Which of the following statements in the context of income-environment relationship is/are correct? 1. Pollution trends tend to follow an inverse-U shaped relationship across different stages of economic development. 2. In the beginning stage, pollution increases due to urbanization and i industrialization. 3. In the later stage, pollution declines due to structural changes towards services sector. Select the correct answer using the code given below.

The income-environment relationship is defined by the Environmental Kuznets Curve (EKC), which posits an inverse-U shaped relationship between economic development and pollution [1]. In the beginning stage, environmental degradation increases as the economy shifts from agrarian to industrial, driven by rapid urbanization, industrialization, and a priority on material output over environmental quality. As income rises, the trend eventually reaches a 'turning point'. In the later stage, pollution declines due to structural changes where the economy shifts toward the services sector and technologically-driven, cleaner industries. This transition is further supported by increased demand for environmental quality, better regulatory mechanisms, and the adoption of resource-saving technologies [1]. Thus, all three statements accurately describe the theoretical stages and structural drivers of the EKC hypothesis.

Sources

1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 8: Inclusive growth and issues > 2. Kuznets Curve > p. 281