CHAPTER TWO

INTRODUCTION
2. ENVIRONMENT AND EMERGING
DEVELOPMENTAL ISSUES
Before 1950’s and 1960’s, the main emphasis of
development was to realize economic growth than
the environment, i.e. to increase per capita income.
Even in 1960’s and 1970’s, though development
concepts such as health, nutrition, education,
freedom, etc. were established, environmental issues
were not included. Thus, for a long period of time,
development economics ignored the issues of
environment.
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• This is partly because of the features of the
environmental goods. For a good to be considered
as economic good, it must be marketable, i.e.
tradable. But the environmental goods do not have
such like economic values. In addition, because of
the problem of market failure, natural resources
were not considered as economic goods.
• Up until the 1950’s and 1960’s, environmental and
natural resources were considered as free goods. It
is in the 1980’s that environmental issues were
considered as development issues because of the
consequences of environmental degradations.
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• Recognition for environmental degradation
began in industrialized countries and was
extended to less developed countries.
Regardless of the economic status of
countries and their geographical location,
currently all countries of the world are in
sever environmental problems. But the degree
of the problem may vary from country to
country depending on geographical location
and economic status.

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• In the today’s global system, many
developmental and emerging issues are
linked to the environment management.
Some of these issues include the problem
of environmental degradation, the effect
of rapid population growth, economic
growth and environment, sustainable
development, etc. some of which are
discussed below.

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Environmental degradation refers to the
deterioration of the environment through
depletion of resources such as destruction of
ecosystems; fauna and flora; air, water and soil;
habitat destruction; pollution; etc. It is defined as
any change or disturbance to the environment
perceived to be undesirable.
Environmental degradation is a process through
which the natural environment is compromised in
some way, reducing biological diversity and the
general health of the environment.

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This process can be natural in origin, but mostly
caused by human activities. Environmental
degradation is one of the Ten Threats
officially cautioned by the High Level Threat
Panel of the United Nations. The United
Nations International Strategy for Disaster
Reduction defines environmental degradation
as “The reduction of the capacity of the
environment to meet social and ecological
objectives, and needs”. The primary cause of
environmental degradation is human
degradation.
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For example, climate change affects the
Earth's water supply in a number of ways.
The mean global temperature will rise due
to a number of forces affecting the climate,
the amount of
atmospheric carbon dioxide (CO2) will rise,
and both of these will influence water and
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A rise in global temperatures and increase
in global precipitation led to increase in
runoff, floods, increased rates of
soil erosion, and mass movement of land,
a decline in water quality because while
water will carry more nutrients it will also
carry more contaminants.
While most of the attention about climate change is
directed towards global warming and
greenhouse effect, some of the most severe effects
of climate change are likely to be from changes in
precipitation, runoff, and soil moisture.
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It is generally expected that, on average,
global precipitation will increase, with
some areas receiving increases and some
decreases. The primary cause of
environmental degradation is human
disturbance.
Environmental degradation is of many
types. The degree of the environmental
impact varies with the cause, the
habitat, and the plants and animals that
inhabit it.
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Global warming which is related to
carbon dioxide emission, depletion
of ozone layer, acid rain and
hazardous waste materials is one of
the most environmental problems
related to economic growth. Humans
and their activities are major sources
of environmental degradation.
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• When natural habitats are destroyed or
natural resources are depleted, the
environment is degraded.
• Efforts to counteract this problem
include environmental protection and
environmental resources management.
Ecological restoration and regeneration
based on eco-friendly approaches- to
economic activities is necessary to
reduce environmental degradation.
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Forms of Environmental Degradation
Though there are various forms of environmental degradations, some of the basic forms of environmental
degradation include the following.
1. Land degradation
2. Excessive soil erosion
3. Fuel, wood and water shortage
4. Over grazing
5. Water shade degradation
6. Over fishing These and the like undermine the
7. Loss of bio diversity effort of economic development
8. Air pollution
9. Water contamination/pollution
10. Urban congestion
11. Global warming.
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 Causes of Environmental Degradation
 Environmental degradation is caused by the combination of large
and increasing human population, continually increasing
economic growth or per capita affluence, and the application of
resource depleting and polluting technology. The major causes
of environmental degradation include;
 Overpopulation,
 Rapid deforestation,
 Unsustainable agricultural activities.
 Fishing practices, overconsumption,
 Mal-distribution of wealth,
 The rise of the corporation,
 Large and small scale mining
 Social injustice,
 The third world debt,
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 Militarization and wars.
Consequences of Environmental Degradation
• Increased poverty
• Overcrowding
• Drought and famine
• Weather extremes
• Species loss
• Acute and chronic medical illnesses
• War and human rights abuses
• Unstable global situation
• Air and water pollution
• Chaos and disaster.

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Do think both developed and developing
countries face the same effects of
environmental problem? Why or why not
developing countries are mostly affected
by the impacts of environmental
degradation than developed nations?
There is a strong link between poverty and
environmental degradation. Environmental
degradation cause poverty and poverty
also causes environmental degradation.
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Since LDCs are mostly characterized by
poverty and underdevelopment, they are more
affected by environmental degradation. It has
negative effect on health, productivity, clean
water, air, etc. It results in water pollution and
shortage of potable water. In health status, air
pollution results in death, illness and poor
hygiene.Air pollution death, illness, poor hygiene,
death, maternity death, soil degradation (decrease
nutrient for poor family, decrease land productivity);
deforestation (decrease ecosystem adaptability) has
been the severe in LDCs.
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In general, most of the world’s governments,
guided by self-interest (or self-preservation)
have adapted too slowly to environmental
changes and face decreasing internal stability.
An estimates 24% of the global disease burden
(healthy life lost) and 23% of all deaths are
attributable to environmental factors, with
the environmental burden of diseases being 15
times higher in developing countries than in
developed countries due to differences in exposure
to environmental risks and access to health care.
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The main concerns of developing
countries are:
• Deforestation (inadequate forest)
• Water contamination (unsafe water)
• Over fishing
• Soil depletion
• Indoor smoke (burning fire woods)
• Outdoor smoke (pollution)

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The main concerns of developed countries
include;
Global warming
Air pollution
Depletion of ozone layer
The environmental problems of less and more
developed countries are of course not
completely independent of each other. If the CO2
emissions that come primarily from rich countries are
causing green house warming which affects less
developed countries.
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Loss of Biodiversity due to destruction of
tropical rain forests in less developed countries
is a problem for more developed countries as
well. Industrialized countries need to solve their
own problems but they also have their crucial
role to play in helping to improve the
environment of developing countries.
1.Developing countries need to have access to
less polluting technologies and to learn from
the success and failures of industrialized
countries on environmental policies.
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2.Some of the benefit from the environmental
policies in developing countries (e.g. the
protection of tropical forests and biodiversity)
accrue to rich countries which act, therefore to
bear on equivalent part of the costs.
3.Some of the benefits from the environmental
problems facing developing countries
(particularly global warming and ozone
depletion) steam from high consumption levels
in rich countries. Thus the burden of finding and
implementing solutions should be on the rich
countries.
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4.The strong and growing evidence of
links between poverty reduction and
environmental goals makes a compelling
case for greater support for programmes to
reduce poverty and population growth.
5.The capacity of developing countries to
enjoy sustainable economic growth will
depend on industrial countries economic
policies.
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 2.2.Rapid Population Growth and the Environment
2.2.1.Trends of Population Growth: The past, the
present and the future
The number of human population on earth is
expanding rapidly which goes hand in hand with
the degradation of the environment at large.
Rapid population growth is a threat to wellbeing
in the poorest countries, whereas very low fertility
increasingly threatens the future welfare of many
developed countries. Most of the poorest
countries, especially in sub-Saharan Africa, are
characterized by rapid growth of more than 2%
per year.
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Moderate annual growth of 1–2% is concentrated in large
countries, such as India and Indonesia, and across North
Africa and western Latin America. Whereas most
advanced-economy countries and large middle-income
countries, such as China and Brazil, are characterized by
low or no growth (0–1% per year), most of Eastern
Europe, Japan, and a few western European countries are
characterized by population decline.
Countries with rapid growth face adverse social,
economic, and environmental pressures, whereas
those with low or negative growth face rapid
population ageing, unsustainable burdens on public
pensions and health-care systems, and slow economic
growth.
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Every year, more than 75 million people are
being added to the world’s population. Almost
all of this net population increase (97%) is in
developing countries. Increases of such
magnitude are unprecedented. But the problem
of population growth is not simply a problem of
numbers. It is a problem of human welfare and
of development. Rapid population growth can
have serious consequences for the well-being of
all humanity.

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If development entails the improvement in people’s levels
of living (their incomes, health, education and general
well-being) and if it also encompasses their capabilities,
self-esteem, respect, dignity and freedom to choose, then
the really important question about population growth is
this. How does the contemporary population situation in
many developing countries (particularly low income
countries) contribute to or detract from their chances of
realizing the goals of development, not only for the
current generation but also for future generations?

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 To address this central issue, examining the reasons
and consequences for the positive relationship between
poverty and family size is important.
More broadly, examining what drives high population
growth in developing countries, why population growth
in general subsequently falls as countries grow and
develop and the causes and implications of these patterns.
When people first started to cultivate food through
agriculture some 12,000 years ago, the estimated world
population was no more than 5 million. Two thousand
years before, it had grown to nearly 250 million, less than
a fifth of the population of China today. At the beginning
of the Industrial Revolution, 1750, it tripled to 728
million people, less than three-quarters of the total
number
04/21/2024 living in India today
Lati M., as ofshown
Dadu, Department economics by table 1.1 below.
27
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Just four decades thereafter (1950–1990), the
human population more than doubled again,
bringing the total figure to around 5.3
billion. The world entered the twenty-first
century with over 6 billion people. In 1950,
about 1.7 billion people lived in developing
countries, representing about two-thirds of
the world total; by 2050, the population of
less developed countries will reach over 8
billion, nearly seven-eighths of the world’s
population.
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By 1750, the population growth rate had
accelerated to nearly 0.3% per year and by
the 1950s, the rate had again accelerated
tripling to about 0.91% per year. This
continued to accelerate until around 1970,
when it peaked at 2.09% per year. Today,
the world’s population growth rate remains
at a historically high rate of nearly 1.2%
per year, but the rate of increase is slowing.
However, the population growth rate in
Africa is still an extremely high 2.3% per
year.
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 The relationship between annual percentage increases
and the time it takes for a population to double in
size, or doubling time. A convenient method of
calculating doubling time is simply to divide any
growth rate into the number 70. Before 1650, when
the population grew at rate of 0.002% per year, it will
take nearly 35,000 years to double world population.
With the growth rate of 1.22% per year, the world
population doubles its value in about 57 years.
 The reason for the sudden change in overall population
trends is that for almost all of recorded history, the rate
of population change, whether up or down, had been
strongly influenced by the combined effects of famine,
disease, malnutrition, epidemic and war that are
resulted
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Dadu, Department of economics 31
 Human population and economic activity have
remained fairly stable during much of recorded
history. Prior to the Industrial Revolution of the
19thC, Europe’s population grew slowly and
standards of living changed little. The advent of the
market economy and rapid technological progress
altered this pattern dramatically. Population
increase over the last two decades, in the United
States, has also been accompanied by a shift to an
increase in urban areas from rural areas, which
concentrates the demand for water into certain
areas, and puts stress on the fresh water supply
from industrial and human contaminants.
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Urbanization causes overcrowding and
increasingly unsanitary living conditions,
especially in developing countries, which in turn
exposes an increasingly number of people to
disease. Humanity's appetite for needs is
disarranging the environment's natural
equilibrium. Production industries are venting
smoke and discharging chemicals that are
polluting water resources. The smoke that is
emitted into the atmosphere holds detrimental
gases such as carbon monoxide and sulphur
dioxide.
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An increased population means increased
withdrawals from the water supply for
domestic, agricultural, and industrial uses,
the largest of these being agriculture,
believed to be the major non-climate driver
of environmental change and water
deterioration. The next 50 years will likely be
the last period of rapid agricultural
expansion and the larger population over this
time will demand more agriculture.

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Particularly, about 79% of the world's
population is in developing countries,
which lack access to sanitary water
and sewer systems, giving rises to
disease and deaths from contaminated
water and increased numbers of
disease-carrying insects. Populations
in Europe entered a period of rapid
growth that led British classical
economist.
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POPULATION-ENVIRONMENT VEIWS
So far, wide arrays of theories have
emerged to describe the relationship
population growth, development and
environmental concerns leading to
different conclusions and policy
recommendations including
Malthusian and Boserupian
theories.
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Theories state that population has been one
of a number of variables that affect the
environment and that rapid population
growth exacerbates other conditions such as
bad governance, civil conflict, wars, polluting
technologies, or distortion policies.
Malthus holds that human populations,
because of their tendency to increase
exponentially if fertility is unchecked, will
ultimately outstrip Earth’s resources, leading
to ecological catastrophe.
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Malthus argued that that agricultural output can
increase with increasing population density (but
just not enough to balance). This has been one of
the dominant paradigms in the field of population
and the environment, but it is one which many
social scientists have rejected because of its
treating humans in an undifferentiated way from
other species that grow beyond the local “carrying
capacity.” Neo-Malthusianism has been criticized
for overlooking cultural adaptation, technological
developments, trade, and institutional
arrangements that have allowed human
populations to grow beyond their local subsistence
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Thomas Malthus theorized that populations
would outgrow food supplies, keeping the
mass of people perpetually at a subsistence
standard of living. Malthus’s Essay on the
Principle of Population as It Affects the
Future Improvement of Society, published in
1798, and initiated a long and continuing
debate on the impact of population growth.
History has proved the simple Malthusian
hypothesis wrong: both population and living
standards in Europe rose rapidly throughout
the two centuries following Malthus’s Essay.
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But if we consider a more sophisticated argument, that a
growing human population and economic system will
eventually outrun its bio-physical support systems, the
debate turns out to have strong current relevance.

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In opposition to Malthusian, Boserupian
hypothesis, named after agricultural
economist Esther Boserup, holds that
agricultural production increases with
population growth owing to the
intensification of production (greater labor
and capital inputs). The main difference
between the theories of Malthus and Boserup
is that Malthus saw technology as being
exogenous to the population-resource
condition and Boserup sees it as endogenous.
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Boserup’s theory of intensification has been found
to hold true in the historical experience of many
developed countries and in many localized case
studies spanning the developing world like India,
china, etc. Vicious circle model (VCM), which
attempts to explain sustained high fertility in the
face of declining environmental resources. In this
model, it is hypothesized that there are a number
of positive feedback loops that contribute to a
downward spiral of population growth, resource
depletion, and rising poverty (land degradation).

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In relation to environmental issues, each of the
theories identifies one or more ultimate causes
for environmental degradation, which if
remedied would “solve” the problem. In the case
of neo-Malthusianism, population growth is the
primary problem, and the solution is population
programs. The controversy over population
growth is intimately intertwined with resource
and environmental issues. In the 21st century
these issues, rather than the simple race between
population and food supply, will strongly affect
the course of economic development.
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It is unlikely that we will see major shortfalls in
food supply on a global scale. But it is highly
likely that the environmental stresses associated
with a growing population and rising resource
demands will require sweeping changes in the
nature of economic systems.
Certainly a focus on productive capacity alone
is insufficient. Resource and environmental
factors, as well as issues of equity, will be
central in responding to the challenge of
feeding larger populations with limited
resources.
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 As a consequence of rapid population growth
the demand for land to a larger extent increases.
Pressure on land increases and the productivity
of land will be unquestionably decreased.
 Expanding populations require more space for
urban, residential, and industrial development.
These needs will tend to encroach on farmland,
forests, and natural ecosystems.

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This population pressure on land and pollution
is acute in countries such as India (794 people
per square mile) or Bangladesh (2,320 people
per square mile). In less densely populated
areas such as the United States (74 people per
square mile), land use remains a central
environmental issue, with ever-increasing
pressure from suburban developments on
farmland and natural areas, and continual
conflict between large scale agriculture or
forestry and wilderness preservation.
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The following two views (stands)
suggest on how population pressure
worsens environmental degradation;
i. Increased population leads to rise
in food and increased demand for
arable land
ii.Population increase leads to
increased physical waste materials.

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Fig. 2.2 Relationship b/n Population Growth and Carbon Dioxide Emissions

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 Effects of Population Growth on
Environment
In general, one of the factors responsible for
environment degradation is population growth or
population density. Population density plays the
most important role in shaping the socio-economic
environment in the following major aspects.
1. Generation of Waste: Due to his destructive
activities, man has dumped more and more waste
in environment. As the man-made waste is not
transformed, it causes degradation and the capacity
of environment to absorb more waste is reduced.
Further, waste leads to air and water pollution.
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2.Threat to Biodiversity: Due to his destructive
activities, man has extracted more and more
minerals from the earth. Animals have been
hunted and plants have disappeared. There has
been loss of biodiversity. These have led to
ecological imbalance.
3.Strain on Forests: Man has established new
housing colonies. National highways and
hydropower projects have been built and forests
have been wiped out. These destructive activities
have increased and led to ecological imbalance.

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4. Effects of urbanization: Rapid growth of
population has led to urbanization which has
adversely affected environment. Due to
population pressure, natural resources in the
cities are depleted at a fast rate due to population
pressure. Moreover, population does not have
proper sanitation facilities and pure drinking
water. As a result, the health of the people is
adversely affected. No doubt, urbanization
reduces pressure on the rural environment, but it
brings with if environmental damages through
industrial growth, emissions and wastes.

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5. Industrialization: Underdeveloped countries are following
the policy of heavy industrialization which is causing
environmental degradation. The establishments of such
industries as fertilizers, iron and steel, chemicals and refineries
have led to land, air and water pollution.
6. Land Degradation: Intensive farming and excessive use of
fertilizers and pesticides have led to over-exploitation of land
and water resources. These have led to land degradation in the
form of soil erosion, water logging, etc.
7. Transport Development: Environmental degradation is also
due to transport development in different parts of the world.
The automobiles release huge quantities of poisonous gases
such as carbon monoxide, nitrogen oxides and hydrocarbons.
The developments of ports and harbors have led to oil spills
from ships adversely affecting fisheries, coral reefs, mangroves
and landscapes.
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8. Climatic Change: Climatic changes are irregular due
to green house gases. The thin skin of air that surrounds
the planet is being affected by human activities as never
before. Urban people are still being exposed to
unaccepted levels of toxic pollutants. Further, forests
are still being degraded by acid deposition generated by
faraway industries, and greenhouse gases continue to
accumulate in the atmosphere.
9. Low productivity: Environmental degradation not
only harms health but also reduces economic
productivity. Dirty water, inadequate sanitation, air
pollution and land degradation caused serious diseases
on an enormous scale in developing countries.

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These, in turn, reduce the productivity levels in the
country. To take specific instances, water pollution
has led to declining fisheries in rivers, ponds and
canals in both urban and rural areas. Water
shortages have reduced economic activity in
towns, and cities and villages. Soil and hazardous
wastes have polluted ground water resources
which cannot be used for agricultural and
industrial production. Soil degradation leading to
soil erosion, drought, etc. have led to siltation of
reservoirs and blocking of river and canal transport
channels.
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Deforestation has led to soil erosion and
consequent loss of sustainable logging potential.
Loss of bio-diversity has resulted in the loss of
genetic resources. Thus, environmental
degradation undermines economic productivity of
a nation.
10. Impact on new technologies: Presently,
environmental pollution is caused by old
technologies which release gases and pollutants
causing chemical and industrial pressure on the
newly emerging technologies and on the
environment.
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 Policies to control rapid population growth

a)Access to family planning should be

encouraged,
b)Educate people to benefit from
having low households,
c)Legal law that specifies the
minimum age for marriage,
d)Economic incentive and disincentive
to manage population number
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2.3.Economic Growth and the Environment
What are the essential or major determinants to
economic growth?
Before showing the link between economic growth
and the environment, let us briefly highlight some
determinants of increased productivity which makes
steady growth possible. One of these factors is
accumulation of capital. Indeed, investment allows
growth of capital stock over time, as capital stock
per worker increases, the productivity of each
worker also increases. The second variable is
technological innovation which raises productivity
of both capital and labor.
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Standard economic growth models place no limits
on this process. Provided that investment continues
at adequate rates, productivity and per capita
consumption can continue rising far into the future
production. Besides the mentioned factors,
ecological economics focuses and suggested three
additional factors-essential to economic growth.
a)Energy Supply: Europe’s economic growth in the
19th century depended heavily on coal as an energy
source, and some writers at the time expressed
concern that coal supplies might run out. In the 20th
C, oil displaced coal as the prime energy source for
industry.
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Currently oil, natural gas, and coal provide
more than 85 percent of energy supplies for
the United States, Europe, Japan, and other
industrial economies, and about the same
proportion of industrial energy for the world
as a whole. To a great extent, economic
growth both in agriculture and industry has
been a process of substituting fossil fuel
energy for human labor. This substitution has
important resource and environmental
implications, which in turn affect the future
growth goals.
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b)Supply of Land and Natural Resources
(natural capital): Almost all economic activities
require some land use. As these activities grow,
pressures increase to convert land from a
natural state to agricultural, industrial, and
residential uses. Land, of course, is fixed in
supply. Except in limited cases such as the dike
areas of the Netherlands, human technology
cannot create more land. Natural resources vary
in abundance, but mineral resources and the
regenerative capacity of forests and other living
resources have physical limits.
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c)Absorptive capacity of the environment (waste
products of industries): When national and
global economic activities are accelerated, the
flow of waste products increases and may
threaten to overwhelm environmental systems.
Flows of solid wastes, sewage and liquid wastes,
toxic and radioactive wastes, and atmospheric
emissions all pose specific environmental
problems that require local, regional, and global
solutions. Broadly speaking, the intended
economic growth mostly results in a number of
different negative consequences.
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 1.Deterioration of natural resources
Worldwide pressure on renewable resources
such as forests and fisheries has become
increasingly evident. Over-harvesting of
renewable resources has caused serious
environmental losses. World forest coverage
has declined, with particularly rapid loss of
tropical forest during the past decades. After
many years of steady increase, global fish
catch appears close to a maximum, with major
fisheries now in decline.
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Exploitation of natural resources is also
causing an increasing rate of species loss,
posing unknown ecological hazards and
diminishing the natural “inheritance” of future
generations. These pressures will only
increase with rising demands for food, fuel,
wood products, and fiber. Economic theory
offers an explanation for the over-harvesting
phenomenon. In some cases, private property
rights can create incentives for individual
owners to conserve resources.
04/21/2024 Lati M., Dadu, Department of economics 63
2.Environmental Pollution
Economic growth also brings the
problem of growing volumes of
cumulative pollutants (pollutants that
neither disperse nor significantly
degraded over time) and of toxic and
nuclear wastes. Controls on emissions,
the traditional focus of pollution
policy, are of limited use in dealing
with these more insidious problems.
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When we deal with cumulative pollutants such
as chlorofluorocarbons (CFCs), organ chlorides
such as DDT, or radioactive wastes, we must
grapple with the legacy of all previous pollution
and waste production as well as consider how
our present activities will affect the future
environment. This greatly complicates any
economic evaluation of costs and benefits. Air
and water pollutants that are not cumulative can
be controlled through specific regulatory
policies-but economic growth often leads to
increased volume of such pollutants.
04/21/2024 Lati M., Dadu, Department of economics 65
In general, decline of the environmental
problems such as pollution, sanitations,
lack of safe water, urban congestion etc.
with economic growth can be shown by
using Environmental Kuznets Curve
(EKC). The following figure reflects or
represents the relationship between
environmental problems (degradation) and
the economic growth (per capital income)
based on the Simon Kuznets hypothesis
(EKC)
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EKC is a curve which shows the relationship
between PCI and environmental degradation.
The hypothesis was first advanced by economist
Simon Kuznets in the 1950s and '60s. At the
initial stage of the economic growth-increase in
PCI is associated with the environmental
degradation. After certain point of growth (PCI)-
industrial economy, the environmental problem
is worsened and reach maximum. Then, under
the post-industrial, service sector based
economy, environmental pollution/degradation
declines.
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Fig 2.3: Kuznets (EKC)-Environmental Problems and Economic Growth
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The above figure 2.3 shows hypothetical
environmental Kuznets curve: a translation of
the Kuznets curve to the use of natural resources.
The Environmental Kuznets Curve (EKC)
hypothesis postulates an inverted-U-shaped
relationship between different pollutants and per
capita income, i.e., environmental pressure
increases up to a certain level as income goes up;
after that, it decreases. EKC actually reveals
how a technically specified measurement of
environmental quality changes as the
opportunities of a country change.
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The common assertion of EKC is that the
environmental quality deteriorates at the early
stages of economic development/growth and
subsequently improves at the later stages. In
other words, environmental pressure increases
faster than income at early stages of
development and slows down relative to GDP
growth at higher income levels. Environmental
problems initially worsen but then improve as
income rise, e.g. most forms of air pollution and
water pollution. Possible explanations for this
EKC include;
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a)The progress of economic development, from clean
agrarian economy to polluting industrial economy to clean
service economy;
b)Tendency of people with higher income having higher
preference for environmental quality, need for amenities, etc.
The environmental Kuznets curve hypothesized
the relationship between environmental quality and
economic development: environmental
degradation tend to get worse as modern economic
growth occurs until average income reaches a
certain level over the course of development. So,
the EKC suggests that "the solution to pollution is
economic growth”.
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Today, there are considerable evidence to
support the application of environmental
Kuznets curve for various environmental health
indicators, such as water, air pollution and
ecological footprint which show the inverted
U-shaped curve as per capita income and/or
GDP rise. It has been argued that this trend
occurs in the level of many of the
environmental pollutants, such as sulfur
dioxide, nitrogen oxide, lead
chlorofluorocarbons, sewage, and other
chemicals released directly into the air or water.
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For example, between 1970 and 2006, the United
States' inflation-adjusted GDP grew by 195%, the
number of cars and trucks in the country more than
doubled, and the total number of miles driven
increased by 178%. However, during that same
period certain regulatory changes and technological
innovations led to decreases in annual emissions of
carbon monoxide from 197 million tons to 89
million, nitrogen oxides emissions from 27 million
tons to 19 million, sulfur dioxide emissions from
31 million tons to 15 million, particulate emissions
by 80%, and lead emissions by more than 98%.
04/21/2024 Lati M., Dadu, Department of economics 73
 Deforestation may follow a Kuznets curve and ands with re-
forestation. It has been argued that wealthier countries are able to
maintain forests along with high consumption by ‘exporting’
deforestation.
However, in general, EKC relationship can be explained
from the view point of optimism and pessimist;
1)Optimist: Argue that pollution initially increase because
at the early stage of economic growth they worry to
increase their PCI and do not worry about the environment.
They always worry to become industrialized and to sustain
life but at certain point they tried to think about fresh air,
entertainment and conserving wild life. They tried to think
about to become worth for their environment. This makes
the curve to slope down.
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2)Pessimist: According to pessimist view there is no
real argument. None of the environmental problems
are inevitable and static. They contend the
persistency of environmental problem of the world.
2.4.Sustainable Development and Economic Growth
In 1987 the World Commission for Environment and
Development (WCED) prepared a document entitled
Our Common Future, also known as the Brundtland
Report, after the coordinator of the commission, Gro
Harlem Brundtland. It was the first occasion on
which the concept of sustainable development was
introduced.
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Its definition says: sustainable development
is development that meets the needs of the
present generation without compromising
the ability of future generations to meet
their own needs (WCED, 1987). Though
the definition does not speak about the
environment as such, the fundamental
ethical principle that the responsibility of
present generations to future generations
was originated (sustainability).
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 Ecological Approach to Economic Growth
To realize sustainability, both the market-oriented
approaches stressing on economic system adaptability
and the ecological assessment of biophysical
problems have important roles to play in devising
policy responses. Before dealing with the basic
economic issues of production, employment, and
output growth, our concept of economics must
consider the environment as fundamental to the
productive process. Of course, economic production
has always depended on the environment, but the
scale of economic activity makes a difference.
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Since economic production produces widespread
environmental effects, it is essential to integrate
our views of economics and environment. If we
adopt a broader perspective, we must adapt the
goals of economic activity themselves to
ecological realities. Traditionally, the main goals
of economic activity have been seen as increased
production and rising per capita consumption.
But in many ways, these goals pose a threat to
the environmental sustainability of our economic
system.
04/21/2024 Lati M., Dadu, Department of economics 78
 The effort to balance economic and environmental goals
is addressed in the theory of sustainable development-
economic development that provides for human needs
without undermining global ecosystems and depleting
essential resources.
Recall that the standard view of economic growth is
defined in terms of per capita GDP, meaning that total
GDP must raise faster than population. Sustainable
development requires different measures. Increased
output of goods and services can certainly be part of the
desired outcome, but equally important is the
maintenance of the ecological base of the economy-
fertile soils, natural ecosystems, forests, fisheries, and
water systems. Sustainable development means more
than simply a different
04/21/2024 yardstick.
Lati M., Dadu, Department of economics 79
 Sustainable Development and Economic Growth
 On the production side, it is important to differentiate
between renewable and nonrenewable resources. Every
economy must use some nonrenewable resources, but
sustainable development implies conservation or
recycling of these resources and greater reliance on
renewable.
 On the consumption side, an important distinction must
be drawn between wants and needs. In contrast to the
standard economic paradigm, in which “dollar votes”
command the market place and determine which goods
are to be produced, sustainable development implies
putting a priority on supplying basic needs before
luxury goods.
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Also in contrast to economic growth theory,
sustainability implies limits to macroeconomic
scale. Rather than projecting rates of growth
indefinitely into the future, some maximum
level is postulated based on the carrying
capacity of the area (the planet). This in turn
implies a maximum level of population above
which carrying capacity-the level of population
and consumption that can be sustained by the
available natural resource base-will be
exceeded and living standards must fall .

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 Sustainable Development and Population
This introduction of population as a key
variable in determining the limits of economic
growth has implications for both developing
and currently industrialized economies. For
developing economies with rapid population
growth rates, it means that limiting population
growth is a critical element in successful
development. For industrialized economies,
the role of population is different.
04/21/2024 Lati M., Dadu, Department of economics 82
In much of Europe and in Japan, population has stabilized,
and for countries such as Germany and Russia concern has
shifted to an emerging pattern of population decline. In the
United States, however, population increase continues to
put pressure on both national and global ecosystems.
Although the U.S. population growth rate is less dramatic
than that in many developing nations (0.6 percent per
annum as opposed to 2–3 percent in much of Latin
America, Africa, and Asia), the much larger U.S. per capita
consumption means that each additional U.S. resident
creates several times the additional resource demand of, for
example, an additional resident of India. This means that
population policy must be an essential element of
sustainable development.
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Population policy must include elements
of education, social policy, economic
policy, and health care, including
contraceptive availability, and often runs
into conflict with established religious
and social mores. Still, this difficult area,
generally little considered in standard
economic development models, is crucial
for sustainability.
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 Sustainable Development and Energy
A similar issue arises as to whether renewable
energy sources (including solar energy) have the
capacity to replace fossil fuel dependence.
Renewable now supply less than 10 percent of
energy in the industrialized nations. The picture is
different in developing nations, where a large
portion of current energy supply comes from
biomass (wood, plant, and animal wastes).
Efficient use of biomass and maintenance of forest
resources can thus play an important role in energy
policy.
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Technological advances in solar, wind, and biomass
energy systems have lowered the prices of these
renewable sources, and their potential for future
expansion is significant both in developed and
developing nations. A huge, often unrecognized,
potential lies in conservation and improved efficiency-
by some estimates the developed world could reduce
its energy use by about 30 percent through these
techniques with little or no effect on living standards.
The traditional emphasis on energy supply (such as
building new power plants) could thus give way to a
focus on demand-side management (increasing
efficiency and reducing energy consumption).
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The industrialized nations now account
for ¾ of global energy use (though only
¼ of global population), increased energy
consumption in developing nations could
possibly be offset by reductions in rich
nation energy use. Negotiations over
global climate policy suggest that such a
tradeoff may be essential to reduce
overall human impacts on the world’s
climate.
04/21/2024 Lati M., Dadu, Department of economics 87
 Objectives of sustainable development
1.Economic objective: Promoting growth and
efficiency e.g. income redistribution, employment,
targeted assistance, increase of PCI of poor and
decrease uncompensated future cost, etc.
2.Social Objectives: Fulfilling people’s cultural,
material, and spiritual needs in equitable manner
(e.g. popular participation, consultation, pluralism,
social equity.
3.Environmental objectives: Maintaining and
improving long term validity of the ecosystem,
biodiversity.
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 Diagram 2:1 Sustainable Development
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 In general sustainable
development has the role of
balancing between:
Human needs and capacity of the
environment,
The poor and rich,
Present generation and future
generation
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 Types of Sustainable Development
We have got two arguments of sustainable
development based on the substitutability of
different forms of capital; weak and strong
sustainable development.
1.Weak sustainable development
In the weak sustainable development the sum of
capital asset must be constant. K = Km + Kn+ Kh ;
where K is total capital stock which is assumed to
be constant, Km- man made capital, Kh- human
capital and Kn-natural capital.
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As to weak sustainable development if the decrease of
one is sustained by the increase in the other it is
sustainable development. The overall stock of capital
assets (Km + Kh + Kn) should remain constant
overtime. Reduce in one form of capital asset may be
tolerated as long as there is an increase in the other
form of capital asset that offset the other reduces.
2.Strong sustainable development
Some forms of capital asset must be constant overtime.
Strong sustainability argues that sustainability requires
that the level of natural capital (Kn) be non-declining.
There should be lack of inversibility in Kn (constant
Kn).
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 Signs of unsustainable development
1.Poverty: A billions of population lives under absolute poverty.
The level of poverty is getting most horrible overtime
2.Increasing world population and consumption of resources: The
world population increased from 4.4 billion in 1940 to 5.6 in 1970
and to 6.2 billion in 2000.
3.Resource depletion: In less than 200 years, the planet has lost 6
million km2 of forests.
4.Pollution: An increase in industrialization leads to an increase in
pollution which in turn leads to increase in cancer in developed
countries
5.Global climate change: Because of depletion of Ozone layer the
world temperature has been increasing; rain fall decreases by 20%
to 40% and world temperature has increased from 0.4% to 0.8%.
04/21/2024 Lati M., Dadu, Department of economics 93
 2.5.Policy for Development and the
Environment
1.Win-win policy
It is a policy that increases economic efficiency. It is
the policy that improves the economic efficiency
and the environment. It improves the gain of both
current and future generation. This can be achieved
by;
a) Correcting (preventing) policy failure: E.g.
elimination of subsidy in chemical fertilizers.
b) By improving access to resource and technology;

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Example;
 Providing property right (decrease over grazing, decrease
over fishing);
 Introduce less polluting technology
 It is a policy related to poverty reduction
 It results in social distribution
 It is not only as attacking poverty as a moral imperative
but also as environmental protector.
 Win-win policies may be in the form of:
 Investment in human capital,
 Investment in a better sanitation and water,
 Improves research and extensions but, these policies are
not enough. Thus there
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should be alternative
Lati M., Dadu, Department of economics 95
 Forgotten Policies
 We have to live more on the market and less on
the government but in the case of public goods
market fails to allocate resources properly.
Environmental aspect which needs high
government intervention may result in
temporarily loss of income but may result in
permanent (sustainable) gain in future income.
The world has learned over the past decades to
relay more on market and less on government to
promote development. But environmental
protection is one area in which government must
maintain a central role.
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This is basically emanates from the fact that
the government cares the environment than
private sector. Here there may be a tradeoff
between income loss and environmental
protection, requiring a careful assessment of
both the benefit and costs of alternative
policies as they affect both today’s population
and future generation.
Example;
 Change the behavior of polluters
 Protect the environment
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 Policies based on incentive: Taxation based
on the level of pollution released by a
farmers, subsidies for less polluting
technologies
 Policies based on quantitative restrictions:
setting emission standard
Policy Measures for Environmental Protection
Agricultural and industrial development along
with urbanization and spread of infrastructure
combined with population growth has led to
environmental degradation.
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Environmental degradation harms
human health, reduces economic
productivity and leads to the loss of
amenities. The damaging effects of
economic development on
environmental degradation can be
reduced by a judicious choice of
economic and environmental policies
and environmental investments.
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1.Control of Rapid Population Growth: The rate
of population growth should be curtailed through
effective family planning measures. This is
essential because the proportion of total
population in the labor force will increase further
in the years to come as a result of changes in the
age structure of the population (demography). The
shifting of labor force from the rural to the
secondary sector requires increase in agricultural
productivity. Increased agricultural productivity
helps in meeting the demand for raw materials of
the expanding manufacturing sector.
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With increased productivity, lower workers are
required to produce raw materials for industry
and food-grains for the population. It also
increases agricultural surplus thereby raising
saving and investment for economic
development. So efforts are needed to increase
agricultural productivity through technological
advancement. This will ultimately lead to
commercialization of agriculture and production
for exports, thereby earning foreign exchange for
further development.

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2.Economic Development: The aim of
population control is not only to bring about
a decline in fertility rates but also to
improve the quality of life of the people.
These are possible through rapid economic
development because reduction in
population growth by itself will not
automatically raise living standards. In fact,
an effective family planning policy should
be integrated with measures to accelerate
economic development.
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In the current phase of demographic transition,
developing countries can also achieve economic
growth and improvement in quality of life
despite population growth through
commercialization of agriculture, diversified
industrialization, urbanization, and development
of infrastructure so as to increase employment
opportunities, raise income levels, and saving
and investment rates. These will help the country
to achieve economic transition from low
economic growth (low per capita income) to
high income growth and to high per capita
income.
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3.Improving Health and Nutrition: The food and
nutrition security in developing countries should not
be considered as issues in the Nutrition Science but
should be considered as part of right to work, right to
health, right to education, right to information and
right of the poor. All the fiscal and budget policies
affect life of the poor, their food and nutritionist
security and health. So, various types of food are
needed for maximum nutrition and if they are all taken
together and in proper proportions (balanced diet),
they can provide necessary nutrients. Improving health
and nutrition levels is an extremely important factor
contributing to the social development of a developing
country.
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 Especially the people of the weaker sections of
the society who do not take adequate advantage
of health, family welfare and nutrition services,
should be made aware of these facilities so that
their health and nutrition status can be improved.
4.Reducing Poverty: Such development projects
should be started which provide greater
employment opportunities to the poor. The
government should expand health and family
planning services and education so as to reach
the poor that will help reduce population growth.
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Further, making investments in providing civic
amenities like the supply of drinking water,
sanitation facilities, alternate habitats in place of
slums, etc. will not only improve welfare but
also environment.
5.Removing Subsidies: Subsidies to capital
intensive and highly polluting private and public
industries lead to environmental degradation.
Removing or reducing subsidies will bring both
economic and environmental benefits to the
country.
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To reduce environmental degradation at no
financial cost, subsidies for resource use by the
private and public sectors should be removed.
Subsidies on the use of fertilizers, pesticides,
diesel, petrol, gas, irrigation water, etc. lead to
their wasteful use and environmental problems.
6.Clarifying and Extending Property Rights:
Lack of property rights over excessive use of
resources leads to degradation of environment.
This leads to overgrazing of common or public
lands, deforestation, and overexploitation of
minerals, fish, etc.
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 Clarifying and assigning ownership titles and
tenurial rights to private owners will solve
environmental problems. Places where the use of
common lands, forests, irrigation systems,
fisheries, etc. are regulated and rules for their
proper use are laid down by the community, the
ownership rights should be clearly specified.
7.Market Based Approaches: Besides regulator
measures, there is a need for adopting market
based approaches for the protection of
environment.
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They aim at pointing to consumers and industries
about the cost of using natural resources on
environment. These costs are reflected in the prices
paid for goods and services so that industries and
ultimately the consumers are guided by them to
reduce air and water pollution. The Market Based
Instruments (MBIs) are in the form of environmental
taxes that include pollution charges (emission
tax/pollution taxes), marketable permits, depositor
fund system, input taxes/product charges, differential
tax rates and user administrative charges and
subsidies for pollution abatement equipment for air
and water resources.
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8.Regulatory Policies: Regulatory polices also help
in reducing environmental degradation. Regulators
have to make decisions regarding prices, quantity
and technology. In making decisions, they have to
choose between the quantity or the price of
pollution or resource use of technologies. The
regulating authority has to decide whether policies
should target the environmental problem directly
or indirectly. It lays down technical standards and
regulations and charges on air, water and land
pollutants. Regulators should be impartial in
applying environmental standards to both public
and private sector polluters or resources users.
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9.Economic Incentives: Like regulatory
policies, economic incentives related to price,
quantity and technology are important
incentives usually in the form of variable fees
to resource users for the quantity of pollutants
in air, water and land use. They are given
rebates if less waste or pollution is generated
than the emission standards laid down.
10.Public Participation: Public awareness and
participation are highly effective to improve
environmental conditions.
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 Conducting of formal and informal education
programmes relating to environment management
and environmental awareness programmes can go
a long way in controlling environmental
degradation and keeping the environment clean.
For instance, the scheme of eco-labeling of
products helps consumers to identify products that
are environment friendly. Public participation can
also render costless and useful assistance in
afforestation, conservation of wildlife,
management of parks, improvement of sanitation
and drainage systems and flood control.
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 Use of indigenous institutions,
local voluntary organizations and
NGOs can render much help in
educating the masses about the
harmful effects of environmental
degradation and the benefits of
keeping the environment clean.

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