To achieve economic growth and poverty alleviation, it is imperative to constantly replenish environmental resources
environment is related essentially in two forms -- as a productive input and an amenity. In the former, the ecosystem directly contributes to the Gross Domestic Product ( gdp ) and, therefore, it is significant for the group of organisms (read people) during the course of their growth and development -- the developing world. The latter form, meanwhile, is related to those group of people who have already achieved a desired level of growth and social equity -- the developed world. Hence, while environment contributes to growth and development in the developing world, it acts as an entertainer for the developed world. Environmental economics and sciences, therefore, are vital in determining the level of natural resource exploitation.
Demand-supply forces, however, operate when environmental resources start influencing human well-being in either of the two forms. Hence, natural forces and regulatory mechanisms are the key to equate the demand-supply conditions for a given stock of resources, its utilisation and welfare maximisation. A number of factors, such as population growth, property rights, economic institutions and level of economic competition, are crucial in determining the effective relationship between development (or poverty) and environment. For instance, an excessive pressure of population has the potential of completely negating the need for preserving the environmental resources towards a judicious use pattern, which will have devastating effects on local communities. It is found that poor people have high discount rates -- which implies that they would discount future consequences from the current degradation of their resource base. Hence poverty, growth and environment become a vicious cycle.
According to the World Bank, around 65 per cent of the world population lives in low-income countries. The share of labour force engaged in the agriculture sector of these countries is also very high and agriculture accounts for 30 per cent of the gdp . In sharp contrast, in the industrial world, agriculture accommodates only six per cent of the labour force and accounts for two per cent of the gdp . Environment for the latter is, therefore, an amenity -- a factor that induces enjoyment directly and not as a factor used in producing something beneficial.
Inhabitants of the less-developed regions eke out a living directly from the ecosystem -- such as cultivation, fodder collection, fuelwood, animal care and grazing. Continuous use of the above will degrade the resources and their productivity diminishes. As the pressure of population on land is on a constant rise, the chances of substitution would also be nil. No economic policy on poverty alleviation or economic growth, therefore, is complete without considering the environment variable -- the resource base in the concerned region.
Further, within the given geographical characteristics and the level of economic activity, the demand for environmental inputs varies from place to place. It is difficult to classify environment as an input in one region and amenity in another. In other words, the environment's role in development and growth vary with the level of well-being of the habitants. Within this mixed economic background in a given locality, the rich can afford to demand a cleaner environment. This, however, would go against the environmental duty of being an input -- a paradox which has to be analysed. Hence, the real issue is to maintain a balance between development and environment.
Population growth and rapid urbanisation in developing countries damage environment in the absence of constraints in infrastructural investments. Studies reveal that with a degraded environment and resource base, population increases -- in a doomed attempt to compensate declining productivity with more number of labourers.
The writer is an economist based in Delhi
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