Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 10 The Environment and Development.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved.

Chapter 10

The Environment and Development

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-2

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


Environment and Development: The Basic Issues

Sustainable development and environmental accounting



nm DDGNINNI *

Sustainable net national product is:

WhereNNI* is sustainable national income

GNI is Gross national incomeDm is the depreciation of manufactured

capital assetsDn is the depreciation of environmental

capital



ARDDGNINNI nm *

Alternatively, sustainable net national product is:

WhereNNI*, GNI, Dm, and Dn are as before R is expenditure needed to restore

environmental capitalA is expenditure required to avert

destruction of environmental capital



Sustainable development and environmental accounting

Population, resources, and the environment Poverty and the environment Growth versus the environment Rural development and the environment


Environment and Development: The Basic Issues (cont’d)

Urban development and the environment The global environment


The Scope of Environmental Degradation: A Brief Statistical Review

Environmental problems have consequences both for health and productivity


Table 10.1


Table 10.1 (cont’d)


Rural Development and the Environment: A Tale of Two Villages

Representative African village Representative South American village


Traditional Economic Models of the Environment

Privately owned resources


Figure 10.1


Figure 10.2



Privately owned resources Common property resources


Figure 10.3



Privately owned resources Common property resources Public goods and bads: regional

environmental degradation and the free-rider problem

Limitations of the public goods framework


Figure 10.4


Urban Development and the Environment

The ecology of urban slums Industrialization and urban air pollution


Figure 10.5


Figure 10.6


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


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


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


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


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


Table 10.2


Concepts for Review

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 (cont’d)

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

Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 10 The Environment and Development.

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