In the early
stages of economic growth degradation and pollution increase, but beyond some
level of income per capita (which will vary for different indicators) the trend
reverses, so that at high-income levels economic growth leads to environmental
improvement.
beyond
This implies that the environmental impact indicator is an inverted
U-shaped function of income per capita. Typically the logarithm of the indicator is
modeled as a quadratic function of the logarithm of income. An example of an
estimated EKC is shown in Figure 1. The EKC is named for Kuznets (1955) who
hypothesized income inequality first rises and then falls as economic
development proceeds
development proceeds.