Despite the government's stated goal of a low-carbon growth strategy and a flood of public and private investment going into to many new energy related projects, I am not all that sanguine about a quick fix of our environmental problems.

That is the message I took away from the International Conference on Low-Carbon Economy held before National Day jointly by the University of International Business and Economics where I teach, and Nagoya University in Japan.

One presentation at the conference discussed the empirical results of applying the environmental Kuznets curve (EKC) to China.

Simon Kuznets first discovered evidence that economic inequality increases over time while a country is developing, and then after a certain average income is attained, inequality begins to decrease.

Pollution curve

The relationship between inequality and income per capita plotted on a graph form an inverted-U curve, and this is one of the key contributions to the science of economics for which Kuznets won the Nobel Prize in 1971.

In a path-breaking paper for the 1992 World Development Report, Grossman and Krueger proposed the same relationship between levels of pollution and income per capita, and this curve has later become what is called the Environmental Kuznets Curve.

The EKC theme is rationalized by the theory that greater economic activity hurts the environment and that as incomes rise, the demand for improvements in environmental quality will increase.

Although I have been vividly shaken a couple of times by people tossing empty bottles of mineral water from their Mercedes and BMWs right in front of my car on the highway, my academic faith in the EKC theme that demand for better environment increases as income rises is largely intact.

Many country-specific EKC studies generally predict the environment situation improves once the per capita income reaches the range of US$4,000 to US$8,000 (at 1985 prices, purchasing power parity).

That is still a long march ahead, even at China's bustling growth rate. Indeed, the paper by Professor Jinjun Xue at Nagoya University shaped China's EKC using carbon (CO2) and sulfur (SO2) emission data. On both accounts, emissions have very high correlations with GDP growth and thus per capital income.

More importantly both the EKCs of China appear to be very much on the steep climbing slope, and thus are not even near the turning point.

Tunnel effect

Avoidance of the top of the EKC creates a new buzz phrase these days among environmental economists and public policy makers of what is called the "Tunnel Effect."

Graphically, it means that an economy can go from the left slope of the EKC to the right slope by a short cut through the tunnel (it is shaped as a tunnel drilled through the mountain of the inverted-U curve).

How? Via newer and cleaner technologies that revolutionize people's use of energy. In fact, the conference was littered with presentations trumpeting the impact of these new technologies from Germany to Japan.

Quote me as a skeptic on this new technology stuff, as it reminds me of the popular euphoria before this global recession that information technology (IT) is going to change all that.

But look at the pathetic state of the world's most sophisticated IT-empowered economy!

In the grand scheme of things, technologies, be it the Internet or alternative energy, are not likely to alter humans' development path in a revolutionizing way. Be it in the air or on land, environmental degradation may continue to be a price we have to pay for those near double-digit GDP growth rates.

(The author is an associate professor of economics at the University of International Business and Economics. The views expressed are his own. He can be reached at: johngong@gmail.com)

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