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01 / 03
Study Finds Economic Prosperity is Associated With a Cleaner Environment

Blog Post | Environment & Pollution

Study Finds Economic Prosperity is Associated With a Cleaner Environment

Higher living standards and ecological responsibility are two interrelated byproducts of human progress.

It is often assumed that economic prosperity leads to environmental degradation, but a new study challenges this view. Using data from 180 countries over 20 years, the study finds that higher levels of income per capita are associated with lower levels of air pollution and deforestation. This article explores the possible explanations and implications of this finding for environmental policy and human well-being.


The climate activist and Time Magazine’s 2019 Person of the Year Greta Thunberg made the following remark at the 2019 U.N. Climate Action Summit,

You have stolen my dreams and my childhood with your empty words. And yet, I’m one of the lucky ones. People are suffering. People are dying. Entire ecosystems are collapsing. We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth. How dare you!

Thunberg’s remarks are riddled with generalizations and exaggerations, but the main thrust of her argument is the most troubling one because it is fundamentally false. According to the activist, there is a negative relationship between economic growth and environmental protection. That assertion has little basis in reality. On the contrary, economic progress enhances our ability to be good stewards of our planet.

The Environmental Performance Index 

The Environmental Performance Index (EPI) is a joint project of the Yale Center for Environmental Policy and Law and the Center for International Earth Science Information Network at Columbia University. The index has been a leading resource on accessing environmental protection in individual countries for over 20 years.

The latest 2020 edition ranks 180 countries based on metrics, such as air quality, ecosystem vitality, environmental health, drinking water, CO2 emissions, etc. However, what stands out about the 2020 edition is its conclusion: 

Good policy results are associated with wealth (GDP per capita), meaning that economic prosperity makes it possible for nations to invest in policies and programs that lead to desirable outcomes. This trend is especially true for issue categories under the umbrella of environmental health, as building the necessary infrastructure to provide clean drinking water and sanitation, reduce ambient air pollution, control hazardous waste, and respond to public health crises yields large returns for human well-being.

Furthermore, the report notes that although urbanization and industrialization can lead to increased pollution (especially in developing countries), tradeoffs between environmental protection and economic growth can be greatly mitigated by sound policy. For example, “commitment to the rule of law, a vibrant press, and even-handed enforcement of regulations – have strong relationships with top-tier EPI scores.” That’s because open governments allow for greater public scrutiny, whereas dictatorial governments, like the former Soviet Union, can silence their critics and continue destroying the environment unimpeded.

Provided below are the top five EPI-ranked countries in each region of the world. Each country’s EPI ranking is accompanied by that country’s global gross domestic product (GDP) per person ranking. Also included are the top five worst-performing countries. The EPI ranking is on a scale from 1 to 180, with 1 being the best and 180 being the worst. The GDP per capita ranking is provided by the World Data Atlas for the year 2020 in current U.S. dollars. The scale goes from 1, which is the highest GDP per capita, to 192, which is the lowest GDP per capita. 

Below is a regression table plotting countries based on their GDP per capita and their total EPI score. As can be seen, there is a strong correlation between a country’s wealth and its EPI score.

Source: 2020 Environmental Performance Index 

Also provided are the factors considered when accessing an aggregate EPI score.

Source: 2020 Environmental Performance Index, methodology for each category outlined in the full report.

Explanation

The relationship between better environmental performance scores and GDP per capita is quite intuitive. The first major reason being that environmentally friendly technology, cleanup operations, and ecological stewardship are expensive. Richer societies can afford to divert more resources to protecting the environment, while poorer societies tend to be more concerned with meeting basic living standards.

For example, in countries like the United States, it is standard to cook food with natural gas-powered or electric stoves. Those are far cleaner and safer than the alternatives commonly found in poorer societies. For example, Aaron Steinberg from the Council on Foreign Relations noted in 2019 that in India, around 78 percent of residents still use biomass for cooking and heating. That number can go as high as 90 percent in India’s low-income regions and 52 percent worldwide. Burning biomass, whether it be wood or, in many cases, dried dung, is extremely toxic and leads to millions of health complications every year. In fact, this is such a problem that increasing access to clean-burning stoves was a priority outlined in a 2014 United Nations report on sustainable energy.

Another example of the importance of advanced technology is the access to catalytic converters, which make it possible for automobile makers to lower car emissions to comply with the U.S. National Emission Standards Act. Such components are expensive, as are other environmentally friendly products, such as renewable energy, organic food, public transportation systems, smart grids, and so on.

The EPI report also notes that although industrialization can lead to increased pollution, the latter can be mitigated by a strong rule of law, a vibrant civil society, and a prudent as well as accountable government. An arbitrary and corrupt government, in contrast, is not only bad for generating prosperity, but it is also likely to be a poor protector of the environment. Undermining of private property rights, for example, can incentivize poor ecological stewardship – as it did most recently in Zimbabwe and Venezuela. 

Key Takeaways 

The EPI report confirms what many have known for a while. Although industrialization and modernization may lead to increased pollution and emissions, economic prosperity also offers the tools needed to mitigate environmental damage. Greater access to green technology, better incentives for environmental stewardship, and the resources necessary to pursue environmental stewardship are all luxuries brought about by a prosperous society. A prudent and accountable government that upholds the rule of law is not only a better promoter of economic growth but also a better steward of the environment. Higher living standards and ecological responsibility are not two competing interests but two interrelated byproducts of human progress.

Blog Post | Energy Production

Let Numbers Be Your Guide

For understanding the modern world, there really is no substitute for numbers.

This article is about the importance of numbers for understanding the modern world. It reviews a book by Vaclav Smil, an energy theorist and scientist, who explores various topics that can be illuminated by quantitative analysis. It also cites Steven Pinker, a psychologist and author, who argues that scientific thinking requires us to put numbers to our claims and not rely on intuition.


Many people think that the modern world quantifies too much: everything is measured, reported, analyzed, matched with KPIs, and dressed up to tell a quantitative story. Many people also think that numbers can be deceptive, elaborate hoaxes, or – in the classic Mark Twain quote about statistics – damned lies.

There is good reason to be skeptical about precise figures and who made them and how. But whenever I hear claims that we shouldn’t rely on numbers, I think of a paragraph in Harvard University psychologist Steven Pinker’s Enlightenment Now! The Case for Reason, Science, Humanism, and Progress:

“Resisters of scientific thinking often object that some things just can’t be quantified. Yet unless they are willing to speak only of issues that are black or white and to foreswear using the words more, less, better, and worse […] they are making claims that are inherently quantitative. If they veto the possibility of putting numbers to them, they are saying ‘Trust my intuition.’ But if there’s one thing we know about cognition, it’s that people (including experts) are arrogantly overconfident about their intuition.”

In 2020, Vaclav Smil, another prolific Canadian author, published a book celebrating quantitative powers: Numbers Don’t Lie: 71 Things You Need to Know About the World. It’s a short and commuter-friendly book that reminds me of Hans Rosling’s Factfulness. The book includes a wide variety of topics that are swiftly dealt with in a handful of pages each.

We learn that the French drink less wine and eat less cheese than they used to; that the risk of dying from commercial flights is smaller than the background risk of death from just being alive; that Brexit isn’t that big of a deal; that the late-1800s invented many more civilization-changing items than the late-1900s; and that the green promise of electric vehicles is hugely oversold. We get a playful estimate of the number of people involved in building the pyramids and learn that the world’s phones and tablets use more energy than its cars.

Numbers don’t lie, but Professor Smil would be the first to agree that they sometimes deceive and that there can be uncertainty surrounding which numbers best capture reality. Investigating what numbers reveal about our world takes finesse as much as skill and requires us to think about how the numbers were constructed, what they leave out, and what nuance we miss when we quickly report them.

Smil, an energy theorist and reclusive scientist at the University of Manitoba, naturally focuses much on our physical environment: the energy that powers our civilizations, the technologies that dominate our lives, the gradual and long-term improvements in our technical capabilities of lighting, fuel efficiency, and electricity generation. Energy transitions, he has convincingly pointed out elsewhere, take time. An energy transition away from fossil fuels “is a task for many decades,” not a quick fix like political leaders at COP26 and elsewhere are fond of proclaiming.

There are no rivals for kerosene jet fuels or gigantic diesel engines for long-distance transportation over oceans. Today’s batteries don’t pack enough energy and thus take up much too much space to generate the power needed for a containership or an aircraft. In a revealing back-of-the-envelope calculation, Smil shows that we would need batteries that are ten times more energy-dense than the best lithium-ion ones merely to rival today’s fossil fuels. That is “a tall order indeed,” he concludes as, “in the past 70 years, the energy density of the best commercial batteries hasn’t even quadrupled.”

In the three­ decades since the first global climate change meeting, the world’s energy mix has gone only from using 86.6 percent fossil fuels to 85.1 percent – and not for lack of trying. The world has achieved more decarbonization through expanded hydroelectric power than all wind and solar installations combined. In the United States, three-fifths of the reduction in emissions from power generation came not from adding green technologies but from shifting towards natural gas.

Bar civilization-changing technological breakthroughs, which are by their nature unpredictable, fossil fuels are our future – whether we like it or not. As if that weren’t enough to anger many climate alarmists, Smil also thinks we can safely wait another few thousand years before we judge our times a completely new geologic epoch – the Anthropocene. He writes, “Let us wait before we determine that our mark on the planet is anything more than a modest microlayer in the geologic record.”

Healthy bodies, healthy homes, and healthy minds

We get a fair bit of nutritional advice as well. Smil likes the Japanese diet – the population with the longest life expectancies must be doing something right – as well as traditional Mediterranean cuisine. Smil has published a full book on eating meat, and some of that book’s arguments make their way into his new work – such as comparing the energy conversion for different meat sources (chicken, pork, and cattle). He shows the appalling degree of food waste in North America, which is inexcusable compared to best estimates elsewhere in the world, especially since Americans already eat too much (around 35 percent of the population is obese, and another 40 percent is overweight).

He advises us on how to insulate our homes (it’s the windows!) and takes us on a layman’s journey to compare energy conservation in engines, wind turbines, and container ships. Despite all the attention we give to batteries, some 99 percent of the world’s electricity storage capacity is provided by pumped hydro.

If Marian Tupy and Ron Bailey’s Ten Global Trends Every Smart Person Should Know deserves a place on everyone’s coffee table, then Smil’s Numbers Don’t Lie should form part of every smart person’s commute – easily accessible in the side pocket of your bag or within close reach during heated dinner conversations.

For understanding the modern world, Smil concludes, there really is no substitute for numbers.

Blog Post | Environment & Pollution

Natural Gas Drives Energy Costs to Record Lows

The U.S. has successfully decoupled economic growth and energy demand.

The Business Council for Sustainable Energy and Bloomberg’s New Energy Finance have recently released their 2017 Sustainable Energy in America Factbook, which looks, among other things, at the benefits of rising natural gas use across the United States. According to the report, Americans now devote less than four percent of their total annual household spending to energy—the lowest since government record-keeping begun. That welcome development is, in part, a result of the fracking revolution and of the declining prices of natural gas.

Lower energy prices have also helped to reduce manufacturing costs, thus reviving the U.S. economy. Today, the United States generates very cheap electricity for industrial use, outranking China, India and Mexico. In spite of those low energy costs, American producers have been growing more efficient. The United States, the report notes, “has decoupled economic growth and energy demand.” Since 2007, American GDP grew by 12 percent, while overall energy consumption fell by 3.7 percent.

The use of natural gas, which is now the top fuel source for electrical generation, has also been good for the environment. The burning of natural gas emits between 50 and 60 percent less carbon dioxide than the burning of coal. As such, the carbon footprint of the power-generating industry has actually shrunk by 24 percent since 2005. Rounding off a set of positive numbers, after many decades of use, we now have greater proven reserves of natural gas than ever before.

Market forces fueled a rise in domestic natural gas production, providing the economy with a cheap, cleaner burning source of fuel. However, the report notes that development of necessary natural gas infrastructure is not keeping pace with demand and should be improved going forward. The report provides proof of natural gas’ many positives. Americans are saving more on energy bills than ever before, the economy is growing and the United States is the only major country reducing its green house gas emissions. Happily, as infrastructure expands and improves, the benefits will only increase.

This first appeared in Reason.