1. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 10 The Environment and Development

2. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-2 Economics and the Environment n Environmental issues affect, and are affected by, economic development n Poverty and ignorance may lead to non- sustainable use of environmental resources

3. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-3 Environment and Development: The Basic Issues n Sustainable development and environmental accounting

4. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-4 Environment and Development: The Basic Issues Sustainable net national product is: Where NNI* is sustainable national income GNI is Gross national income D m is the depreciation of manufactured capital assets D n is the depreciation of environmental capital

5. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-5 Environment and Development: The Basic Issues Alternatively, sustainable net national product is: Where NNI*, GNI, D m, and D n are as before Ris expenditure needed to restore environmental capital Ais expenditure required to avert destruction of environmental capital

6. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-6 Environment and Development: The Basic Issues n Sustainable development and environmental accounting n Population, resources, and the environment n Poverty and the environment n Growth versus the environment n Rural development and the environment

7. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-7 Environment and Development: The Basic Issues (cont’d) n Urban development and the environment n The global environment

8. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-8 The Scope of Environmental Degradation: A Brief Statistical Review n Environmental problems have consequences both for health and productivity

9. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-9 Table 10.1

10. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-10 Table 10.1 (cont’d)

11. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-11 Rural Development and the Environment: A Tale of Two Villages n Representative African village n Representative South American village

12. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-12 Traditional Economic Models of the Environment n Privately owned resources

13. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-13 Figure 10.1

14. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-14 Figure 10.2

15. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-15 Traditional Economic Models of the Environment n Privately owned resources n Common property resources

16. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-16 Figure 10.3

17. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-17 Traditional Economic Models of the Environment n Privately owned resources n Common property resources n Public goods and bads: regional environmental degradation and the free- rider problem n Limitations of the public goods framework

18. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-18 Figure 10.4

19. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-19 Urban Development and the Environment n The ecology of urban slums n Industrialization and urban air pollution

20. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-20 Figure 10.5

21. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-21 Figure 10.6

22. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-22 Urban Development and the Environment n The ecology of urban slums n Industrialization and urban air pollution n Problems of congestion and the availability of clean water and sanitation

23. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-23 The Need for Policy Reform n The recognition that action to reduce environmental hazards has been insufficient is now widespread n However, budgets are limited n Better pricing policies would improve matters n Inclusion of women in the design of environmental policy is important

24. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-24 The Global Environment: Rain Forest Destruction and Greenhouse Gases n Many scientists are alarmed by recent evidence regarding ozone depletion and global warming n Economists also are concerned with the costs of global climate change n The solutions seem to involve both LDCs and industrialized countries

25. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-25 Policy Options in Developing and Developed Countries n What LDCs can do –Proper resource pricing –Community involvement –Clearer property rights and resource ownership –Improved economic alternatives for the poor –Improved economic status of women –Industrial emissions abatement policies

26. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-26 Policy Options in Developing and Developed Countries (cont’d) n How developed countries can help LDCs –Trade policies –Debt relief and debt for nature swaps –Development assistance n What developed countries can do –Emissions controls –R&D –Import restrictions

27. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-27 Table 10.2

28. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-28 Concepts for Review n Absorptive capacity n Biomass fuels n Clean technologies n Common property resource n Consumer surplus n Debt-for-nature swap n Deforestation n Desertification n Environmental accounting n Environmental capital n Externality n Free-rider problem n Global warming n Greenhouse gases

29. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 10-29 Concepts for Review (cont’d) n Internalization n Marginal cost n Marginal net benefit n Ozone depletion n Pollution tax n Present value n Private costs n Producer surplus n Property rights n Public bad n Public good n Scarcity rent n Social costs n Soil erosion n Sustainable development n Sustainable national income n Total net benefit