Wealth as indicator

Lawrence Solomon and Jerry Taylor
An exchange between Lawrence Solomon and Jerry Taylor/National Post
August 11, 2003

Trust this correlation

Mr. Solomon says, "they [meaning Cato among others] inadvertently endorse planning and regulation, not the free market and the common law, as a desirable medium for environmental decision-making." This is just plain silly.


There is an avalanche of material in the academic literature – ably summarized in Mr. Hollander’s book – that establish beyond any shred of doubt that economic well-being and demands for environmental quality are strongly correlated. Tellingly, Mr. Solomon lifts not a finger to challenge that literature – he simply condemns it for what it implies.

Despite what Mr. Solomon believes, one can indeed accept reality without necessarily endorsing socialism. Wealth does in fact increase demand for environmental goods and services. How those goods and services are delivered is another question altogether.

Jerry Taylor is Director of Natural Resource Studies at Washington-based Cato Institute.


Correlation does not equal causation

Lawrence Solomon responds: An avalanche of academic material correlating wealth and environmental protection does exist, as the Cato Institute’s Jerry Taylor states but, he will be surprised to learn, it is not summarized, ably or otherwise, in Jack Hollander’s book, The Real Environmental Crisis. Hollander, an academic himself, rightly ignores the material because it is based on correlations. Unlike proofs, correlations can be notoriously misleading. To quote one source, whose work Mr. Taylor and I both respect immensely:

"Correlation simply does not equal causation, no matter how impressive the statistics. Consider an epidemiological study published in Holland that found that keeping birds correlates with a sevenfold increase in the risk of lung cancer – a correlation three times more significant than that of secondhand smoke. Similarly, biochemist Bruce Ames of the University of California at Berkeley is fond of showing his students a graph with two lines representing data from 1950 to the present. The two lines almost completely match. The students invariably say yes, the two sets of data must be related. Yet one line represents the number of mating storks in Germany; the other, the number of live childbirths." The quote comes from a 1995 Wall Street Journal article, authored by Jerry Taylor of the Cato Institute.

Typical of the academic correlations that Jerry endorses (I will call him Jerry not out of disrespect but out of familiarity – Jerry and I have been on a first-name basis for many years) is a World Bank study suggesting that people in poor countries discount the effects of fecal coliform bacteria until their per capita incomes reach US$1,375 and then – BINGO! – they start clamouring for improvements. Other BINGO points come at per capita levels of US$3,280, when people become concerned about smoke and particulate matter, and at US$3,670, when sulphur dioxide emissions begin to decline. Now, that is truly silly.

The Real Environmental Crisis claims that "As people become more affluent, most become increasingly sensitive to the health and beauty of their environment. And gaining affluence helps provide the economic means to protect and enhance the environment." While this argument may seem plausible to ivory tower academics and Washington think tanks far removed from the struggles of the poor, the reality is very different in the trenches.

In the major environmental battles that have taken place in poor nations over the last quarter century, almost without exception it has been the rich and powerful who have destroyed the environment for personal gain or glory, and it has been the poor and downtrodden who have resisted the destruction. I speak as a founder of the World Rainforest Movement, who in the 1980s helped forest peoples in Malaysia and Indonesia defend their ancestral lands from crony capitalists, and as an employee of a foundation whose Probe International division works on the ground with Third World citizens groups. To my knowledge, no environmental group in the west, and perhaps in the world, has had a longer history of working with disenfranchised populations in Asia, Africa and Latin America in the protection of their environments.

In our foundation’s experience, the story is almost always the same. In the case of the Asian crony capitalists, corrupt leaders such as Suharto would issue their friends and associates deeds to traditional lands of tribal populations, whose customary laws – analogous to the west’s common laws – would be overridden without due process or compensation. In the case of Haiti under Baby Doc Duvalier, industrialists were given the right to build hydro dams that would flood the Artibonite River Valley, the country’s breadbasket, without compensating the small farmers whose land would be flooded. In the case of China’s Three Gorges Dam, two million Chinese are in the process of being relocated, without fair compensation and often at the point of a gun, to make way for a project that meets no environmental or economic test.

In truth, there are no grounds for the conventional wisdom among many conservative groups that the poor are less "sensitive to the health and beauty of their environment." Yet on that logic, many of these groups justify environmental destruction as a necessary step to affluence, after which, they convolutedly reason, people will have the wealth needed to protect their environment. In truth, the destruction of the environment is generally accompanied by the destruction of wealth: In all my examples, above, the wealth accumulated by the few paled next to the impoverishment created in the many.

What explains the strong correlation between affluence and environmental protection? Jerry provided the answer in his 1995 Wall Street Journal article, in which he quotes an academic who explains that scientists often are "committing a fundamental error" by considering a factor to be causative "when in reality we may be studying [the effects of confounding factors]."

In the case of affluence and environmental protection, the confounding factors involve property rights, free markets, and other attributes of good governance. Well governed countries don’t allow rich and powerful elites to run roughshod over the rights of the poor, and they do allow the poor to become affluent. Rather than wealth producing a healthy environment, it is good governance that produces both. Hollander discovered as much himself, and distanced himself from the myth that lives on in Jerry’s mind. Instead of emphasizing the role of affluence, Hollander concludes that "an environmentally sustainable future is within reach for the entire world provided that affluence and democracy replace poverty and tyranny as the dominant human condition."

Lawrence Solomon is executive director of Urban Renaissance Institute, a division of Energy Probe Research Foundation. Probe International is a sister division. E-mail: LawrenceSolomon@nextcity.com.


Read Lawrence Solomon’s review of Jack Hollander’s book, The Real Environmental Crisis."

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