Wealth and the Environment

Notwithstanding Mark Twain’s solemn advice to, “Get your facts first, and then you can distort them as much as you please. (Facts are stubborn, but statistics are more pliable.)” allow me to dangle an illuminating graph for your consideration. The variables on the graph shown in Figure 1 require a modest amount of explanation, but the concept behind them is powerful. The graph is borrowed from The Skeptical Environmentalist by Bjorn Lomborg (Page 33). The source for the data in the graph is the World Economic Forum of the Yale Center for Environmental Law and Policy and the World Bank.

Figure 1: Environmental Stability versus GDP. (From The Skeptical Environmentalist by Bjorn Lomborg, Page 33.)

The horizontal axis represents per capita Gross Domestic Product (GDP) in units of Purchasing Power Parity (PPP) dollars for different countries. This is a mouthful of alliteration describing a normalized measure of per capita productive wealth production. It is a complex matter to compare wealth in different countries. The PPP dollar is an attempt to reduce this complexity to a single value. In short, regardless of what a particular product or service — a gallon of milk, a loaf of bread, a train ride, or a Big Mac — costs in local currency, it should cost the same in PPP dollars. PPP dollars are a best effort at measuring relative wealth in different economies using different currencies. Just think of the horizontal axis as the rate of per capita wealth generation.

The vertical axis is an environmental sustainability index. It is a combination of various measures of the environmental status including pollution of the air and water. The larger the value, the better off the country is environmentally.

There is certainly wide variability from country to country, but the implication of Figure 1 is not only clear, but also runs counter to the conventional wisdom of the age. The greater the per capita wealth of a country, the greater is the sustainability of its environment. Not only is productive capacity not inimical to a clean environment, it is positively correlated to it. Of course, correlation is not the same as causality. Nonetheless, it is clear that the large and complex web of economic, political, and social factors that contribute to high levels of economic growth are also associated with clean environments.

Figure 1 should remind those on the Right that there might be money to be made from environmental friendliness. But the Right has long recognized that all resources, including wealth are finite, and that priorities in environment must be weighed against costs.

The Left by contrast has more to learn. It has raised environmentalism to a religious sentiment in the hopes that the issue could be used as leverage to increase public supervision of the economy. Except for those of a Left-wing anti-globalization temperament whose minds have long ago been constipated by the lack of intellectual fiber, Figure 1 demonstrates that an automatic Luddite opposition to economic growth is irrational and counterproductive. Having a clean environment is an important value and it seems that one way to achieve it is to maintain a robust growing economy.

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