Families have basic needs that must be met. They must put food on the table and keep the house warm in the winter. Many people have the good fortune to take food, shelter, water, clothing, and energy for granted, but the number of people worldwide without these
necessities remains undesirably high.
Many people have the good fortune to take food, shelter, water, clothing, and energy for granted, but the number of people worldwide without these necessities remains undesirably high.
Until those needs are met, the environment is far less of a priority. B. Kelsey Jack, associate professor at UC Berkeley, said, “In many instances, the immediate need to put food on the table outweighs all the benefits an individual could get from efforts to reduce pollution. This is because these benefits are usually delayed and shared by others – the environment is a public good. It is also, importantly, because the benefits of higher consumption are large and immediate when you have next to nothing.”1
In some parts of the world, those needs are met with low-cost, highly polluting fuel sources. The lack of reliable power results in families relying on charcoal, dung, and coal to meet heating and cooking needs, resulting in hazardous indoor air pollution and, consequently, a higher mortality rate. Other families face difficult tradeoffs. Higher energy bills mean fewer resources are available for food, clothes, and healthcare.
Global Energy Access and Cleaner Fuel Adoption
As economies grow, electricity access expands while reliance on solid fuels declines, reducing indoor air pollution and improving public health, especially in developing nations.
Source: Our World in Data.
Global Shift Away From Solid Fuels for Cooking (1980-2010)
The percentage of populations relying on solid fuelds, such as wood and charcoal, has declined significantly across all regions, with an especially pronounced decline in populous Southeast Asia.
Source: Our World in Data.
Encouragingly, the number of households with access to electricity is rising, and the number of people relying on solid fuels for cooking is falling.2 Greater levels of wealth and prosperity will further improve those stats, and greater levels of economic freedom will help achieve greater standards of living across the globe.
In fact, one primary reason economic freedom has a positive correlation with other important human and societal quality metrics is that economically free countries have higher levels of economic growth and more investment. Economic freedom helps people achieve higher levels of wealth and prosperity faster, which, in turn, spurs more attention and dedication to environmental protection.3
When higher-priority needs are met, there is a stronger demand from a country’s citizens to tackle pollution – and the available resources to make it happen. Through policies and the accumulation of knowledge, the public and private sectors reduce unwanted environmental byproducts. However, countries at every income level have different environmental scores, meaning some wealthy countries have better environmental outcomes than others. Therefore, human development, freedom to innovate, government integrity, and public policy play important roles. When countries are freer and wealthier, businesses have more resources to fund new technologies and cutting-edge research and to invest more in people through education and scientific institutions.
How Wealth and Development Improve Evironmental Health
Countries with higher Human Development Index (HDI) scores have cleaner environments, better sanitation, and stronger public health systems, supported by economic growth.
Source: Yale University and United Nations Development Programme.
The United Nations Human Development Index (HDI) provides a composite score for each country based on a person’s ability to live a long and healthy life, enjoy a good standard of living, and be knowledgeable. Economically free countries, on average, have much greater HDI scores than economically repressed countries. Further, there is a strong, positive correlation between HDI scores and environmental performance.
The Environmental Kuznets Curve (EKC) is a visual depiction of wealth’s positive impact on the environment.4 The EKC is an inverted-U relationship between pollution and economic development, where growth from industrialization initially results in higher levels of pollution. Over time, however, people spend their incomes cleaning up the environment and can more easily afford the compliance costs of environmental policies.
A similar curve, the environmental transition curve, emphasizes the role of innovation and technology in bending pollution curves backward.5 In effect, technological progress more quickly offsets the higher emissions from economic growth, resulting in cleaner, stronger economies. These investments will help turn green premiums into economic advantages and help developing countries bend pollution curves back faster than it historically took more developed countries. Technological progress creates opportunities for low or even negative abatement costs for emissions.
Higher Economic Freedom Leads to Longer, Healthier Lives
Freer markets drive innovation, job creation, and investment in healthcare and education, leading to longer life expectancy and greater overall prosperity.
Source: United Nations Development Programme and The Heritage Foundation.
Peer-reviewed literature has demonstrated the EKC exists for several ecological variables such as waste, waste emissions, sulfur dioxide, and suspended particulate matter.6 Other literature has found insufficient evidence of an EKC.7 The moment when the inverted U in the Kuznets curve starts bending downward depends on many factors and does not uniformly apply to all emissions or all countries.
The Environmental Kuznets Curve
Pollution rises in early industrialization but declines as wealth enables investment in cleaner technologies, stricter regulations, and public demand for environmental quality.
Source: The Property Environment and Research Center.
- “Why Environmental Quality Is Poor in Developing Countries: A Primer.” EPIC, May 26, 2015. https://epic.uchi-cago.edu/news/why-environmental-quality-is-poor-in-developing-countries-a-primer/[↩]
- Hannah Ritchie, Pablo Rosado, and Max Roser, “Access to Energy,” Our World in Data, January 4, 2024, https://ourworldindata.org/energy-access[↩]
- James Gwartney, Robert Lawson, Joshua Hall, and Ryan Murphy, 2022 Economic Freedom of the World: 2022 Annual Report. Fraser Institute. https://www.fraserinstitute.org/sites/default/files/economic-freedom-of-the-world-2022.pdf. The literature review Fraser’s Index cites is: Joshua Hall and Robert Lawson (2014). Economic Freedom of the World: An Accounting of the Literature, Contemporary Economic Policy 32, 1: 1–19. ; and Robert Lawson, Economic Freedom in the Literature: What Is It Good (Bad) For?, pp. 187–200 in this edition.[↩]
- Bruce Yandle, Maya Vijayaraghavan, and Madhusudan Bhattarai, “The Environmental Kuznets Curve – A Primer,” PERC, May 2002, https://www.perc.org/wp-content/uploads/2018/05/environmental-kuznets-curve-primer. pdf.[↩]
- Indur M. Goklany, Affluence, Technology, and Well-Being, 53 Case W. Rsrv. L. Rev. 369, 2002, https://scholarly-commons.law.case.edu/caselrev/vol53/iss2/9[↩]
- Md Danesh Miah et al., https://link.springer.com/article/10.1007/s10669-010-9303-8 and https://www.sci-encedirect.com/science/article/abs/pii/S1364032115012228[↩]
- For instance, see: Recep Ulucak and Faik Bilgili, “A reinvestigation of EKC model by ecological footprint measurement for high, middle and low-income countries,” Journal of Cleaner Production, Vol. 188, pp. 144-157, July 1, 2018, https://www.sciencedirect.com/science/article/abs/pii/S095965261830862X[↩]