Does Poverty Cause Environmental Degradation? Evidence from Developing Countries

ABSTRACT

Environmental quality has been decreasing in most countries in the world. With poverty is the primary attribute of most developing countries, this study aims to examine the effect of poverty on environmental deterioration by using panel data of 50 developing countries for the period between 2001 and 2014. Utilizing the generalized method of moments, findings establish that poverty is among the principal sources of environmental damage across the countries. Therefore, the efforts to reduce environmental degradation must be comprehensive enough and the priority of environmental policies should in the first place, targeting poverty reduction.

KEYWORDS:

• developing countries
• environmental degradation
• GMM
• poverty

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Trade is also being cited as one critical source of environmental degradation (Stern, Common, & Barbier, 1996). Nothing to surprise as to do trade, national output must be higher and normally supported by higher FDI. Urbanization, which is another reflection of higher output and inflows of FDI, has received limited attention but found to be significant especially in the case of developed countries (Kinoshita & Campos, 2003).

2. What is more surprising is that the study to connect income and environmental degradation under Kuznets curve is also failed to achieve consensus among past studies for developing countries. One of the biggest unstated reason is that high income does not mean equal distribution among the population, which is the primary characteristic of most developing countries. Huge income disparity may leave the issue of environment remains serious. Moreover, the latest study by Masron and Subramaniam (2018) observe that the presence of serious corruption tend to invalidate the positive prospect that income may help environmental quality improvement.

3. As Dawson (1997) is able to marshal data on the environment for larger samples of countries and income levels, evidence began to mount that as countries develop, certain measures of the quality of life might initially deteriorate but then improve. Nevertheless, the results with the inclusion of GDP² are available upon request to conserve space. The inclusion of GDP² does not alter the effect of our main variables in this study.

4. The choice of period is very much dependent on two factors: firstly, the starting point of 2001 is due to the initial take-off of many poor or low income countries towards a higher income level, and secondly, the discrete time is due to data availability. That is also the reason why only 50 developing countries, as in footnote No. 1, are selected although our original aim is to include all the developing countries listed by the World Bank. Nevertheless, they are still representative of developing given the fact that a number of countries are available from each region in the world.