Economic Development = Environmental Destruction?

In 1930 in Belgium, the Meuse Valley fog caused by industrial pollution killed around 60 people. In 1948 in America, Donora smog resulted in serious air inversion that killed 20 people and caused various health issues in 7,000 people in the surrounding areas. In the 1950s and 1960s, people in Los Angeles struggled in some of the dirtiest air in the world at the time. And in 2015, the first ‘red alert’ over smog levels was issued in Beijing due to coal-powered industries and heating systems as well as carbon emissions by transportations. The air in Beijing was described as ‘dark’ and filled with smog everywhere, making it difficult to even clearly view objects directly in front


Going by history, it would seem that the development of a country’s economy is always accompanied with the destruction of its environment. But, does it mean that environmental degradation is a necessary precondition for economic growth?


Various studies have explored the link between sustainable development and environmental degradation. A study by Stern, Common and Barbier (1996) discovered that the existence of ‘an inverted U-shape relation’ between the level of environmental degradation and GDP per capita. It seems that empirical data suggests that economic growth actually reduces the negative environmental influence over time. Figure 1 shows the relationship between the emissions of SO2 and GNP per capita provided by Panayotou (1993). This demonstrates clearly the negative relationship between economic growth and emissions of SO2.

Moreover, Stern, Common and Barbier (1996) provided a mathematical model about the remaining forest cover, which is as follows:

where EDEF is the estimated rate of deforestation in year t. This equation has been plotted in Figure 2. The visual representation suggests global forest cover will decline until 2016, and thereon it is predicted to increase from 37.2 million to 37.6 million in 2025. Meanwhile, as indicated in Figure 2, tropical forest cover declined throughout the periods, with its constant deforestation rate 1.8% annually. Combining with the total forest cover results, there exists net temperate reforestation.


Therefore, although economic development will lead to some environmental problems such as deforestation and air pollution, it is suggested that economic growth will not become a threat to global sustainability. Moreover structural changes in countries’ economies will actually lead to improvement in environmental conditions over time.


Take the example of the United States and Japan to illustrate this change. Japan now imports more processed materials instead of raw materials to reduce the procedures of processing and prevent the pollution caused by processing. The US specializes in trading in materials with lower energy and resource intensities, and has been developing technologies to assist with sustainable development. Recent reports based on the latest data even suggest that global emissions of carbon dioxide have declined slightly this year.


However, this does not mean that all the countries experiencing economic structural transformation will reduce their levels of environmental degradation successfully.


Rising pollution levels in developing countries such as China are a major cause for concern. Free trade theory predicts that countries will specialize toward their intensive activities. Hence developed countries will provide capital and human capital, while developing countries will provide natural resources and factories to produce the goods. Going by theory, this will lead to a situation where developed countries will reduce their level of environmental degradation, but this level will increase in the developing countries.


As a result, it must be accepted that economic growth will lead to some harm to the environment. However, this does not justify complacence on the part of countries like China which are struggling to control their pollution levels. We must use the lessons we have learnt from history and bring about the necessary adjustments and economic structural transformation, to realize our goals of sustainable development. Global climate change conferences have been held in past years to discuss the prevention of further environmental degradation and for setting a standardized CO2 emission level. An example are the COP21 climate talks held in Paris in December, where attending countries pledged to limit increase in global average temperature to 2°C. Moreover, as climate change is related to countries all over the world, developed countries should assist developing countries to adopt more green and environment friendly technologies by contributing not just economic resources to aid the process but also knowledge and expertise.


References:

Stern, D.I., Common, M.S. and Barbier, E.B. (1996) ‘Economic Growth and Environmental Degradation: The Environmental Kuznets Curve and Sustainable Development’, World Development, 24(7), pp. 1151-1160.


Images taken from article to be found at:http://www.sciencedirect.com/science/article/pii/0305750X96000320