During my last ‘general paper’ lessons we discussed a very interesting research topic from a report from a meeting held in September 1994 in Sweden. I summarized the brilliant ideas into the following package!
It is argued that national and international economic policy has usually ignored the environment. The presumption is often that economic growth and liberalization are good for the environment, meaning that economy-wide policy reforms have been encouraged with little regard to their environmental consequences on assumption that they would either take care of themselves or could be dealt with separately.
Economic growth, institutions and the environment
The proposition that economic growth is good for the environment is justified by the claim that there exists a practical relation between per capita income and some measures of environmental quality.
Based on an observation that as income goes up there’s increasing environmental degradation to a certain point after which, environmental quality improves. One explanation is that poor countries cannot afford amenities over material well-being so in the earlier stages of economic development; increased pollution is viewed as an acceptable side effect. However, when a country has attained a sufficiently high standard of living, people give more attention to environmental amenities.
True, but it’s important to be clear about the conclusions that can be drawn from these findings. While they show that economic growth may be associated with improvements in some environmental quality, they imply that economic growth is neither sufficient to effect environmental improvement in general, nor that the environments resource base is capable of supporting unlimited economic growth.
The solution to environmental degradation was concluded to lie in institutional reforms as would oblige private users of environmental resources to take account of the social costs of their actions.
Carrying capacity and ecosystem resilience
The environmental resource base upon which all economic activity ultimately depends includes ecological systems that produce a variety of services. This resource base is definite implying that there are limits to the carrying capacity of the planet. It is possible though, that improvements in the management of resource systems will enable economic and population growth despite this definiteness.
A more useful tool of environmental sustainability is ecosystem resilience, which is the capacity of an ecosystem to tolerate disturbance without collapsing into a qualitatively different state that is controlled by a different set of processes. A resilient ecosystem can withstand shocks and rebuild itself when necessary. If human activities are to be sustainable, we need to ensure that the ecological systems on which our economies depend are resilient.
Economic growth and environmental quality
In conclusion, economic growth is not a solution for environmental quality. What matters is the content of growth. This content is determined by, economic institutions within which human activities are conducted. They need to be designed so as to provide the right incentives for protecting the resilience of ecological systems.
Such measures will not only promote greater efficiency in environmental resource allocation in all income levels but would also assure a sustainable scale of economic activity within the ecological life-support system. Protecting the capacity of ecological systems to sustain welfare is as important to poor countries as it is to the rich ones.