The Environment and Development

2. The Environment and Development Chapter 11

3. Economics and the Environment • Environmental issues affect, and are affected by, economic development • Poverty and ignorance may lead to non-sustainable use of environmental resources

4. Environment and Development: The Basic Issues • Sustainable development and environmental accounting

5. Environment and Development: The Basic Issues Sustainable net national product is: Where GNP is Gross National Product Dm is the depreciation of manufactured capital assets Dn is the depreciation of environmental capital

6. Environment and Development: The Basic Issues Alternatively, sustainable net national product is: Where GNP is Gross National Product Dm is the depreciation of manufactured capital assets Dn is the depreciation of environmental capital R is expenditure needed to restore environmental capital A is expenditure required to avert destruction of environmental capital

7. Environment and Development: The Basic Issues • Sustainable development and environmental accounting • Population, resources, and the environment • Poverty and the environment • Growth versus the environment • Rural development and the environment

8. Environment and Development: The Basic Issues, cont’d • Urban development and the environment • The global environment

9. The Scope of Environmental Degradation: A Brief Statistical Review • Environmental problems have consequences both for health and productivity

12. Rural Development and the Environment: A Tale of Two Villages • Representative African village • Representative South American village

13. Traditional Economic Models of the Environment • Privately owned resources

14. Figure 11.1 Static Efficiency in Resource Allocation

15. Figure 11.2 Optimal Resource Allocation over Time

16. Traditional Economic Models of the Environment • Privately owned resources • Common property resources

17. Figure 11.3 Common Property Resources and Misallocation

18. Traditional Economic Models of the Environment • Privately owned resources • Common property resources • Public goods and bads: regional environmental degradation and the free-rider problem • Limitations of the public goods framework

19. Figure 11.4 Public Goods, Normal Goods, and Free-Rider Problem

20. Urban Development and the Environment • The ecology of urban slums • Industrialization and urban air pollution

21. Figure 11.5 Pollution Externalities: Private versus Social Costs and the Role of Taxation

22. Figure 11.6 Increasing Pollution Externalities with Economic Growth

23. Urban Development and the Environment • The ecology of urban slums • Industrialization and urban air pollution • Problems of congestion and the availability of clean water and sanitation

24. The Need for Policy Reform • The recognition that action to reduce environmental hazards has been insufficient is now widespread • However, budgets are limited • Better pricing policies would improve matters • Inclusion of women in the design of environmental policy is important

25. The Global Environment: Rain Forest Destruction and Greenhouse Gases • Many scientists are alarmed by recent evidence regarding ozone depletion and global warming • Economists also are concerned with the costs of global climate change • The solutions seem to involve both LDCs and industrialized countries

26. Policy Options in Developing and Developed Countries • What LDCs can do • proper resource pricing • community involvement • clearer property rights and resource ownership • improved economic alternatives for the poor • improved economic status of women • industrial emissions abatement policies

27. Policy Options in Developing and Developed Countries, cont’d • How developed countries can help LDCs • trade policies • debt relief • development assistance • What developed countries can do • emissions controls • R&D • import restrictions

28. Absorptive capacity Biomass fuels Clean technologies Common property resource Consumer surplus Debt-for-nature swap Deforestation Desertification Environmental accounting Environmental capital Externality Free-rider problem Global warming Greenhouse gases Concepts for Review

29. Internalization Marginal cost Marginal net benefit Ozone depletion Pollution tax Present value Private costs Producer surplus Property rights Public bad Public good Scarcity rent Social costs Soil erosion Sustainable development Sustainable national income Total net benefit Concepts for Review, cont’d