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Chapter One: Introduction
V Bhaskar and Andrew Glyn
The Rio Meeting of the UN Commission on the Environment and Development (UNCED) in 1992 showed that environmental issues have moved to the centre-stage of political and economic debate. Green concerns, which were once limited to a vocal fringe of society, have become a preoccupation of our age. It is now clear that a finite earth cannot bear an infinite burden, and untrammelled economic growth is unviable. This is exemplified most starkly by global problems such as global warming, acid rain, deforestation and loss of biodiversity, as well as more local ones such as urban pollution and contamination of water resources.
This book is concerned with the impact of environmental constraints on the pattern of development within the North and within the South and the relations between the two. While few contributors to the environmental debate question the importance of environmental issues and the necessity for effective policies to meet them, there is much less unanimity on how they will impinge on the trajectory of the world economy. At one end of the spectrum is the 'Limits to Growth' School, which has done much to dramatise the issue of environmental constraints by projections of drastic slowdown and even collapse. At the other are the technological optimists, exemplified perhaps by parts of the World Bank's World Development Report, who argue that resource constraints can be overcome at relatively little cost provided the correct (usually market-oriented) policies are put in place.
The fundamental idea of Limits to Growth is extremely simple
and very much in the tradition of the classical economists,
especially Ricardo and Malthus. The world economy, it claims,
faces a series of environmental resource constraints -increased
extraction costs of raw materials and energy as the best sources
are exhausted, increased costs of food production as the
intensity of cultivation rises with population growth, and
increased costs of pollution control/clear-up as production
expands. These constraints imply that a given gross ouput
requires more fixed capital (deeper and deeper mines to get
minerals, extra pollution control equipment) or more intermediate
inputs (more fertiliser to compensate for inferior soil). Either
way the ratio of net output to capital employed declines, tending to pull down the long-run growth of output and consumption.
The resonance for these ideas came from the commodity and energy price increases of the 1970s, which seemed to proclaim the arrival of just such scarcities. By the early 1990s, however, the prices of many commodities had fallen back to, or below, their real level in the 1960s, apparently banishing fears of real resource limits to expansion. However, there is an important qualification to such optimism. The industrialization and high levels of consumption in the North has depended on access to the whole world's resources. But if the majority of the rest of the world industrializes this shrinks the hinterland whose resources can be exploited for benefit elsewhere. Ratios of reserves to production look much less comforting if Northern levels of consumption were to be generalized to a world population expected to double by the middle of the next century. Conversely, potential scarcities held at bay by an unchanging and grossly unequal world distribution of consumption represent a distinctly less than comforting prospect.
However it is pollution, in its many guises, rather than resource limits, that has dominated the discussion in recent years, with the costs of containing global warming seeming to pose the greatest new threat to continued expansion of the world economy. While some argue that the scientific case for significant global warming is not yet strong enough, and the economic costs of its occurrence not yet clear enough, there seems rather widespread support, in principle at least, for taking decisive action. Given the possibility, however small, of catastrophe resulting from inaction, the case has been pithily summarized as 'If we live as if it matters and it doesn't matter, it doesn't matter. If we live as if it doesn't matter, and it matters, then it matters' (as quoted by Norman Myers).
Costs of taking action do matter, of course, if for no other
reason than they may actually determine whether the necessary
policies are implemented. So how costly will such action be? Just
as with incipient resource scarcities, the optimists believe that
it will be relatively cheap to develop the technologies required
to cut greenhouse emissions very significantly. They argue that
there are many 'win-win' situations where policies to reduce
greenhouse emissions will actually enhance growth by eliminating
inefficiencies (a well-known example being ending the subsidies
to energy use which leads to a squandering of energy resources).
Over this range there are no trade-offs between environmental
improvement and consumption levels; indeed in principle nobody
has to pay, since compensation can be found from the higher
output for any groups whose consumption levels are especially hit
by policies to correct environmental problems (such as those
particularly affected by elimination of energy subsidies). It
would, however, be a super-optimist who would assert that
trade-offs between environmental concerns and conventional
consumption levels never occur. The mainstream position,
exemplified by Nordhaus, concludes that the 'drag from resources'
(higher costs of energy and minerals, plus costs of limiting
pollution) might reduce Northern growth by a similar amount over
coming decades as it has over the past 20 years. Given the
severity of problems such as
employment it might seem that the impact of environmental pressures on the world economy is hardly a matter to get too excited about.
Yet as soon as we admit that dealing with environmental problems may entail cuts in standards of living the question of who will pay becomes central; the more significant the costs the greater the potential distributional conflicts. Such conflicts constitute a major theme of this book.
The predominant paradigm in the economic literature dealing with the environment is the theory of externalities and public goods. Environmental bads are externalities inflicted by consumers and firms upon other agents in the economy, and the lack of a market in environmental goods creates an inefficiency since these effects cannot be reflected in market transactions. Environmental quality is similarly a public good; my enjoyment of the beauty of a tropical forest does not reduce your pleasure. Externalities and public goods give rise to market failures, which lead to inefficiency in the sense that potentially beneficial transactions do not take place: that is they are Pareto inefficient, because potential gains all round remain unexploited. Hence the need for action, either by the state or by collectivities of agents, to rectify these inefficiencies and move to a situation where all are better off. This paradigm and the consequent prescription for corrective taxes is no doubt useful. It identifies a major reason for the occurrence of win-win situations in the environmental context. But an exclusive preoccupation with this paradigm prevents engagement with other questions which are no less important. Chief among these is the issue of distribution.
Economists have been notoriously disinclined to address distributive questions, and have preferred the 'neutral' preoccupation with Paretoefficiency. Indeed, the main economic critique of tax solutions in the sphere of externalities, due to Coase, proclaims its indifference to the question of distribution. The Coase conjecture is that any clear demarcation of property rights ensures efficiency. Provided either the polluted or polluter has a clear entitlement (to clean air or to deposit whatever he or she likes in the atmosphere respectively) then some form of bargaining can ensure an efficient outcome. A major reason for a failure of the conjecture is of course that property rights are themselves the focus of distributive struggle, and the state may be unable to define them clearly.
Distributional issues enter perforce when economists engage with more long-range environmental issues such as resource depletion or global warming. In these examples, current actions do not affect current generations, but affect those as yet unborn. Since unborn generations have no rights, except those granted at the pleasure of the living, it becomes meaningless to rely exclusively on efficiency criteria. There would be nothing inefficient in society choosing to put no weight on the interests of the unborn. The issue of inter-generational equity must therefore be addressed in this context and there is now a voluminous literature on this topic. However, there is a marked reluctance to widen this to include consideration of all aspects of equity, particularly intra-generational equity. There is a schizophrenia; while Pareto is the guru when discussing the disposal of hazardous wastes, Bentham and Rawls take over in the context of global warming.
The papers in this volume agree on the need to integrate concerns for equity and for the environment. Environmental externalities are not simply inflicted by identical agents upon each other: they are often what the rich and powerful do to the weak and hungry. They are what Union Carbide did to the people of Bhopal, what the Soviet State did to the people around Chemobyl, and what greenhouse gas emissions in the US will do to the people of Bangladesh. The victims often do not know about the potential hazards until it is too late, and therefore there is simply no possibility of bargaining d la Coase. And to discuss these problems purely in terms of efficiency criteria would be evasion on a monumental scale.
Environmental issues fall naturally into two main categories: global and local. Traditionally, attention has focused on local environmental issues, discussion of which can be confined to national boundaries, and on which local communities or nation states are agents for remedial action. Air and water pollution and soil erosion are examples which fit naturally into this category. While these issues retain their importance, it is the rise of global environmental issues which differentiates the present period. These are potential environmental catastrophes, the impact of which or the causes of which span international borders, if not the entire globe. The destruction of the ozone layer is the consequence of the use of CFCs by individuals the world over, and the impact in turn affects (differentially) people the world over. The ongoing large-scale extinction of species is perhaps immediately due to localized causes, being mainly in tropical forests, but the consequent loss of a diversified gene pool is to all humanity. Global warming arises due to greenhouse gas emissions the world over. The global nature of these problems has meant that there must be a global response - individual nations are too small to have any unilateral impact upon the problem, and their incentives for doing so are also inadequate given the global nature of the public good. A major theme in this volume is these global problems. How serious are they? What is the differential impact of the catastrophes across countries, particularly between the North and the South? What is the responsibility of individual nations to take remedial action?
The global concern has certainly focused attention upon the environment the world over. Even countries caught up in growth mania, with little time for niceties of environmental protection, have had their attention drawn to green concerns. Somewhat paradoxically, the North's monopoly over the international media and its ability to set the international agenda has played a positive role in this context. Now is the chance for developing countries to address the local environmental problems which have hitherto been brushed under the carpet. Indeed, given the neglect, these local problems are often much more pressing than the global ones, and the costs of remedial action are often quite small.
GLOBAL PROBLEMS AND RESPONSES
The chapter by Paul Ekins and Mike Jacobs begins with a summary of the main symptoms of environmental unsustainability - pollution and resource depletion. The archetypal global problem, which many subsequent chapters take up for discussion, is that of global warming due to emissions of carbon dioxide and other greenhouse gases. Ekins and Jacobs discuss the evidence on global warming and on the extent of cuts in emissions which are dictated by prudence. Developed countries account for a predominant share of greenhouse gas emissions, and per capita emissions are many times higher in the North as compared to the South. Developing countries, however, have a higher ratio of emissions to GDP (at least on conventional measures), and the fear is that with Southern industrial-ization, total emissions would skyrocket. Global warming is an important example of the necessity for a major reduction of what Ekins and Jacobs term the 'environmental impact' of economic activity. Southern development requires space in the global environment, which the North must vacate. This can be done either by reducing the environmental impact per unit of GDP or by reducing GDP itself. Both optimists and pessimists, while differing as to the costs of this project, agree on its necessity.
This raises the question of the feasibility, economic as well as political, of reducing the burden imposed by the North, and this is discussed in the chapters by Andrew Glyn and Juliet Schor. Glyn first shows how the impact of Northem growth on the environment has diminished substantially since 1973. His analysis of expected growth trends in the North leads to a rather surprising conclusion: that GDP growth in the North is likely to fall very substantially further. This is dictated primarily by the reduction in growth of the working population of working age, and is aggravated by the prospect of continuing poor productivity growth of the increasingly important services sector. This conclusion has contradictory implications for the global environment: on the one hand, less GDP implies less demands on the environment, whereas increased stringency allows less leeway for spending on environmental protection. This chapter then analyses existing estimates of the output cost of reducing greenhouse gas emissions. It notes in particular that if there was to be really substantial 'catch-up' of the South to the North the impact of restraints on carbon emissions would have to be more severe than currently contemplated. Only the development of cheap substitutes for carbon-based fuel, or a very inegalitarian distribution of rights to emission in favour of the North, would prevent costs to the North being rather severe.
The North could react to environmental constraints in a number
of different ways: by halting the upward trend in total
consumption and increasing leisure or by changing the composition
of consumption expenditure away from resource intensive goods
towards more environmentally-friendly welfare services, for
example. Juliet Schor focuses on the first possibility and argues
that the consumer society represents a socially irrational
preoccupation with consumption, trapping individuals on a
treadmill of 'work and spend'. She takes on the neoclassical
counterargument, that competitive labour markets imply that
workers get the leisure-consumption package that they prefer, by
bringing in the role of consumption as a status good, and habit
formation. She suggests that attitudinal surveys show signs of a
shift towards postmaterialism and away from consumer society, but
emphasizes that the
task of building on and extending this trend will face opposition from those with strong vested interests in continued economic growth.
The papers by Franck Amalric, V Bhaskar and Alain Lipietz focus directly upon the North-South distributional issue. Amalric analyses one of the most controversial matters, the role of population growth, particularly in the South, in generating global environmental problems. He focuses on the 'Ehrlich equation' which has been used to analyse quantitatively the contribution of population growth to global carbon dioxide emissions. Such analyses always generate a range of answers depending on precise assumptions. But Amalric shows that this work frequently makes a very simple analytical mistake, in its failure to take account of the much smaller consumption levels of the Southern population and particularly the Southern poor. This leads to gross exaggeration of the contribution of Southern population increases to global consumption and hence on the global environment. He argues, further, that focus on population derives from unwillingness to confront what is the ultimate problem, the failure of the institutional structures, at national and global level, to control the environmental impact of high and growing consumption levels especially in the North.
The control of global warming requires a reduction in global carbon emissions, and various criteria have been suggested for distributing emission entitlements.- Bhaskar examines the ethical basis on which we can distribute claims to this global common property resource. Two different types of ethical theories are examined - welfarist theories, such as utilitarianism or Rawl's difference principle, and rights-based theories such as those of Locke and Nozick. Bhaskar argues that both of these imply that the North should bear most of the burden of emissions limitation, albeit for quite different reasons. Welfare-based theories suggest that the North should pay, since the welfare cost of a reduction in consumption is lower in the North. Rights-based theories support a distribution of emissions on a per capita base. In addition, these theories suggest that the North should compensate for its excessive pollution in the past, which is responsible for the current stock of carbon dioxide in the atmosphere.
Alain Lipietz discusses the political economy of international negotiations over three global issues: the ozone layer, biodiversity and global warming. The South persistently sees itself as being denied the path to modernization already trodden by the North, whether in the form of cheap refrigeration (involving CFCs), standardized agriculture (reducing biodiversity) or carbon-based energy (global warming). But Lipietz also shows that there can be differences of interest within both North and South: thus in the global warming negotiations, the 'virtuous' countries of Northern Europe, with relatively low carbon intensity, are prepared to implement cuts in emission for precautionary reasons, while the carbon guzzling US is not prepared to negotiate away 'our way of life'. Southern countries with most to lose from global warming may (with financial help) support the precaution principle, while carbon-profligate Russia and the carbon-rich oil producers have little immediate interest in progress in the negotiations. Around all these discussions statistics fly back and forth in the cause of allocating 'responsibility' for the emissions and thus obligation to pay for their reduction. Lipietz concludes that some progress on these issues was made at Rio and that there are hopeful signs in Europe of a move to combine employment and environmental concerns in a shift in taxation from labour to energy.
With the growth of environmental concerns in the North pollution is now incorporated into trade theory as a factor of production. This was dramatized when a leaked memorandum by the chief economist at the World Bank advocated the transfer of dirty industries to the South. Partha Sen's chapter discusses the implications for international trade and investment of such a development. He distinguishes between industries where polluting effects are localized, such as those producing toxic wastes, and industries with global effects through emission of CFCs and CO2. He argues that the North will be relatively unconcerned about the movement of the former to the South. However the movement of globally polluting industries, such as would occur if carbon taxes were imposed only in the North, would be resisted, particularly since emissions are likely to be higher in the South. Sen investigates the extent to which international trade fore such as GATE could be used to pressurize the South into complying with Northern standards and examines the likely role of regional trading blocks, such as NAFTA, in this context.
The papers by Jong-Il You, Gita Sen and Will Cavendish turn to the second major theme of the book, ie the neglect of local environmental concerns and local aspirations in the process of development. You examines the onward march of the Korean model and documents the relentless destruction of the environment it entailed, in terms of air and water pollution, acid rain and the dumping of industrial wastes. He argues that the success of the Korean model was predicated upon the single-minded pursuit of growth maximization. This was made possible by a politically authoritarian regime which saw the articulation of any reservations about this model of development as subversive. There were examples of very successful mobilizations by the state in the cause of environmental improvement (notably reforestation). But overall the environment suffered needlessly. The authoritarianism of the regime, which allowed the state to maximize growth by riding roughshod over the interests of individual businesses, also facilitated neglect of the environmental conditions of the mass of Korean people - a facet of the Korean model which has not been widely remarked on. You emphasizes the limitations of Korea as a 'model' for development, arguing that welfare rather than growth maximization would imply growth with environmental care rather than degradation.
The paper by Gita Sen takes up the case of the Narmada valley
dams in India - perhaps the most controversial of large scale
irrigation projects. The paper argues that in this instance,
powerful groups who stood to gain are able to project their own
interests as those of national development, while
simultaneously portraying those adversely affected to the extent of loss of livelihood as obstructive and 'anti-national'. Not only would the dams imply the loss of land and destruction of livelihood, but government plans for the resettlement of those ousted were woefully insufficient. Sen also points out that the ecological damage occasioned by the project, particularly due the loss of biodiversity, would be severe. However, she argues that such environmental costs are probably secondary to destruction of the livelihoods of an already marginalized tribal community; indeed, human activity should be viewed as part of the ecosystem rather than as an external force. She concludes that assessments of such projects must incorporate in central ways considerations of distribution, weighting more highly the concerns about livelihoods and survival of those who are socially or economically without privilege and ensuring that their voices have special weight in the formulation of such projects.
Environmental questions have traditionally been the preserve of environmental economists and greens. Will Cavendish argues for an integration of ecological considerations into a study of peasant economies, taking as a case in point the communal areas of Zimbabwe. He shows that the peasants under consideration have a remarkably low level of conventional income. However, their reliance upon environmental resources and forest produce shows the importance of these resources for peasant subsistence. Cavendish argues that the peasants have a sophisticated understanding of environmental constraints and the need for preventing the degradation of their environment. Government policy towards the environment has, in a simple-minded way, assumed that the peasants are facing 'the tragedy of commons'. Policy has been framed without taking into account the local information at the disposal of peasants, and has hence been a failure. This sustains the case for democratizing the formulation of policy in order to take into account both the aspirations and the informational resources of marginalized groups.
Finally, Bob Sutcliffe's chapter reviews the post-1945 history of thinking about development in the light of the environmental critique. He points out that the great debates about development in the 1950s and 1960s, concerning the role of state and market, capitalism and socialism, all agreed that development meant the situation in the most developed countries. The 1970s saw increasingly important critiques of the accepted notion that pursuit or attainment of development would necessarily increase the welfare of the people, stressing the material and cultural deprivation of much of the population. In this context environmental critiques of development, stressing both local degradation, and global problems, have recently been gaining prominence. While the welfare and environmental critiques of development are distinct and policies motivated by them can be contradictory, Sutcliffe argues for a fusion with the objective being sustainable human development. The conclusion is that the fundamental task is to secure the political support for serious measures of redistribution, from the wealthy in the North towards the poor in the South, and to future generations who may be adversely affected by the environmental implications of current consumption levels in the North.
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