough at $5,000 and $11,000, respectively, whereas an upward-trending straight line was produced by a cubic FE model. Another study (Grossman and Krueger 1995) for dark matter using a generalized least square model produced a turning point at $6,151 (1,985 dollars). Data were for 18 cities in 13 countries in 1972, 13 cities in 9 countries in 1982 and 7 cities in 4 countries in 1988, with a total of 19 countries. Harbaugh et al. (2002) used GEMS data (488 observations) for smoke. Using RE and FE models with linear time trends (log value of mean in some cases), they found a turning point at $6,000 (1,985 dollars). Some observations in the mid-1990s (Selden and Song 1994; Shak 1994; Grossman and Krueger 1995) showed support for the EKC for SPM and dark matter. Most other results (Grossman and Krueger 1991; Torras and Boyce 1998) did not support the conventional EKC. Shak (1994) found the lowest turning point, only $3,280 income per capita, perhaps because very few countries with high income per capita were included in the study. Selden and Song (1994) showed the highest turning point, $9,811 income per capita.

Turning point(s) ($ 1,990)

$6,151 ($ value of 1985) Inverted U-shaped Generalized Least Square 19 countries

Straight line, downward N/A

Straight line, upward

Ordinary Least Square, Quadratic Inverted U-shaped

Straight line, upward 52 cities in 32 countries Cubic, FE

Inverted U-shaped

Inverted U-shaped Inverted U-shaped

EKC result

22 OECD and 8 developing countries Quadratic, RE

22 OECD and 8 developing countries Quadratic, FE 47 cities in 31 countries Quadratic, FE

Ordinary Least Square, FE

Models

1852 cities in 1942 countries

52 cities in 32 countries

52 cities in 32 countries

42 cities in 26 countries

52 cities in 32 countries

Countries/cities

488 observations for smoke Cross countries

19791982, 198386 and 198790

Time period

19791987

19791987 19721988

19771991

FE and RE

Cubic, RE

Cubic, RE

Cubic, FE

Inverted U-shaped

N-shaped

N-shaped

$6,000 ($ value of 1985)

$12,500 and $9,500 ($ value of 1985)

$9,617

$9,811 $3,280

N/A

N/A

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Dinda et al. (2000) observed that the turning point was different in residential areas from that in commercial areas. Residential areas create less pollution than commercial areas. Furthermore, residents are sensitive to pollution and with a little rise in income per capita, they are prepared to seek a pollution-free area in which to reside. The dark matter studies of Grossman and Krueger (1991) were not supportive of the EKC, but they later found a turning point (Grossman and Krueger 1995). Almost similar results were found in the study of Harbaugh et al. (2002) with a difference in turning point of $151 (1,985 dollars). Those results provided some support for the conventional EKC.

Fig. 3 GDP real growth rate of Bangladesh from 2000 to 2008

6 EKC implications for Bangladesh It is assumed that Bangladesh is now at the early stage (upward slope) of the EKC for environmental degradation. Economists, when using the EKC hypothesis, would perceive that Bangladesh has the right to pollute now, become developed, and reduce pollution later on. But environmentalists are concerned about the impact of further pollution in a country and when the EKC turning point will arrive. According to the IPCC (2007) and the Bangladesh Climate Change Strategy and Action Plan 2008 (MoEF 2008), Bangladesh will be among the countries worst affected by climate change. The EKC studies discussed in the previous sections could lead us to focus on the question how to shorten the rst stage of the EKC by adopting appropriate economic and environmental policies in Bangladesh. The following sections elaborate on that. 6.1 GDP trend in Bangladesh Observing the trend of economic growth in Bangladesh in the last 20 years, it is assumed that the country will become a middle-income country by 2020 (GOB 2000; CIA 2008). In three of the last 5 years, the economy has grown at 6% or more (Fig. 3) (CIA 2008). The Economic Survey of Bangladesh (GOB 2000) stated that although declines in the growth rate were observed in some years, positive growth was on the way nonetheless (Table 3). According to the ADB quarterly (ADB 2009), Bangladesh is one of the thirteen countries that have the potential to grow fastest. As the global focus for economic activity has shifted to neighboring India and China, Bangladesh could capitalize on its comparative advantages in order to benet from this global shift. 6.2 Drivers for the EKC in Bangladesh Considering the growth trend of national income, Bangladesh is going to face a severe threat of environmental

degradation in the upcoming years or decades. From studies of EKC in developing countries, it is clear that environmental complications will steadily increase, until the turning point is achieved. Economic growth is important, but the priority will be to eliminate the upcoming environmental threats. It would be best to follow alternative routes (Fig. 2). No industry should go into production without a detailed Environmental Impact Assessment (EIA). Efcient and clean technologies must be introduced in both production and waste treatment. Introduction of taxes and law enforcement have proved effective in the case of some specic pollutants. Such policies should be introduced and implemented properly. The neoclassical economic theory is based on making a prot in monetary terms, but we know that thinking only about prot will lead to a disastrous impact on the environment. In line with that, EKC theory assumes that environmental degradation has no effect in production, which cannot be true. Bangladesh was largely unaffected by the rst-round fallout of the recent global economic crisis, mainly because of the limited exposure of its nancial system to international markets. By controlling the market (rather than through the market itself), we can save our economy and with better cleaner technologies, we can save our environment. Promoting private sector production also threatens the environment. So government regulation is critical to environmental protection. The ndings of the EKC studies for waste and SPM suggest that Bangladesh, so far a low-income country, will need to achieve a particular income per capita in order to reach the EKC turning point. But if we just wait for the turning point to come, the environmental situation of Bangladesh will worsen day by day. The main energy sources of Bangladesh so far are biomass, oil, coal, and natural gas, while other renewable energies, like wind power and photovoltaics, are still underdeveloped. Biomass energy sources are traditionally used for domestic cooking and in small rural industries. The technology used for burning biomass in Bangladesh has been proved primitive, with a potential for GHG emissions, particularly SPM, and

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Environmentalist (2011) 31:5966 Table 3 Growth trend of real gross domestic product (GDP) in Bangladesh during 19752000 (at 1984/1985 prices) Year 19751976 19761977 19771978 19781979 19791980 19801981 19811982 19821983 19831984 19841985 19851986 19861987 19871988 19881989 19891990 19901991 19911992 19921993 19931994 19941995 19951996 19961997 19971998 19981999 19992000 (provisional) Real GDP (millions of taka) 293,820 301,670 323,010 338,520 341,300 352,880 357,220 374,700 395,030 406,930 424,590 442,340 455,130 466,610 497,530 514,440 536,190 560,230 583,840 609,790 642,440 680,210 718,670 756,120 801,710 Growth rate (%) 5.7 2.7 7.1 4.8 0.8 3.4 1.2 4.9 5.4 3.0 4.3 4.2 2.9 2.5 6.6 3.4 4.2 4.5 4.2 4.4 5.3 5.9 5.7 5.2 6.0

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is possible to dig a tunnel through the EKC to lower the turning point is an open question. Technology to abate the pollution without hampering production and consumption would have to be developed or to be imported from developed nations. Strong policies regarding the environment should be introduced and properly implemented. Only with controlled guidance and political commitment will economic growth not be a harmful practice. Information accessibility, research-based education, and law enforcement are needed to retard environmental degradation in Bangladesh.
Acknowledgments The authors are grateful to Jim Richardson, Director of the Canadian Bioenergy Association, for improving the paper greatly. We also greatly acknowledge the anonymous reviewers for their valuable comments, criticism, and suggestion to improve the paper.

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for causing health hazards (Miah et al. 2009). Furthermore, the consumption of fossil fuel is growing more than 5% per year (Azad et al. 2006). As Bangladesh is a fast-growing country, it may now be impossible to slow the use of fossil fuel to zero. So, following the suggestion of Munasinghe (1995), Bangladesh can only seek to tunnel through the EKC with the help of new technology.

7 Conclusion Many studies have conrmed the usual trajectories of the EKC for waste and SPM, but some have not. The inverted U-shape EKC offers no hope for the short-term reversal of environmental degradation caused by such agents in Bangladesh. The per capita income required for the turning point is high in Bangladesh and will be a long time in coming. In the meantime, severe environmental degradation may occur in Bangladesh, and due to unpredictable factors, the degradation may not be reversible. Whether it

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