1.2. Literature review
Many researchers have studied the correlation between economic growth, as measured by GDP, and the amount of household waste generated by a country’s population.
The so-called Environmental Kuznets Curve (EKC) is at the core of this research. Kuznets studied the relationship between economic growth and income inequality [
2]. As incomes increase, income inequality initially increases but gradually decreases after reaching a so-called turning point. In other words, income distribution is more unequal at lower economic growth rates. Income inequality gradually evens out as they rise. The so-called inverted U shape can graphically represent this relationship. It was subsequently named after its author or the Kuznets Curve. A few decades later, in the 1990s, the Kuznets Curve was rediscovered and used to prove the relationship between environmental quality and income per capita. The researchers concluded that the same curve can describe both relationships.
The environmental damage is minimal at deficient levels of per capita income. Furthermore, the public responsibility and concern for environmental problems is negligible. Gradually, the ecological quality deteriorates with industrialisation, urbanisation and population growth. At the same time, the state’s revenues are insufficient, and the government consequently allocates few resources to environmental spending. With rising incomes and industrialisation, ecological quality continues to deteriorate, but up to a point. Once this point is reached, the subsequent successive increase in per capita income improves the environment. A wealthy society is more responsible, informed and committed to environmental issues. It can invest resources in improving the quality of life. It can spend more on purchasing environmentally friendly and healthy products. New technologies are being developed to protect the environment. The richer a society becomes, its priorities are reordered and "the environment moves up in the hierarchy of human needs" [
3].
Despite his criticism, Beckerman concludes that the surest way to improve the environment is to become rich. On the other hand, a wealthy state [
4] can allocate more resources to ecology, spending them more efficiently. Several regulations are also passed to enforce regulatory measures to protect the environment. Environment degradation must occur before any improvements in environmental quality can occur.
An inverted U shape curve has been approved concerning indicators to measure environmental quality [
5,
6,
7,
8]. According to Arrow [
9], it is valid only for pollutants involving local short-term costs, such as sulfur, particulates, and fecal coliforms. Shafic and Bandyopadhyay also study the relationship between economic growth and the environment, concluding that it is "far from simple" [
10]. Using eight indicators, they measure the environmental quality for 149 countries at different income levels from 1960 to 1990. These are lack of safe water and urban sanitation, deforestation, dissolved oxygen in rivers, fecal coliform in rivers, ambient Sulphur dioxide, suspended particulate matter, municipal solid waste, and carbon emissions per capita.
Some indicators find that environmental quality improves as income increases; for others, there is first deterioration and then improvement, and for others, there is no relationship. They prove the EKC hypothesis for air pollutants with
$300-4,000 turning points. They subsequently conclude that when environmental quality directly affects human health, higher incomes are associated with better ecological quality [
11]. In addition, Shafic and Bandyopadhyay also examine the impact of investment, trade, debt, and other macroeconomic indicators, finding that they have a negligible effect on the environment. In cases where environmental problems can be externalised, no improvement in the ecological quality is observed with increasing income [
10,
12].
Panayotou [
13] proves the inverted U-shape hypothesis of the relationship between environmental degradation and economic development using data from developing and developed countries. He measures environmental quality using two indicators - deforestation and air pollution. Panayotou introduced the concept of the Environmental Kuznets Curve (EKC). He calculates turning point values. Deforestation occurs at income levels between
$800-1200, and in terms of air pollution,
$3,800-5,500. Combining the two indicators moves the turning point between
$1000-3000. Panayotou next reports a more sensitive structural change at income levels above
$10,000 per capita when there is a shift from energy-intensive heavy industry to technology-intensive industry.
Various authors are researching what should be the value of the turning point at which environmental quality enhances alongside economic growth. Grossman and Krueger [
14] measure environmental quality with four indicators - urban air pollution, the state of the oxygen regime in river basins, fecal contamination of river basins, and contamination of river basins by heavy metals. Although they report differences between the different indicators, they conclude that in most cases, the turning point occurs when the country reaches a per capita income of
$8,000. Even higher values are compared by Selden and Song [
15]. They prove an inverted U-shape relationship between economic growth and four indicators measuring air quality - Sulphur dioxide, suspended particulates, nitrogen oxides, and carbon monoxide for 30 countries. They find turning points of
$8,709 for SO2,
$10,289 for SPM,
$11,217 for NOx, and
$5,963 for CO. The authors attribute the higher values obtained to differences in the data used.
Cole, Rayner and Bates [
16] examine the relationship between income and environmental quality as measured by various indicators such as total energy use, SO2, SPM, NO2, nitrates in water, traffic volumes, chlorofluorocarbons emissions (CFCs) and methane. They prove inverted EKC only concerning local air pollutants. The other more global, indirectly influenced environmental indicators increase monotonically with increasing income or have a higher turning point. They conclude that local air pollutants peak at lower income levels relative to total emissions per capita, while transport-generated local air pollutants peak at higher income levels. This conclusion is also confirmed by Holtz-Eakin and Selden [
17]. They examine the EKC relationship for SO2 and show that CO2 emissions decline after reaching a per capita income of
$35,000.
Panayotou [
18] examines the relationship between economic growth and the environment in countries of the ECE region. He includes countries at different stages of economic growth, starting with poor countries with incomes below
$1,000, such as Tajikistan and coming to rich countries with incomes above
$30,000. Panayotou finds that the poor and transition countries are on the left side of the turning point in the upward part of the Kuznets curve. In this part, economic growth is associated with environmental degradation. The rich countries are on the right side of the turning point in the downward part of the curve. However, Panayotou believes that even poor countries can improve the environment and "succeed in decoupling environmental pollution and resource use from economic growth" through structural, technological and policy change or a combination of the three.
Panayotou concludes that EKC is not a universal and irreversible pattern but depends on the type of pollution, political and institutional factors, technological progress and global effects. Some types of pollution may have flatter or more curved EKC or may not even exhibit EKC. Some countries may transition faster or slower to a cleaner environment depending on their political and institutional systems. Some technologies may cause overuse of natural resources or lead to global warming. Economic growth is not necessarily counterproductive for the environment but can be part of the solution. It can provide the resources needed to invest in cleaner technologies, improve institutions and increase environmental education and awareness. Economic growth can also stimulate innovation and the diffusion of cleaner technologies, as well as increase the elasticity and adaptability of society to environmental problems.
Gene Grossman and Alan Krueger [
19] examine the relationship between economic growth and the environment, focusing on waste. They find that in the initial stages of economic growth, municipal waste increases as the consumption of goods and services increases. The achieved further economic development leads to innovations and technological improvements that allow society to consume more efficiently and produce goods and services with less waste. They argue that economic growth can be compatible with environmental protection, provided that effective waste management policies are adopted. Hence, including environmental protection costs in national GDP accounts can lead to a better measurement of real economic progress, also considering the environmental protection costs necessary to achieve sustainable growth.
Thomas Kinnaman [
20], professor of economics at Bucknell University, has published several studies on waste and the environment. In one of his best-known studies, “The generation of municipal solid waste in the US: An estimation framework and Cointegration analysis”, Kinnaman uses an elasticity coefficient to estimate the relationship between GDP and municipal waste generation. The results show that the elasticity between GDP and municipal waste is between 0.8 and 0.9, meaning that for every 1% increase in GDP, municipal waste increases by 0.8-0.9%. Hence the amount of waste households generate also increases with economic growth.
In the article "Dynamic and causality interrelationships from municipal solid waste recycling to economic growth, carbon emissions and energy efficiency using a novel bootstrapping autoregressive distributed lag" [
21], Asif Razzaq et al. analyse the relationship between GDP and municipal solid waste generation in the USA. They use data from 1990 to 2017 and investigate the long-term relationship between GDP and municipal solid waste generation. This study confirms a unidirectional causal link between municipal solid waste recycling to economic growth, carbon emissions, and energy efficiency. These findings imply that any policy intervention related to municipal solid waste recycling leads to significant changes in economic growth and carbon emissions.
Martin Wagner and Jakob Weber [
22] explore the relationship between GDP and waste in their article "The carbon Kuznets curve: A cloudy picture emitted by bad econometrics?". They explore the Carbon Kuznets Curve (CKC) hypothesis, which suggests that per capita carbon emissions will increase with GDP growth up to a certain threshold, after which they will decrease. Wagner and Weber criticise many previous studies that have found such a relationship for using flawed or inappropriate statistical methods. They use more modern techniques and examine the relationship between GDP and per capita carbon emissions in 59 countries from 1960 to 2005. The results of Wagner and Weber’s study do not support the CKC hypothesis. They find that per capita carbon emissions continue to increase with GDP growth, with no apparent threshold after which they begin to decline. Wagner and Weber conclude that reducing carbon emissions requires active policies to reduce emissions rather than relying on economic growth to solve the environmental problem.
Vassilis J. Inglezakis and colleagues [
23] analyse the relationship between waste management and the economic situation in several countries - Romania, Bulgaria, Slovenia, and Greece- from 2000 to 2013. They focus on the "separation principle" of economic growth from resource use, which falls within the policies of the EU. The authors use population growth, gross domestic product (GDP), and municipal solid waste generation as critical indicators. These indicators are integrated into one composite index - the Municipal Waste Indicator (MWI), allowing easy comparison between countries and simplifying data analysis. The study concludes that separation occurs when the rate of increase in the environmentally relevant variable (such as waste generation) is lower than that of its economic driving force (such as GDP) for a given period.
Shigefumi Okumura, Tomohiro Tasaki & Yuichi Moriguchi [
24] conclude that economic growth affects the selection of waste treatment options in Asian countries, such as Japan, Korea, and China. The authors use statistical analyses and an analytic hierarchy process to examine how GDP per capita and other factors influence these countries’ municipal waste incineration and composting rate. They find that:
There is a positive correlation between GDP per capita and incineration rate, meaning that higher levels of economic development are associated with higher waste incineration rates;
There is a negative correlation between GDP per capita and composting rate in Japan and China, meaning that higher levels of economic development are associated with lower rates of waste composting. However, there is a positive correlation in Korea, meaning that higher levels of economic growth are associated with higher rates of waste composting;
The incineration rate in Japan and China has increased in parallel with economic growth, while the composting rate has decreased or remained stable. In Korea, both the incineration and composting rates have increased with economic growth;
The preferences and priorities of experts and government officials from Southeast and East Asian countries for waste treatment options vary depending on their income level and economic growth. For instance, social acceptance is essential in upper middle-income countries (USD 4,036–12,475), while environmental impact is vital in lower middle-income countries (USD 1,026–4,035).
The authors conclude that economic growth affects the selection of waste treatment options in Asian countries. Policy interventions should consider the different degrees of economic development and the elasticity of waste generation concerning GDP per capita. They recommend conducting further research to understand the causal mechanisms behind the observed trends and correlations.
Wasi Ul Hassan Shah, Rizwana Yasmeen, Muddassar Sarfraz, and Larisa Ivascu [
25] assess the consequences of economic growth, industrialisation, and foreign direct investments on municipal solid waste in OECD countries from 2000 to 2020. Further investigation includes the role of technology in managing the impacts of waste activities. The authors also examine the mediating effect of technology and industrialisation on economic growth concerning waste generation in OECD economies. The empirical evaluation is conducted in two ways. First, the authors employ graphs to assess the trends over the years and their relationship with critical factors. Second, they apply appropriate econometric methods to investigate the empirical relationships between the respective factors. The study finds that economic growth and industrialisation evolve, increasing waste generation in OECD economies. The influx of foreign direct investments enhances waste production. However, the magnitude of the effect of foreign direct investments is lower compared to that of economic growth and industrialisation. Technological progress (research and development activities) is a significant factor in reducing waste generation. The latter stage of economic growth is still unfavourable for reducing waste generation in OECD countries.
Different scholars and researchers agree that there is a correlation between household waste and GDP, although this relationship can be estimated in other ways using other methods and data. Furthermore, how household waste is treated and managed depends on economic growth [
26]. Each author reveals different aspects of this relationship by analysing factors that may influence it. However, the general opinion among the scientific community is that these two variables are interrelated, and their relationship can be used to understand the environmental consequences of economic growth and formulate future sustainable development strategies.
The relationship between municipal waste and GDP has been studied by the academic world and various organisations such as the World Bank, the Organisation for Economic Co-operation and Development (OECD), the European Environment Agency, etc. According to OECD, there is a positive relationship between municipal waste and GDP in many countries.
For example, in 2019, on average across OECD countries, there is a correlation of 0.84 between GDP and per capita municipal waste generation [
27]. A higher GDP is associated with more municipal waste generated per capita. Of course, the value of the correlation can vary between countries depending on various factors such as the economy’s structure, demographic characteristics and waste management. World Bank data from 2010 to 2019 shows a positive correlation between GDP and municipal waste generation in major economies such as the US, China, Japan, Germany, etc. [
28]. For example, the correlation coefficient is 0.87 for the US, 0.93 for China, 0.84 for Japan and 0.93 for Germany. However, there are countries where GDP growth is not accompanied by increased household waste, such as South Korea, where the correlation is only 0.09. The 2019 United Nations State of the World’s Environment (GEO) Global Environment Outlook (GEO) report looks at various aspects of global environmental issues, including the problem of municipal waste. According to this report, about 2.01 billion tons of municipal waste is produced annually worldwide, increasing by 70% by 2050 [
29]. At the same time, the economic growth of the world economy is expected to increase if more efficient waste management methods and changing consumption patterns are implemented. In summary, UN data show that the relationship between municipal waste and GDP is complex and often depends on many factors, such as national economic and social conditions, waste management policies, the degree of industrialisation, etc. According to Eurostat, 502 million tonnes of municipal waste was generated in the European Union (EU) in 2020, down from 513 million tonnes in 2019. At the same time, the EU GDP grew by 2.2% in 2020 compared to the previous year.
The present study aims to contribute to the expansion of knowledge in the field of waste management, provide valuable insights into the complex relationship between GDP and household waste, and offer directions for enhancing policies and strategies for sustainable waste management in the future.