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The relationship between economic growth and the environment is, and will always remain, controversial. Some see the emergence of new pollution problems, the lack of success in dealing with global warming and the still rising population in the Third World as proof positive that humans are a short-sighted and rapacious species. Others however see the glass as half full. They note the tremendous progress made in providing urban sanitation, improvements in air quality in major cities and marvel at the continuing improvements in the human condition made possible by technological advance. The first group focuses on the remaining and often serious environmental problems of the day; the second on the long, but sometimes erratic, history of improvement in living standards. These views are not necessarily inconsistent and growth theory offers us the tools needed to explore the link between environmental …