The Environment and Development

Rina Isanan Master of Arts In Economics

TOPICS FOR DISCUSSION

A. ECONOMICS AND THE ENVIRONMENT B.ENVIRONMENT AND DEVELOPMENT : THE BASIC ISSUES C . T H E S C O P E O F E N V I R O N M E N TA L D E G R A D AT I O N

D.RURAL DEVELOPMENT AND THE ENVIRONMENT

E.URBANDEVELOPMENT AND THE ENVIRONMENT F. P O L I C Y O P T I O N S G . E N V I R O N M E N TA L A S S E S S M E N T FOR THE PHILIPPINES

The old nation of development versus environment has given way to a new view in which . . . better environmental stewardship is essential to sustain development. -WORLD BANK, World Bank Atlas, 1997

Economics and the Environment

In recent years, economists have become increasingly aware of the important implications of environmental issues for the success of development efforts. We now understand that the interaction between poverty and environmental degradation can lead to a selfperpetuating process in which, as a result of ignorance or economic necessity, communities may inadvertently destroy or exhaust the resources on which they depend for survival. Rising pressures on increasingly taxed environmental resources in developing countries can have severe consequences for Third World self-sufficiency, income distribution, and future growth potential.

Environment and Development: The Basic Issues

Sustainable Development and Environmental Accounting

Basically ,sustainability refers to meeting the needs of the present generation without compromising the needs of future generations.

F o r e c o n o m i s t s , a development path is sustainable if and only if the stock of overall capital assets remains constant or rises over time.

Environment and Development: The Basic Issues

Sustainable Development and Environmental Accounting

Environmental Accounting
Overall capital assets are meant to include not only manufactured capital (machines, factories, roads) but also human capital (knowledge, experience, skills) and environmental capital (forests, soil quality, and rangeland). By this definition, sustainable development requires that these overall capital assets not be decreasing and that the correct measure of sustainable national income or sustainable net national product (NNP*) is the amount that can be consumed without diminishing the capital stock. Symbolically, NNP* = GNP Dm Dn, where NNP* is sustainable national income, Dm is the depreciation of manufactured capital assets, and Dn is depreciation of environmental capital---the monetary value of environmental decay over the course of a year . An even better measure, though more difficult to calculate with present data collection methods, would be, NNP* = GNP Dm Dn R A where Dm and Dn are as before, R is expenditure required to restore environmental capital (forests, fisheries, etc.), and A is expenditure required to avert destruction of environmental capital (air pollution, water and soil quality etc.)

Environment and Development: The Basic Issues

Population, Resources, and the Environment
Rapidly growing Third World populations have led to land, water, and fuel wood shortages in rural areas and to urban health crises stemming from lack of sanitation and clean water. In many of the poorest regions of the globe, it is clear that increasing population density has contributed to severe and accelerating degradation of the very resources that these growing populations depend on for survival.

Environment and Development: The Basic Issues

Poverty and the Environment

For environmental policies to succeed in developing countries, they must first address the issues of landlessness, poverty, and lack of access to institutional resources. Insecure land tenure rights, lack of credit and inputs, and absence of information often prevent the poor from making resource-augmenting investments that would help preserve the environmental assets from which they derive their livelihood.

Growth versus the Environment

Evidence indicates that the worst perpetrations of environmental destruction are the billion richest and billion poorest people on earth. It has even been suggested that the bottom billion are more destructive than all 3.2 billion middle-income people combined. It follows that increasing the economic status of the poorest group would provide an environmental windfall.

Environment and Development: The Basic Issues

Rural Development and the Environment
The increased accessibility of agricultural inputs to small farmers and the introduction (or reintroduction) of sustainable methods of farming will help create attractive alternatives to current environmentally destructive patterns of resource use

Urban Development and the Environment

Rapid population increase accompanied by heavy rural-urban migration is leading to unprecedented rates of urban population growth, sometimes at twice the rate of national growth. Consequently, few governments are prepared to cope with the vastly increased strain on existing urban water supplies and sanitation facilities.

Environment and Development: The Basic Issues

The Global Environment

As total world population grows and incomes rise, net global environmental degradation is likely to worsen. Some trade-offs will be necessary to achieve sustainable world development. By using resources more efficiently, a number of environmental changes will actually provide economic savings, and others will be achieved at relatively minor expense.

The Scope of Environmental Degradation: A Brief Statistical Review

The most pressing environmental challenges in developing countries in the next few decades will be caused by poverty.

These will include health hazards created by lack of access to clean water and sanitation, indoor air pollution from biomass stoves, and deforestation and severe soil degradation---all most common where household lack economic alternatives to unsustainable patterns of living.

TA B L E 11 . 1 P R I N C I PA L H E A LT H A N D PRODUCTIVITY CONSEQUENCE OF E N V I R O N M E N TA L D A M A G E
ENVIRONMENTAL PROBLEM Water pollution and water scarcity EFFECT ON HEALTH More than 2 million deaths and billions of illnesses a year attributable to pollution; poor household hygiene and added health risks caused by water scarcity EFFECT ON PRODUCTIVITY Declining fisheries; rural household time and municipal costs of providing safe water; aquifer depletion leading to irreversible compaction; constraint on economic activity because of water shortages Restrictions on vehicle and industrial activity during critical episodes; effect of acid rain on forests and water bodies

Air pollution

Many acute and chronic health impacts; excessive urban particulate matter levels are possible for 300,000 to 700,000 premature deaths annually and for half of childhood chronic coughing; 400 million to 700 million people, mainly women and children in poor rural areas, affected by smoky indoor air Diseases spread by rotting garbage and blocked drains; risks from hazardous wastes typically local but often acute

Solid and hazardous wastes

Pollution of groundwater resources

TA B L E 11 . 1 P R I N C I PA L H E A LT H A N D PRODUCTIVITY CONSEQUENCE OF E N V I R O N M E N TA L D A M A G E

Soil degradation

Reduced nutrition for poor farmers on depleted soils; greater susceptibility to drought

Field productivity losses in range of 0.5% to 1.5% of gross national product (GNP) common on tropical soil; offsite siltation of reservoirs, river-transport channels, and other hydrologic investments Loss of sustainable logging potential and of erosion prevention, watershed stability, and carbon sequestration provided by forest Reduction of ecosystem adaptability and loss of genetic resources Sea-rise damage to coastal investments; regional changes in agricultural productivity; disruption of marine food chain

Deforestation

Localized flooding, leading to death and disease

Loss of biodiversity

Potential loss of new drugs

Atmospheric changes

Possible shifts in vector-borne diseases; risk from climatic natural disasters; diseases attributable to ozone depletion (perhaps 300,000 additional cases skin cancer a year worldwide; 1.7 million cases of cataracts)

The Scope of Environmental Degradation: A Brief Statistical Review An environmental problem shared by both the urban and rural poor is the prevalence of unsanitary conditions created by the lack of clean water and sanitation. This in turn contributes greatly to the spread of infectious diseases. Rapid population growth and heavy rural-urban migration make it difficult to extend urban services to many people who need them A comparable aim for the provision of sanitation would require 400% and 900% increases for urban and rural communities, respectively. On average throughout the developing world, 72% of all new urban households are located in shanties or slums. Airborne pollutants also take a high toll on the health of Third World citizens. Dependence on biomass fuels such as wood, straw, and manure is closely related to poverty. The burning of biomass fuels for cooking and the boiling of waters create dangerously high levels of indoor pollution.

RURAL DEVELOPMENT AND THE ENVIRONMENT

Though heavy urbanization is leading to rapid demographic changes, at present the majority of the v e r y p o o r l i v e i n r u r a l a re a s . F r e q u e n t l y, 7 0 % t o 80% of the poor in LDCs reside in the agricultural s e c t o r, w h e r e e c o n o m i c s n e c e s s i t y o f t e n f o r c e s s m a l l farmers to use resources in ways that guarantee shortterm survival but reduce the future productivity of environmental assets. Unsustainable patterns of living may be imposed by economics necessity.

RURAL DEVELOPMENT AND THE ENVIRONMENT

In hungry farmers periods of prolonged and severe food shortages, desperately hungry framers have been known to eat the seeds with which they would have pl a nt e d t he ne x t y e ar s c ro p, kno w i ng ly pa v i ng t he w a y f o r f u t u r e d i s a s t e r. B e c a u s e i t h a p p e n s m o r e s l o w l y, t h e t e n d e n c y o f i m p o v e r i s h e d p e o p l e t o degrade agricultural resources on which they depend for survival is less dramatic but it is motivated by similar circumstances.

RURAL DEVELOPMENT AND THE ENVIRONMENT

The causes and consequences of rural environmental destruction vary greatly by region. H o w e v e r, persistent poverty is frequently the root cause. The majority of the poor in developing countries survive on the meager yield obtained from cultivation of small p l o t s o f l a n d w h o s e s o i l m a y b e t o o s h a l l o w, t o o d r y o r too sandy to sustain permanent cultivation.

URBAN DEVELOPMENT AND THE ENVIRONMENT

The Ecology of Urban Slums In some ways, life among the poor in urban slums is similar to that of the poor in rural village; families work long hours, income is uncertain, in difficult trade offs must be made between expenditures on nutrition, medical care, and education.

Case: Typical urban slum in an Asian metropolis

URBAN DEVELOPMENT AND THE ENVIRONMENT Though the health implications of environmental degradation are currently highest in rural areas, due to rapid urbanization the vast bulk of future increases in human exposure to unsafe conditions will occur in the cities.

Because the urban poor are much less able than the wealthy to insulate themselves from the negative effects of a tainted environment, they are more likely to suffer serious consequences resulting from environmental degradation.

URBAN DEVELOPMENT AND THE ENVIRONMENT

Industrialization and Urban Air Pollution

The principal sources of air pollution, which pose the greatest health threat associated with modernization, are energy use, vehicular emissions, and industrial production. Industrialization can lead to increases in waste either through direct emissions or indirectly by altering patterns of consumptions and boosting demand for manufactured goods. The production of manufactured goods generally entails the creation of by-products that may be detrimental to the environment. The extent to which they degrade the environment will depend on a number of factors, including the type of by-product produced, their quantities, and their means of disposal.

URBAN DEVELOPMENT AND THE ENVIRONMENT

Industrialization and Urban Air Pollution

Unfortunately, in the absence of regulations, the cheapest way to dispose of unwanted by-products is usually to release them untreated into the air and waterways or to dump the on the ground where runoff is free to sink into groundwater or wash into rivers. Due to the broader transmission of ideas, greater ability of goods, and increase incomes, changes in patterns of consumption and their environmental consequences are likely to appear first in cities. Until technologies and infrastructures capable of coping with environmental consequences are introduced, modernization is likely to lead to high urban environmental costs.

The Need of Policy Reform Annually, $10 billion, or not only about 0.5% of developingcountry GDP, is spent on sanitation and water services; 80% is spent on programs costing at least $550 per person, and less than 20% is spent on programs costing less than $30 per person. Similar patterns occur in the health professions. As a consequence, government schemes tend to reach relatively select group of constituents while falling far short of providing universal access to the poor, who, as we have described, are subject to the worst environmental conditions. Unless governments vastly increase the breadth of the population served by programs, these disparities will tend to worsen with increased urbanization in the future.

POLICY OPTIONS IN DEVELOPING AND DEVELOPED COUNTRIES LESS DEVELOPED COUNTRIES CAN DO Proper Resource Pricing

The most obvious area for reform is probably in government pricing policy, which can exacerbate resource shortages or encourage unsustainable methods of production.

POLICY OPTIONS IN DEVELOPING AND DEVELOPED COUNTRIES

Community Involvement

Programs to improve environmental conditions are likely to be most effective when they work in tandem with community networks, ensuring that program design is consistent with most local and national objective.

POLICY OPTIONS IN DEVELOPING AND DEVELOPED COUNTRIES

Clear Property Rights and Resource Ownership

Investments in household sanitation and water and on-farm improvements often represent a large portion of lifetime savings for the poor, the loss of which can impose harsh economic consequences on households. Hence, the lack of secure tenure on rural or urban property can greatly hinder investment in environmental upgrading. Legalization of tenure can lead to improved living conditions for the poor and increase in agricultural investments.

POLICY OPTIONS IN DEVELOPING AND DEVELOPED COUNTRIES Programs to Improve the Economic Alternatives of the Poor It is therefore important that government programs may credit and land-augmenting inputs accessible to small farmers. By providing rural economic opportunities outside the home, governments can also create alternative employment opportunities so that the very poor are not forced to cultivate marginal lands.

POLICY OPTIONS IN DEVELOPING AND DEVELOPED COUNTRIES R a i s i n g t h e Eco n o m i c S ta t u s o f Wo m e n Improving the educational attainment of women and increasing their range of economic alternatives raise the opportunity cost of their time and may lead to decrease in desired family size. Education also tends to increase womens access to information concerning child nutrition and hygiene, a factor that has been linked to rapid declines child mortality.

POLICY OPTIONS IN DEVELOPING AND DEVELOPED COUNTRIES

Industrial Emissions Abatement Policies

A range of policy options is available to developing-countries governments for the purpose of limiting industrial pollution, including the taxation of emissions, tradable emissions permits, quotas, and standards.

How Developed Countries Can Help LDCs

Tr ade Polic ies

The industrialized countries penalize Third World exports by heavily subsidizing their own agricultural sectors. The resulting large surpluses are often dumped on international markets, unfairly undercutting the agricultural exports of developing countries in markets for which they are presumed to have a comparative advantage. Reducing the estimated $300 billion in annual agricultural subsidies in developed countries could help guarantee the success of rural development efforts in LDCs by reducing poverty and the environmental decay that it causes. Wider access to the international markets would not only raise incomes but could also improve the ability of heavily indebted countries to service their debt. They would thereby reduce their dependence on the unsustainable exploitation of rainforest and other resources to raise foreign exchange.

Debt Relief

Heavy debt servicing drastically reduces funds available to Third World governments for domestic social programs, including those designed to alleviate poverty and reduce environmental degradation.

Debt-for-nature swaps offer an attractive and mutually beneficial way for the Third World to retire its foreign-denominated debt while guaranteeing the protection of tropical rain forests.

Development Assistance

The World Bank estimated in its 1992 World Development Report that an additional 2% to 3% annual investment is necessary in developing countries to achieve sustainable development. These investments would be used for a variety of programs to alleviate poverty, provide services, and promote sustainable patterns of production. Additional aid from developing countries earmarked for these purposes could have a positive impact on developingcountry environments.

What Development Countries Can Do for the Global Environment

Emission Controls Research and Development

Import Restrictions

STATE OF THE ENVIRONMENT AND NATURAL RESOURCES

Philippine Development Plan 2011-2016 The country is widely acknowledge as having an outstanding Endowment of natural resources, which could provide essential Ecosystem services to the population. Demands arising from development and utilization activities, Population expansion, poor environmental protection, a n d e x t e r n a l f a c t o r s su c h a s c l i ma t e c h a n g e , h o w e v e r, h a v e p l a c e d t h e c o u n t r y s environment and natural resources under grave threat.

* Major Urban Centers Are Polluted The waterways in major urban centers, especially the esteros, are UNFIT for human activity despite recent clean-up efforts. In Metro Manila, up to 58% of ground water has been found to be contaminated with COLIFORM.

There has been an increasing number of large companies That generates wastes considered hazardous to healh and environment. Philippines still has inadequate equipment and technical expertise to deal with these wastes. Philippines has no large-scale treatment and disposal facilities for hazardous wastes.

* SOLID WASTE REMAINS A MAJOR SOURCE OF POLLUTANTS

T h e c o u n t r y g e n e r a t e s 3 0 , 0 0 0 t o n s o f g a r b a g e p e r d a y. Metro manila alone produces 8,000 tons per day of which only 70 percent is collected. F o r t h e w h o l e c o u n t r y, o n l y h a l f o f t h e g a r b a g e g e n e r a t e d is collected. UNCOLLECTED garbage ends up mostly in rivers, esteros, and other water bodies, clogging the drainage system and leading to floods and the pollution of major water bodies.

* WATER IS BECOMING SCARCER

Although water is still abundant in certain areas, the country f a c e s t h r e a t o f e m e r g i n g w a t e r s c a r c i t y.

Increasing water demand has resulted in a number of regions and at least nine key urban centers experiencing water stress. These include Metro manila, Metro Cebu, Davao, Baguio, CDO, Bacolod, Angeles, Iloilo and Zamboanga. These highly urbanized cities rely mostly on groundwater f o r w a t e r s u p p l y, r e s u l t i n g i n u n c o n t r o l l e d w i t h d r a w a l f r o m groundwater aquifers in recent years. Rapid and uncontrolled urban development has reduced aquifer recharge and has eventually resulted in the decline of groundwater levels as well as saltwater intrusion.

* MINERAL RESOURCE DEVELOPMENT IS DELIVERING MIXED RESULTS

O f t h e c o u n t r y s 3 0 m i l l i o n h e c t a r e s o f l a n d a r e a , 9 million hectares (30%)is considered as having high mineral potential. Only 2.7 % of this high-potential area is covered by mining permits Data show that the share of mining in GDP and employment is increasing and there are considerable potentials. H o w e v e r, a n u mb e r o f mi n i n g p r o j e c t s h a v e b e e n a l l e g e d t o h a v e caused environmental degradation, physical displacement of indigenous people and cultural dislocation.

POLICY RESPONSES
H A Z A R D O S WA S T E S E c o l o g i c a l S o l i d Wa s t e M a n a g e m e n t A c t o f 2 0 0 0 T h a t p r o v i d e s t e c h n i c a l a s s i s t a n c e t o 1 , 3 2 5 L G U s f o r t h e closure and rehabilitation of open or controlled dumps, and sanitary landfills to 236 LGUs. T o x i c s u b s t a n c e s a n d h a z a r d o u s a n d N u c l e a r Wa s t e Control Act of 1990 Bans the consumption, storage or transport of toxic or nuclear w a s t e i n t o o r w i t h i n t h e c o u n t r y.

POLICY RESPONSES
MINING 97 Environmental Protection and Enhancement Program (EPEP) 23 Final Mine Rehabilitation and/or Decommissioning Program (FMR/DP) 387 Social Development Management Program (SDMP) and IEC Campaigns Aside from these programs, assessment and rehabilitation of abandoned or inactive mines have also been started. Issues of transparency have also cropped up, with some sectors and support groups pointing to difficulties in accessing information on mining contracts.

THANK YOU!