Week 10 - Lecture A - ECON 4411A Fall 2011 Development...

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ECON 4411A, Fall 2011 Development Economics Summary Notes: Week 10, Lesson 1 The Environment and Sustainable Development Quote of the day: Let no one ever come to you without leaving better and happier. To children, to the poor to all who su ff er and are lonely, give always a happy smile. Mother Teresa Introduction In recent years, economists have become increasingly aware that the success of development e ff orts is also linked to environmental issues. Economists are now aware that the interaction between poverty and environmental degrada- tion can lead to a self-perpetuating process of poverty. Many poor communities because of ignorance or economic necessities inadvertently destroy or exhaust the resources on which they depend for survival and hence perpetuate a cycle of poverty. The increasing demand on environmental resources in developing coun- tries can have severe consequences for self-su ffi ciency, income distribution, and future growth potential. Environmental degradation can also detract from the pace of economic development by imposing high costs on developing countries through, health-related expenses and reduced productivity of resources. The exclusion of environmental costs from calculations of GNI is largely responsible for the historical absence of environmental considerations from de- velopment economics. It is important to note that though some production processes can have a positive impact on current GNI figures, they may lead to damage to soil, water supply, and forests, which can in the long-run greatly reduce national productivity because of unsustainable methods of production being used. Hence, it is important that the long-term implications of economic activity on environmental quality be considered in economic analysis. Apart from economic activities, unchecked, rapid population growth can have seri- ous environmental e ff ects and global implications as well. For examples, the destruction of the world’s remaining forests, which are concentrated in Africa, Indonesia, Brazil, Peru, and the Philippines, will greatly contribute to global warming and the greenhouse e ff ect. This week we would examine the relationship between the environment and some factors and also look at indicators, causes and consequences of environ- mental devastation. Environment and Development There are seven basic issues considered when looking at the environment and development. We would consider four of these issues in this lesson. 1. Sustainable Development and Environmental Accounting: Sus- tainability is a term used to characterize the desired balance between 1
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economic growth and environmental preservation. It can be defined as meeting the needs of the present generation without compromising the needs of future generations. Hence, a development path is only sustain- able if the stock of assets are rising or remain constant over time. Hence, to prevent unduely penalizing the future generations, policy makers need to get involved in some form of environmental accounting. This implies
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