ENVIRONMENT. Environment and Development

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1 ENVIRONMENT Alellie B. Sobreviñas, Ph.D. Environment is a unique economic resource. Environment issues affect, and are affected by economic development. Poverty and ignorance may lead to nonsustainable use of environmental resources. 1

2 Environmental degradation imposes high costs through health related expenses (esp. for the poorest 20% of the poor in the rural and urban areas) leads to falling farm productivity and per capita food production (esp. for the lower income groups) may lead to preponderance of infectious disease (inaccessibility of sanitation and clean water, esp. of the poor) can greatly reduce long term national productivity Relevant issues: global warming and climate change Global warming Increasing average air and ocean temperatures. Used in reference to the trend that began in the mid 20th century and attributed largely to human industrial, forestry, and agricultural activities emitting greenhouse gases. Climate change Non transient altering of underlying climate, such as increased average temperature, decreased annual precipitation, or greater average intensity of droughts or storms. Used in reference to the impact of the global warming phenomenon. Recall: National Income Accounts GDP (or GNI) is the market value of final goods and services; excludes the externalities of production and consumption Negative externalities: costs imposed on the environment and third parties; e.g., air pollution, land contamination 2

3 To adjust for the negative externalities find the sustainable net national income (NNI*) as NNI * GNI D m D n where NNI* = sustainable national income GNI = Gross national income D m = is the depreciation of manufactured capital assets D n = is the depreciation of environmental capital Sustainable development meeting the needs of present generation without compromising the wellbeing of future generations More expansively, the sustainable net national income can be measured as follows: NNI ** GNI D m D n R A Where NNI** = the revised NNI calculation GNI, D m, and D n are defined as before R = is expenditure needed to restore environmental capital (forest, fisheries, etc.) A = is expenditure required to avert destruction of environmental capital (air pollution, water and soil quality, etc.) Poverty and Environment The poor as agents and victims of environmental degradation As Victims live in environmentally degraded lands which are less expensive because the rich avoid them have less political clout to reduce pollution where they live living in less productive polluted lands gives the poor less opportunity to work their way out of poverty As Agents high fertility rate of people living in poverty short time horizon of the poor (by necessity) land tenure insecurity Incentives for rainforest resettlement 3

4 Rural Development and the Environment food production in developing countries will have to increase by at least 50% in the next three decades land in many areas of the developing world is being unsustainably overexploited by existing populations need for radical changes in the distribution, use, and quantity of resources available to the agricultural sector need to reduce dependence on unsustainable methods of production need to increase accessibility of agricultural inputs to small farmers and to introduce sustainable methods of farming) Urban Development and the Environment heavy rural urban migration increased strain on existing urban water supplies and sanitation facilities extreme health hazards for the growing numbers of people congestion, vehicular and industrial emissions, and poorly ventilated household stoves lost productivity of ill or diseased workers contamination of existing water sources destruction of infrastructure increased fuel expenses (e.g., incurred by people s having to boil unsafe water) What Developing Countries can do 1. Proper resource pricing (to include externalities: impose pollution taxes and standards) 2. Community involvement (education, recycling) 3. Clearer property rights and resource ownership (to encourage investment in environmental upgrading) 4

5 What Developing Countries can do 4. Improve economic alternatives for the poor (accessibility to credit and land augmenting inputs for small farmers, alternative employment opportunities in the rural areas) 5. Improve economic status of women (their own day to day activities may largely determine patterns of resource use and their ability to meet the needs of their families is dependent on the sustainable management of water and fuel supplies) What Developing Countries can do 6. Industrial emissions abatement policies (e.g., taxation of emissions, quotas, standards, taxation and subsidies for adopting clean technologies) 7. Proactive stance toward adapting to climate change (improve early warning systems, promote reforestation; restore natural ecosystem barriers, such as mangrove) Philippines: the slash-andburn Tagalog: kaingin Definition: clearing of forestlands by burning to expose fertile soil that is good for cultivation of crops; however such planting system will not be sustainable due to imminent erosion (and later destructive flooding in the lowland) Solution by government and advocacy groups: agroforestry 5

6 Philippines: The issue of mining Recent crackdown on mining firms that cause significant (to severe) environmental degradation Together with environmentalist groups, the current law on mining (RA no. 7942, the Philippine Mining Act of 1995) is called a doleout since it allows foreign ownership of mining endeavors and companies in the Philippines Extent of the damage of the Marcopper mine tailings spill in Boac River, Marinduque (1996) Boac River, Marinduque (1996) Source: ph/issues/disasters/ look-back marcopper-mining-disaster Renewable energy in the Philippines Renewable Energy Act of 2008 (Republic Act no. 9513) Problems with hydropower in Mindanao (due to climate change), increasing demand and complexity of network (especially Visayas and Mindanao) Use of the following alternative sources: wind, and solar energy 6

7 Bangui, Ilocos Norte (wind farm) Pililla, Rizal (wind farm) A Solar Power Plant (Philippines). Source: renewable-energy-projects Tiwi, Albay (geothermal plant) The green economy Creation of green goods: environmentally safe goods and services, and new products from recycled materials (through intensive research and development efforts) Reduction of the volume of wastes (plastics, chemicals, air pollutants): comprehensive waste management Development of green architecture Development of alternative sources of nutrition and meeting demand for food: reduction of carbon footprint in production How developed countries can help developing countries Lower developing country costs for environmental preservation Trade policies: reduce barriers (e.g., import restrictions, quotas, commodity bans), subsidies Debt relief (to reduce financial burden) Debt for nature swaps (development assistance to improve the environment) Development assistance 7

8 What developed countries can do for the global environment Emissions controls, including greenhouse gases Research and Development on green technology and pollution control Transfer of technology to developing countries Restrictions on unsustainable production Assignment Read Section 10.3 of Todaro and Smith, 2015 (Economic Models of Environmental Issues) 8