Mexico and the Environmental Kuznets Curve

Bruce Yandle has a new research paper out with Jody W. Lipford on the Environmental Kuznets Curve, a stylized version of which is presented above. The EKC holds that economic growth precedes improvements in environmental quality. After a certain threshold of economic growth is reached, environmental improvements follow.

Yandle and Lipford apply the theory of the EKC to the effect of NAFTA on Mexico’s environment:

The effects of NAFTA on Mexico’s environment were of great concern pre-NAFTA and have continued to be a matter concern in the post-NAFTA era. As the many studies and evidence presented in this paper show, Mexico’s environment in the post-NAFTA period has not suffered as much as pessimists feared, nor has it improved as much as optimists hoped. This outcome is consistent with theory and evidence from Environmental Kuznets Curves in that Mexico’s macroeconomic performance has been inadequate to raise Mexico’s per capita income to levels needed to cross estimated turning points for many pollutants. Seen in this light, Mexico’s environmental quality will continue to be a mixture of modest improvements along with modest setbacks until the economy exhibits strong and sustained growth.

For more from Yandle on the EKC, see this primer, or this PERC Research Study.