ENVIRONMENT AND DEVELOPMENT - THEORY AND INTERNATIONAL EVIDENCE

This article develops a stylized model of the environment-development trade-offs faced by countries during the process of economic growth. Ruttan's hypothesis about the income elasticity of demand for environmental quality is combined with a model of the supply of market and nonmarket goods to obtain the hypothesis of the environmental transition. The empirical section of the article used recently available data from low- and high-income countries to estimate the relationship between income and two classes of environmental amenities, parks and forests. The empirical results support the environmental transition hypothesis - environmental amenities are negatively related to income in countries with less than about $1200-$2000 income per capita, and in higher-income countries the environmental amenities are positively related to income with an income elasticity that is greater than unity. -from Authors