Measuring Environmental Quality: Ecosystem Services or Human Health Effects

The relationship between income and environmental quality is poorly understood at best. We expand the Environmental Kuznets Curve (EKC) literature by considering not only the role of emissions but also the role of the environment’s absorptive capacity in the relationship between income and environmental quality. Building off of a simple conceptual model, we construct two different aggregate measures of environmental quality. Using these measures, we find that emissions and emissions toxicity exhibit a relationship consistent with the EKC hypothesis, while biodiversity and ecosystem services do not.