Can economic growth be reconciled with environmental sustainability? This paper delves into the environmental Kuznets curve (EKC), a hypothesis positing that pollution initially increases with income, then decreases at higher income levels. Using a representative consumer model, the study investigates the relationship between consumption, pollution, and abatement. The model reveals that at lower income levels, pollution rises in tandem with income as no abatement strategies are implemented. However, once abatement efforts begin, the study demonstrates that consumption satiation is a sufficient condition for EKC. Moreover, the study also finds that environmental quality is a normal good. The paper further reconsiders results of two related models of the literature. Ultimately, this research suggests that a shift toward satiation in consumption patterns is crucial for achieving environmental improvements as economies develop. The paper highlights the complex interplay between economic growth, consumption habits, and environmental policy, offering insights relevant to sustainable development strategies.
Published in Environment and Development Economics, this study contributes to the journal's focus on the interplay between economic activities and environmental outcomes. By analyzing the EKC hypothesis, the paper provides a theoretical framework for understanding how environmental quality changes with economic development. Its findings on consumption satiation and the income elasticity of demand for environmental quality align with the journal's scope, offering insights for economists and policymakers interested in sustainable development.