How Economic Development Influences the Environment

Reducing global poverty and addressing climate change and other environmental crises are among the most important challenges facing humanity today. This review discusses one way in which these problems are intertwined: how economic development affects the environment. I synthesize recent micro-empirical research on the environmental effects of economic development in low- and middle-income countries. The studies that I discuss identify the causal effects of specific aspects of economic development, such as greater household purchasing power, expanded access to credit, more secure property rights, technological progress, and stronger regulatory capacity. I conclude by outlining some gaps in the literature. Expected final online publication date for the Annual Review of Economics, Volume 14 is August 2022. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.