Do individual preferences explain the Environmental Kuznets curve

Abstract Some economists maintain the optimistic view that individual preferences of rich people eventually lead to a virtuous-circle relationship between rising income and environmental degradation. In this article, I review some of the models that establish a relationship between individual preferences and environmental quality. These models provide a basis for discussion of the key role played by two factors: individual preferences and technology. They do not, however, capture the distributive conflicts that occur between different social groups in the process of defining environmental policy. Neither do they provide a good basis for distinguishing between environmental costs caused by the decisions of particular consumers, and those which affect the same consumers. This point is related to the various manners in which environmental costs are displaced. Displacement often occurs within a country for current costs and is even clearer and more relevant when costs are transferred across a great distance or to a remote future. In such cases, there are few incentives to reduce consumption (or alter its composition). Displacement, moreover, can become a strategy (pursued more or less consciously) for maintaining high and rising levels of consumption without dealing with the associated environmental costs.