I-A/B
I. Development-environment
interactions
A. Grow th, trade and the env ir onment: the long- term story
B. Th e EKC and dev eloping coun try ev idence
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Growth and structural change
• Economic expansion
• Sectoral changes in production and resource
allocation
– Changes in relative prices (Engel effects)
– Changes in relative factor endowments
– Differences in technical progress rates
• Contribution of policy reforms, investment
and trade in ‘globalizing’ economies
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Annual growth rates of per capita real GDP (%)
6.00
5.00
East Asia & Pacific
Latin America & Caribbean
South Asia
Sub-Saharan Africa
4.00
3.00
2.00
1.00
0.00
-1.00
-2.00
1961-70
1971-80
1981-90
1991-00
3
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Table 3.1: GDP sha res (%) major sectors, deve loping A sian countries
GDP growtha
Years
Agric.
Indus try
(Mfg)
Services
China
6.42
1960-80
1981-90
1991-00
35
29
20
40
44
48
31
36
37
25
27
32
Indones ia
3.97
1960-80
1981-90
1991-00
42
22
18
23
37
43
10
16
24
35
40
40
Malays ia
4.12
1960-80
1981-90
1991-00
29
20
13
30
39
42
14
21
27
41
41
45
Phil ipp ines
1.04
1960-80
1981-90
1991-00
28
24
20
31
36
32
23
25
23
41
40
48
Thail and
4.34
1960-80
1981-90
1991-00
29
17
11
25
33
39
17
24
29
46
50
50
Vietnamb
5.37
Country
1960-80
..
..
..
..
1981-90
40
29
26
32
1991-00
29
30
20
41
a. Real per capita inco me (1995 US$), annua l average 1970-2000. b. 1991-2000 .
.. = not avail able. Sourc e: World Bank : World Development Indicators 2001
4
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Table 1.1: Population and urbanisation in A sia and deve loping regions
Total
Coun try
Population ('000)
1980
China
Urban
2000
1,004,168 1,282,437
Annua l Growth Ra te of:
Population (%) Total Urban Total Urban
1980
2000
1980-2000
1990-2000
20.0
32.5
1.23
3.71
1.00
2.59
Indones ia
150,341
212,092
22.2
40.9
1.74
4.90
1.52
4.52
Malays ia
13,763
22,218
42.0
57.4
2.42
4.03
2.22
3.68
Myanmar
33,706
47,749
24.0
27.7
1.76
2.49
1.66
2.85
Phil ipp ines
48,035
75,653
37.5
58.6
2.30
4.61
2.17
4.06
Thail and
46,015
62,806
17.0
21.6
1.57
2.78
1.38
2.84
Vietnam
53,005
78,137 19.2 19.7 1.96 2.09
Sour ce: World Bank (2001 ): World Development Indicators 2001
1.69
1.69
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Table 3.2: Gross fi xed capit al formation (per cent of GDP) and foreign direct
inve stme nt (per cent of GFCF), deve loping A sian count ries
Country
Item
1961-80
1981-90
1991-00
China
GFCF
FDI
29
0
29
2
34
11
Indones ia
GFCF
FDI
22
3
25
1
26
2
Malays ia
GFCF
FDI
20
13
30
11
36
15
Myanmar
GFCF
FDI
12
..
15
..
13
..
Phil ipp ines
GFCF
FDI
20
1
22
4
22
8
Thail and
GFCF
FDI
22
2
30
4
34
10
Vietnam
GFCF
..
12
Sour ce: World Bank , World Development Indicators 2001
25
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Table 3.3: Total expo rts (X, % of GDP), manu factured expor ts (MFG, % of expor ts),
and trade/GDP ratio (per cent), deve loping Asian coun tries
Trade as % of
Country
Item
1961-70 1971-80 1981-90 1991-00 GDP, 2000)
China
X
MFG
2
..
Indones ia
X
MFG
10
2
Malays ia
X
MFG
Myanmar
4
..
11
62
22
83
44.5
24
2
25
18
31
49
67.0
42
5
46
14
59
34
97
73
219.7
X
MFG
13
1
6
6
5
6
1
10
1.1
Phil ipp ines
X
MFG
16
6
22
14
25
29
42
60
91.0
Thail and
X
MFG
16
3
20
16
27
42
46
71
108.8
Vietnam
X
..
..
14
36
94.1
MFG
1
11
5
..
.. = not avail able. Source: World Bank : World Development Indicators 2001
7
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Summary
• Growth itself increases environmental
pressures
• Structural changes alter these
• In globalizing economies, policy reforms
and investment flows may make crucial
contributions
8
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Environmental trends
• ‘Drivers’: economic growth, population
growth, and changes in economic structure,
including those from policy reforms
• Components of environmental trends:
– Industrial emissions and air/water pollution
flows
– Natural resource depletion
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Real GDP growth and growth of industrial emissions, 1975-87
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Table 1.2: Air poll ution indicators in major Asian c iti es, 1995
Total Suspend ed
Population Particulates (TSP)
Coun try
Cit y
(‘000)
(/m3)
Sulfur
Dioxide
(/m3)
Nitr ogen
Dioxide
(/m3)
China
Beijing
11,299
377
90
122
India
Bombay
15,138
240
..
..
Calcutta
11,923
375
49
34
Delhi
9,948
415
24
41
Indones ia
Jakarta
8,621
271
..
..
Malays ia
K. Lumpur
1,238
85
24
..
Phil ipp ines
Manila
9,286
200
33
..
Singapo re
Singapo re
2,848
..
20
30
11
23
Thail and
Bangkok
6,547
223
Sour ce: World Bank (2001 ): World Development Indicators 2001
Note: WHO gu idelines fo r acceptable leve ls of poll utants are:
TSP < 90 m3
SOX < 50/m3
NOX < 50 /m3.
.. = Data no t avail able
11
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Table 1.5: WRI estimates of change s in natura l f orest and plantation cover
Ave rage annua l
Region
1990 (‘000 ha )
2000 (‘000 ha )
chang e of na tural
forest
Nat. forest
Africa
Plantation
Nat. forest
Plantation
‘000 ha
Per cent
697,882
4,415
641,828
8,038
-5,589
-0.8
36,201
149
34,869
263
-133
-0.4
S. America
903,199
7,279
863,739
10,455
-3,946
-0.4
Asia
495,340
56,117
431,422
115,873
-6,392
-1.3
—Tropical
289,820
22,486
233,448
54,624
-5,637
-1.9
33,631
197,974
61,249
-755
-0.4
Oceania
—Temperate
05,520
Sour ce: Matthews (2001).
12
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Table 1.7: Human-indu ced land degradation rates, Asian deve loping coun tries
Seve rit y o f hu man-induced land d egrad ation
Country
(per cent of total area)
None
Ligh t
Moderate
Seve re V. Seve re
China
28
8
30
25
10
Sri Lanka
0
17
29
22
32
Indones ia
1
36
26
32
6
Malays ia
0
0
17
83
0
Phil ipp ines
3
0
18
3
3
Thail and
0
2
20
28
50
Vietnam
0
Sour ce: FAO (2000).
0
21
29
49
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Table 1.8: CO2 emi ssion s by sectoral sou rce, selected deve loping coun tries
(thous and metric tons, 1991) .
Coun try
Bangl adesh
From i ndus trial
processes
From l and u se
chang e
% From land use
chang e
15,444
6,800
30
Indones ia
170,466
330,000
70
Malays ia
61,196
110,000
65
Phil ipp ines
44,587
110,000
71
Thail and
100,896
91,000
47
Vietnam
20,573
33,000
62
Sour ce: Estim ates reported in WRI (1995): World Resources 1994-95.
14
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Summary of env. trends
• Rapid growth and changing econ. structure
is associated with:
– Increases in (urban) air and water pollution
– Continued rapid deforestation and depletion of
soil and water resources
• These trends have consequences that are
local, national and even global in nature
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Valuation of env. damages
• Difficult to define and measure, let alone
value environmental degradation
• Estimates of ‘adjusted’ NDP usually fall
below ‘measured’ NDP.
– ANDP = NDP less net depletion (cf.
depreciation) of “environmental capital”
– E.g. Indonesia (WRI 1989): Growth of NDP
7% per year; growth of ANDP only 4% per yr.
16
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Valuation and policy
• Although aggregate values such as ANDP may be
large, those for individual environmental
phenomena are less so.
• Challenge for env. economists is then to convince
policy-makers that sacrifices for env. purposes are
‘worth it’.
• This requires complete and careful accounting
methods, inclusive of indirect costs & benefits
(e.g. ‘double dividend’ arguments)
17
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Development and environment in
LDCs
1. Economic growth in developing
economies incurs high environmental
costs.
— Initial conditions: resource-dependent,
capital poor countries.
— Legacy of economic growth strategies
–
–
Import-substituting industrialisation
Agricultural development policies
18
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2. Global research has focused on industrial
emissions, but in LDCs most problems concern
nat. res. degradation
•
•
— “…their severity and interaction with economic
processes differs sharply from that of pollutants”
(Jha and Whalley 1999)
3. Growth & policy reforms have very different
implications for pollution and for NR depletion
and degradation
19
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4. As countries ‘globalize’ there is an apparent
increase in the rate at which resource depletion &
environmental damage occurs.
— Is globalization responsible for ENR depletion?
— Is env. damage increasing linearly, or will problems
solve themselves in time?
— Are LDCs ‘the same’ as now-cleaner rich countries?
5. Policy/project solutions for NR degradation are
typically defined within same geog. bounds as
problems--and often fail.
— ‘Proximate causes’ of deforestation (population
growth and agricultural intensification in fragile
ecosystems) are in fact endogenous
20
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The ‘grammar’ of policy
arguments
• Few arguments on growth, globalization and
environment have consistent microeconomic
foundations.
• Need both positive analyses (what is happening,
and why?), and normative analyses (what should
be done?).
• The scope of analysis (what is endogenous?) must
be as broad as possible.
21
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I. Development-environment
interactions
A. Grow th, trade and the env ir onment: the long- term story
B. Th e EKC and dev eloping coun try ev idence
22
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The ‘environmental Kuznets curve’
• With economic
growth, pollution
intensity first
rises, then
declines:
Pollution
per unit o f income (z)
z = z(Y/P)
z’ > 0; z” < 0.
Per capita in come (Y/P)
23
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Components of EKC
• Scale effect (economic expansion)
• Composition effects
– Relative price changes
– ‘Unbalanced growth’-- from several sources
• Technique & preference effects
– Production technology
– Consumer preferences & policy pressures
24
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Is there an EKC in Asia?
• Empirical studies:
– Industrial emissions-- maybe.
– Deforestation, water and soil resource
depletion--no robust evidence of EKC.
• Yet experience of wealthy countries
suggests that EKC concept remains a useful
working hypothesis.
25
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Factors affecting EKC shape
•
•
•
•
Exogenous market influences (‘globalization’)
Property rights
Externalities
Policy ‘accidents’
(e.g ISI strategies affecting ind’l & ag growth)
* All have economy-wide implications
* Spatial dimensions may also be important
26
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Methodological approaches
• Economy-wide mechanisms require general
equilibrium techniques
• Methods must also capture key elements of
‘real world’ conditions:
– Trade and intersectoral market integration
– Spatial dimensions of pollution
– Institutional and policy dimensions
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A note on ‘micro’ vs. ‘macro’
approaches
• Agents’ behavior (e.g. firm/farm) is dynamically
linked to macro level changes.
– Economy-wide or global changes affect decisionmaking by micro units, through prices, etc.
– Behaviour of micro-units in aggregate affects macro
outcomes: outputs, prices, employment, income
distribution, and environmental externalities
– Indirect and ‘loop back’ effects can be very important
• Micro and macro approaches are complementary.
Both are required.
28