Chapter 10
The Environment
and Development
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Economics and the Environment
Environmental issues affect, and are
affected by, economic development
Poverty and ignorance may lead to nonsustainable use of environmental resources
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10-2
Environment and Development:
The Basic Issues
Sustainable development and environmental
accounting
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10-3
Environment and Development:
The Basic Issues
Sustainable net national product is:
NNI * GNI Dm Dn
Where
NNI* is sustainable national income
GNI is Gross national income
Dm is the depreciation of manufactured
capital assets
Dn
is the depreciation of environmental
capital
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10-4
Environment and Development:
The Basic Issues
Alternatively, sustainable net national product is:
NNI GNI Dm Dn R A
*
Where
NNI*, GNI, Dm, and Dn are as before
R
is expenditure needed to restore
environmental capital
A
is expenditure required to avert
destruction of environmental capital
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10-5
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
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10-6
Environment and Development:
The Basic Issues (cont’d)
Urban development and the environment
The global environment
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10-7
The Scope of Environmental Degradation:
A Brief Statistical Review
Environmental problems have
consequences both for health and
productivity
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10-8
Table 10.1
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10-9
Table 10.1 (cont’d)
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10-10
Rural Development and the
Environment: A Tale of Two Villages
Representative African village
Representative South American village
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10-11
Traditional Economic Models of
the Environment
Privately owned resources
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10-12
Figure 10.1
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Figure 10.2
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10-14
Traditional Economic Models of
the Environment
Privately owned resources
Common property resources
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10-15
Figure 10.3
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10-16
Traditional Economic Models of
the Environment
Privately owned resources
Common property resources
Public goods and bads: regional
environmental degradation and the freerider problem
Limitations of the public goods framework
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10-17
Figure 10.4
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10-18
Urban Development and the
Environment
The ecology of urban slums
Industrialization and urban air pollution
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10-19
Figure 10.5
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10-20
Figure 10.6
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10-21
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
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10-22
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
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10-23
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
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10-24
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
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10-25
Policy Options in Developing and
Developed Countries (cont’d)
How developed countries can help LDCs
– Trade policies
– Debt relief and debt for nature swaps
– Development assistance
What developed countries can do
– Emissions controls
– R&D
– Import restrictions
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Table 10.2
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10-27
Concepts for Review
Absorptive capacity
Biomass fuels
Clean technologies
Common property
resource
Consumer surplus
Debt-for-nature swap
Deforestation
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Desertification
Environmental
accounting
Environmental capital
Externality
Free-rider problem
Global warming
Greenhouse gases
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Concepts for Review (cont’d)
Internalization
Marginal cost
Marginal net benefit
Ozone depletion
Pollution tax
Present value
Private costs
Producer surplus
Property rights
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Public bad
Public good
Scarcity rent
Social costs
Soil erosion
Sustainable development
Sustainable national
income
Total net benefit
10-29
