By Aniruddh Mohan on cepr.org
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This content is about the nexus of economic development and environmental impact, often captured by an ‘environmental Kuznets curve’. It discusses how conventional approaches to sustainability analysis should focus on the monetary damages of pollution, rather than the physical tonnage of emissions. It also proposes a measure of GDP growth which adjusts for monetary pollution damages. It highlights a large divergence in the Kuznets curves based on these two approaches and provides an analysis of growth in officially measured GDP and EVA, which is GDP less pollution damage. It also discusses the importance of an assessment of sustainability based on monetary damage rather than physical units of pollution.