From last month's China - Exportation of Raw Materials panel report:
7.551 We now turn to analyse the second step in China's argument about the long-term benefits of export restrictions on EPR products, namely that there is a strong link between higher growth and environmental benefits. China argues that "[e]conomic growth, if supported by the adequate regulatory framework, can then be translated into long-term environmental protection". China argues that this relationship is supported by the empirical evidence of the so-called "Environmental Kuznets Curve" (EKC). This is an empirical correlation between income per capita and environmental degradation whereby, while at relatively low levels of income pollution increases with income, beyond a certain income level, pollution declines. Reasons for this relationship are hypothesized to include income-driven changes in: (i) the composition of production and/or consumption that moves away from natural resources goods; (ii) the preference for environmental quality; (iii) the development of institutions introducing the proper regulatory measures to address environmental problems; and/or (iv) the arising economies of scale associated with pollution abatement technologies.
7.552 Parties agree that in general the EKC does not imply a causal relationship from economic growth to environmental quality. A higher level of wealth can strengthen public demand for a cleaner environment, but unless the government responds with policies that enhance environmental protection, the improvements are unlikely to come. China argues that, even if this is not done automatically, higher levels of income make the link between economic development and environmental protection more likely, and China contends that it has provided evidence of an EKC in China for some of the pollutants at issue in this dispute.
7.553 For the Panel, even if growth makes environmental protection statistically more likely, this does not prove that export restrictions are necessary for environmental gains. For example, to the extent that a higher income per capita generates citizens' preferences for a better quality of environment, income redistribution policies may serve the environmental objective just as well as it is claimed that export restrictions do.
Here's more on the idea of an Environmental Kuznets curve:
Pollution often appears first to worsen and later to improve as countries’ incomes grow. Because of its resemblance to the pattern of inequality and income described by Simon Kuznets, this pattern of pollution and income has been labelled an ‘environmental Kuznets curve’. While many pollutants exhibit this pattern, peak pollution levels occur at different income levels for different pollutants, countries and time periods. This link between income and pollution cannot be interpreted causally, and is consistent with either efficient or inefficient growth paths. The evidence does, however, refute the claim that environmental degradation is an inevitable consequence of economic growth.
Does economic growth eventually lead countries to promote a cleaner environment? If so, should this be considered as a factor in relation to defenses to WTO violations? What are the implications if it were considered?
