Is environmental degradation an inevitable consequence of economic growth: tunneling through the environmental Kuznets curve

Economywide reforms often contribute simultaneously to economic, social and environmental gains. However, Unintended adverse side effects occur in many cases-when such growth inducing reforms are undertaken while neglecting other policy, market or institutional imperfections. The remedy does not generally require reversal of the original economywide reforms, but rather the ex-ante implementation of additional complementary measures that remove such imperfections. The EKC approach seeks to relate the state of the environment to the stage of development. Developing countries could learn from the experiences of industrialized nations, and restructure growth and development to 'tunnel' through any potential EKC-thereby avoiding going through the same stages of growth that involve relatively high (and even irreversible) levels of environmental harm. An environmentally adjusted measure of national income could significantly change the shape of the development-environment relationship. Recommendations for decision-making include: actively seeking 'win-win' policies that simultaneously yield both economic and environmental gains; pre-empting environmental harm through ex-ante remedial measures; and fine-tuning reform policies to avoid severe environmental damage. The adoption of more sustainable policies will facilitate the attainment of higher levels of development at a lower environmental cost. (C) 1999 Elsevier Science B.V. All rights reserved.