Unexpected connections: Income inequality and environmental degradation

By Jaqueline Haupt
Posted on 13 February 2012
Filed under Economic Equity, Politics
and Carmen Lawrence
Winthrop Professor, School of Psychology, University of Western Australia

Ensuring that natural resources are consumed and waste is produced at sustainable rates represent major contemporary challenges. Recognition of these challenges resulted in the endorsement in 2000 of environmental sustainability as one of the Millennium Development Goals (MDGs) to be achieved by 2015. However, by 2003 global rates of consumption and waste production were estimated to be at least 25% higher than the capacity of the planet to provide resources and absorb waste (Kitzes, et al., 2007) and this rate may have risen as high as 50% by 2007 (WWF, 2010). A vital aspect of achieving sustainability is widespread social change, yet the current theoretical knowledge of societal transformation processes is limited. In order to improve nations’ environmental performance, a better understanding of socioeconomic and behavioural forces driving such unsustainable development is required.

There is general agreement that economic growth, as measured by per capita national income, affects environmental quality (Constatini & Martini, 2010). Papanyotou (1994) has described this relationship by an inverted U-shape curve (the Environmental Kuznets Curve (EKC)). From this perspective, as the economy expands, environmental damage increases up to a threshold, above which the society demands and can afford environmental remediation and natural resource protection. However, research into the extent to which the EKC succeeds in describing the relationship between economic growth and environmental damage has produced conflicting results. Shafik (1994), for example, found that a number of variables vary monotonically with income – and in different directions; some, such as access to safe water and sanitation show improvement, while others, such as CO2 emissions and waste generation indicate deterioration. There is evidence that the richest countries’ carbon emissions and resource consumption are continuing to increase beyond sustainable levels (Moran, et al., 2008) and some developing countries appear to perform better, environmentally speaking, than developed ones (Emerson et al., 2010). It appears that economic growth may not be ultimately or necessarily beneficial (Lawn & Clarke, 2010; Magnani, 2000) and that other factors make a major contribution to environmental outcomes. In particular, it appears that income distribution rather than average levels of income may be a critical determinant of environmental degradation (Jun et al., 2011).

Income inequality has been extensively correlated with health and social problems: life expectancy, obesity, mental health, drug use, educational performance, teenage births and violence to name a few (Wilkinson & Pickett, 2010). Environmental degradation appears to be another side effect of economic inequality and analyses show there is a negative correlation between income inequality and environmental sustainability (Andrich et al., 2010; Baland et al., 2007; Butler, 2002; Dorling, 2010a, 2010b; Holland et al., 2009; Mikkelson et al., 2007): the higher the income inequality the worse the environmental indicators such as waste production, meat and water consumption, biodiversity loss and environmental composite indices (e.g. ecological footprint).

While research on the relationship between inequality and various social and environmental indicators is extensive, the pathways and mechanisms underlying these linkages are yet to be established. It may be, as Coburn (2004) has argued, that income inequality is itself the result of the basic social, political and economic characteristics of a given society which also affect the quality of the environment. Characteristics such as the prevailing economic ideologies, cultural values like individualism and materialism, as well as attitudes toward consumption, work and the importance of protecting the environment are all likely to influence national policies which affect both income distribution and environmental quality. Breznau’s (2010) analysis of survey data from five countries showed that those with egalitarian values are the most likely to support government services designed to reduce inequality. Conversely, those who support “economic individualism”[1] and neo-liberal economic policies are the least likely to favour such a role for government (Arikan, 2011). Such attitudes also appear to affect support for pro-environmental behaviours and expenditures. Generally speaking, those who hold pro-market/ individualist worldviews do not endorse pro- environmental values and behaviours; the reverse holds true for people who maintain pro-environmental values (Heath & Gifford, 2006; Steg & Sievers, 2000). Significantly, for understanding the relationship between inequality and environmental degradation, these values appear to be reflected in actual government expenditure; countries which have higher scores on “economic individualism” have lower levels of overall government spending per capita (Arikan, 2011).

Arguing from an economic perspective, Magnani (2000) has speculated that income inequality reduces pro-environmental public spending via a ‘relative income effect’ which causes shifts in the preferences of those with below average incomes in favour of greater consumption of private goods instead of public ones. Using data on public expenditure on environmental protection between 1980 and 1992 in 19 OECD countries, she showed that wider income inequalities were associated with lower environmental expenditure.

Alternatively, Wilkinson and Pickett (2010) argue that inequality heightens consumerism that makes it harder to contain economic activity within sustainable levels and show evidence from a number of sources on savings, debt, bankruptcy rates, spending on advertising and working hours that indicate that inequality does increase the pressure to consume. According to Wilkinson and Pickett, two mechanisms can be identified by which social inequality leads to greater consumerism: (1) people in more unequal societies are more stressed and anxious, and consumption provides a way for  people to escape from those pressures, and (2) the consumption by the rich reduces everyone else’s satisfaction with what they have, by showing it up as inferior, as less than the best; a great deal of what drives consumption is status competition, which, intuitively, is more intense in unequal societies.

Boyce et al (2007) have proposed that the unequal distribution of wealth and power within countries leads to greater environmental damage by undermining the collective action required for environmental protection. Likewise, it has been shown that more equal societies are more socially cohesive and have higher levels of trust which foster public-spiritedness (Wilkinson & Pickett, 2010). Similar findings have been reported on the relationship between social capital and environmental outcomes (Dulal et al., 2011), presumably because lack of trust and poorer social capital erode the capacity for collaborative action.

It is possible that by inducing lower expenditure on environmental protection, increasing consumerism or reducing collective action, economic inequality may affect nations’ environment performance. To date, there has been a lack of empirical analyses establishing the potential causal links between income inequality and environmental degradation.  We are currently undertaking research which we hope will fill in some of these gaps in our understanding.

References

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[1] economic individualism—a cultural orientation that emphasizes the values of individual autonomy, self-reliance, and achievement and is associated with support for capitalism and laissez faire market economics and preference for a limited role of government in the economy

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