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We provide a very simple macroeconomic investigation of the role that structural changes might play in generating inverted U-shaped income-pollution relationships. Differently from previous research which mainly focuses on empirical, static or general equilibrium models, we develop a standard balanced growth path (BGP) analysis. We show that along the BGP equilibrium an inverted U-shaped income-pollution relationship may occur as a response to structural changes, but whether this is the case or not it will crucially depend upon the magnitude of a production externality parameter. Moreover, we show that the negative relationship between income and pollution can only be a transitory phenomenon, and in the long run pollution will increase as income rises, generating overall an N-shaped pattern. Abstract We provide a very simple macroeconomic investigation of the role that structural changes might play in generating inverted U-shaped income-pollution relationships. Differently from previous research which mainly focuses on empirical, static or general equilibrium models, we develop a standard balanced growth path (BGP) analysis. We show that along the BGP equilibrium an inverted U-shaped income-pollution relationship may occur as a response to structural changes, but whether this is the case or not it will crucially depend upon the magnitude of a production externality parameter. Moreover, we show that the negative relationship between income and pollution can only be a transitory phenomenon, and in the long run pollution will increase as income rises, generating overall an N-shaped pattern.Keywords Environmental Kuznets curve · Economic growth · Structural changeWe are grateful to Baran Doda and Andrew John for insightful discussions. We also wish to thank the participants to the WCERE 2014 (Istanbul, Turkey), WAMS 2014 (Melbourne, Australia) and JCU seminar for helpful comments and suggestions. We are indebted to two anonymous referees for their constructive comments helping us to substantially improve our paper.

The Brundtland Report (WCED, 1987) encouraged the view that the main threats to the environmental sustainability of development are poverty-driven depletion of environmental resources in the developing world, and consumption-driven pollution of the biosphere by the developed world. Recent work on the empirical relationship between per capita GDP growth and certain indicators of environmental quality seems to contradict this view. Some indicators of local air and water quality first worsen and then improve as per capita incomes rise. This paper reconsiders both these findings, and the empirical relation between environmental quality and measures of poverty, consumption and human development. It finds that deepening poverty at one end of the scale and increasing affluence at the other both have implications for the environment. But these implications are different. Deepening poverty is associated with environmental effects that tend to have immediate and local implications for the health and welfare of the communities concerned. Increasing affluence is associated with environmental effects which are much more widespread and much longer-lasting. The environmental consequences of growth increasingly tend to be displaced on to others ± either geographically distant members of the present generation or members of future generations. The paper argues that the relevant question is not whether economic growth has environmental consequences: it is whether those consequences threaten the resilience of the ecological systems on which economic activities depend. Since loss of ecological resilience implies that the economic activities concerned are environmentally unsustainable, it should be a major focus of strategies for sustainable development.The current issue and full text archive of this journal is available at

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