Environmental and economic goals not in conflict, new study claims

New research claims that air pollution policy reduces the extent to which population growth in urban areas results in increased pollution emissions, without disrupting the economic growth resulting from this urbanisation.

More than half of the world’s population currently lives in urban areas, and the United Nations predicts another 2.5 billion people will move to cities by 2050. However, the exact relationship between population growth and pollution increase is still unknown. This in turn causes problems in policy making, leading to questions over whether environmental regulations that reduce emissions from urbanisation also decrease the economic benefit of this urbanisation.

Scientists from Carnegie Mellon University set out to explore the relationships between environmental policy, pollution and economic growth.

"We find that the relationship between urbanisation (population) and economic output (GDP) is not affected by environmental policy," said Nicholas Muller of the Tepper School of Business. "This has profound implications for the current policy debate that frames environmental goals and economic goals as at odds with each other."

Muller, along with his co-author Akshaya Jha from the Heinz College of Information Systems and Public Policy, used annual data provided by the Environmental Protection Agency to determine whether a US county complied with the National Ambient Air Quality Standards (NAAQS), a standard set at national level to monitor pollution levels.

"When a county is found to be non-compliant with NAAQS, it is subject to stricter regulation than compliant counties," said Jha. "By comparing the outcomes of compliant and non-compliant counties, we can determine how the stringency of environmental regulation affects both economic output and environmental damages."

It was found that stricter NAAQS criteria on non-compliant counties reduced pollution damages (health impacts in monetary terms) but did not slow the rate of economic growth in comparison to compliant counties. Perhaps most interestingly, it was also observed that pollution did not scale linearly with population. In fact, pollution per person would appear to decrease as a population grows.

Put simply, the results suggest environmental policy can reduce the pollution effects of urbanisation without hindering economic development in the form of growth, innovation and growth.

"Well-designed, actively enforced environmental policy and economic growth are not mutually exclusive," said Muller. "We find evidence that environmental policy significantly reduces the per-capita pollution emissions in American cities without adversely affecting GDP per capita."

The new study has been published in the journal PLOS ONE.