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Water Pollution and Economic Growth: An Environmental Kuznets Curve Analysis at the Watershed and State Level

Anamika Barua, Klaus Hubacek

Abstract


The paper examines the relationship between per capita income and water pollution for 16 states of India over a period from 1981 to 2000. There are a variety of problems when assessing the effects of socio-economic variables on water quality: There is a spatial mismatch of biophysical and economic data. On one hand, water quality is measured at certain parts of the river, which may or may not reflect the effects of various economic activities within a watershed draining into that specific river, while on the other hand, economic data are not available at the watershed level but rather on coarse administrative boundaries usually not matching the watershed boundaries. Most EKC studies have been focusing on the national level ignoring important biophysical and socio-economic differences at the regional level. This paper focuses on the watershed and state levels and discusses how to deal with these data problems and analyses the relationship between income growth and water pollution.
Indian states showed mixed results with regards to the chosen water quality indicators BOD and COD. Overall the analysis points out that there is large scale variation in the water quality between the 16 states of India with respect to BOD and COD. Out of the 16 Indian states for which EKC estimation were done we found significant relationships between water pollution and per capita income for 12 states; 4 states showed inverted U-shaped curves (i.e. a de-linking of economic growth and water pollution), but 8 states showed N-shaped curves or u-shaped curves (re-linking of growth and pollution). For most of the states the first turning point appeared at a per capita income level of Rs. 5,000 (US $100), and the second turning point at Rs. 15,000 (US$ 320). Thus we can see that many of the Indian states go through similar transitions of initial high per capita pollution followed by improvements of per capita pollution levels and finally further increases of pollution levels with additional economic growth. Many EKC studies have pointed out how beneficial economic growth is for environmental performance of countries; this study does not share this optimism as water pollution in most states of India is getting worse after initial improvements.

Keywords


Environmental Kuznets curve, water quality, spatial analysis, per capita income, economic development.

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