Short and long-term effects of economic growth on pollution

Abstract

Environmentalists have often claimed that economic growth results in higher inputs of materials and hence higher outputs of wastes. Several economists, on the other hand, have repeatedly claimed that economic growth has benefits for the environment, since environmental quality is a luxury good. Both points can be justified simultaneously if it is accepted that economic growth has different implications for environmental quality over time. In the short run, economic growth may result in an increase in emissions, but there may also be long-run benefits from economic growth since rising incomes may afford room to finance environmental policies. The question, then, is which effect predominates, on balance.