Journal Highlights

When Income Goes Up, Does Pollution Go Down?

From Research SpotlightsScientists look at a possible connection between increased wealth and decreased water pollution in Louisiana.

Does economic development always damage water quality, or does increased income actually help decrease pollution? Researchers have been studying the question for a long time, and its answer may help communities or countries better predict their environmental future. 

One hypothesis is that for a time, a region’s environmental degradation will increase as wealth increases, but at a certain income level the environment will start to recover. For water quality and air quality, scientists have found data supporting this idea in research at the country level, in both developed and developing countries. The bell-shaped environmental Kuznets curve (EKC) graphs a hypothetical relationship between pollution and the average income earned per person in a given area. 

In a recent study, Pandit and Paudel used models to look at the relationship between water pollutants in watersheds and income in the state of Louisiana, to see if an EKC exists that shows eventual water quality recovery due to increased incomes in the state. 

The scientists focused on nitrogen, phosphorous, dissolved oxygen, and mercury to test water quality. So-called “flow pollutants” like nitrogen and phosphorus (typically associated with agricultural pollution) can be absorbed back into the environment. These types of pollutants contrast with “stock pollutants” such as mercury, which, once put into the environment, will not disappear or be absorbed. Instead they will continue to cause damage and cycle through the environment forever. Mercury is usually locked away in rocks and coal but is released into the environment when coal is burned to produce electricity or when burning hazardous waste. 

The authors used watershed data (including data on water pollution) covering 53 counties in Louisiana over a 21-year period, from 1985 to 2006. Over the same period, they used economic growth with per capita income, available from the U.S. Bureau of Economic Analysis

Because the researchers were looking at multiple pollutants, they decided to use a seemingly unrelated partially linear model (SUPLM) for the study. This model is often used in economics to combine multiple equations that are related only through their errors. 

The results indicated that nitrogen did follow a Kuznets curve, as did dissolved oxygen, meaning water quality in Louisiana improved with increased wealth. Phosphorus and mercury both told a different story: Although phosphorous pollution did decrease when state per capita income rose to $14,000, the pollution increased again after a per capita income of $17,000. A similar problem happened with mercury, indicating that mercury pollution rose the second time perhaps due to the increased demand for power and energy. 

The mixed results show that the factors that fix pollution are complicated, but some pollutants, like nitrogen, could be reduced by economic growth. What this study does not answer, as the authors point out, is whether this pollution automatically fell with income growth or whether it was the result of environmentally protective policies in the state. The authors suggest that likely a combination of these factors had some relation to improvement in water quality. 

This research did not find that economic growth will naturally solve pollution and water quality issues, but this growing area of research will be of interest to both environmentalists and economists investigating the connection between industrial development and water pollution. 

-- Alexandra Branscombe, Freelance Writer,