The Diminishing Returns to the 2010 Human Development Index: Implications for Climate Policy and Sustainable Development

Human development, energy, and greenhouse gases are inherently linked under current technology constraints. An empirical comparison illustrates that nations with higher human development values (in terms of the United Nation’s Human Development Index (HDI)) contribute more carbon dioxide (CO2) emissions as a result of greater energy consumption. This finding seemingly places environmental sustainability at odds with advances in human development. However, the comparison also exposes the diminishing returns to HDI that accrue as emissions increase. If accurate, this relationship suggests that the developed world can make emission cuts without experiencing major set-backs in human well-being. It also suggests that under a global mitigation system, emission cuts in developed nations could enable emission increases in underdeveloped countries that result in major improvements to the human condition. Therefore, we investigate the diminishing returns to HDI in the context of sustainable climate policy design. We find that the saturation-like trend is inherent to development indicators and not driven by the functional form of the HDI. Also, the global trend is not consistently detected when the development pathways of individual nations are examined. Nevertheless, a clear relationship between CO2 and HDI emerges within the least developed nations, fourteen of which show consistent advances in HDI as emissions increase over time. These findings suggest that sustainable climat