Chapter 13 – Agricultural Production and the Environment

I. Nature of environmental problems A. Poorest countries are most vulnerable to environmental problems because they tend to be the most dependent on their natural resources

1. Poorest people within these countries suffer the most from environmental degradation a. Contaminated water b. Polluted air c. No sewage facilities

B. Types of environmental problems 1. Soil erosion a. Reduces agricultural productivity b. Causes siltation of rivers & reservoirs c. Siltation can lead to flooding

2. Desertification a. Creating desert from depletion of vegetation along with wind and water erosion of the soil

3. Salinization & waterlogging a. Poor irrigation water management can lead to a build up of water or salt in the soil that lowers productivity

4. Deforestation a. Causes soil erosion b. Burning to clear forests pollutes the air c. Threatens the world’s biological diversity (tropical forests contain > 50% of the world’s plant and animal species)

5. Misuse of chemical pesticides & fertilizers has: a. Contaminated land & water in many LDCs b. Damaged the health of producers & consumers c. Stimulated the emergence of resistant pests d. Destroyed natural enemies of pests e. Killed fish or made them inedible

6. Impact of Agriculture on Global Warming 7. Impact of Global Warming on Ag Production

II. Economic causes of environmental problems in LDCs A. Poverty 1. Promotes population growth which is related to deforestation, overgrazing, & farming on marginal lands

2. Causes the poor to sacrifice the future in order to survive in the present 3. Means LDCs do not have money to address environmental problems 4. Causes LDC governments to export natural resources to pay off debt & to get money for development

B. Externalities (not just in LDCs) 1. Some actions (e.g., deforestation) have costs to society that are not accounted for by a private decision maker 2. These external, uncompensated costs are externalities

3. Externalities lead to greater production of a good than is desirable from society’s viewpoint Quantity of Trees Cut Down Price of Trees ($) P Social Costs Private Costs QSQS QPQP

4. Externalities can also mean external benefits that accrue to society but not to a private decision maker a. External benefits mean less conservation will take place than would be beneficial from society’s viewpoint

Quantity of Conservation ($) Cost of Conservation C Social Benefits Private Benefits QPQP QSQS

III. Institutional causes of environmental problems in LDCs A. Inadequate property rights 1. Lack of long-term & secure rights to forests, land & water decreases incentive to conserve those resources

B. Public policies 1. Government policy to keep food prices low causes: a. Agricultural land to be undervalued reducing incentives for conservation b. Low incomes in agriculture that make investments in conservation difficult

2. Government subsidies of fertilizer, pesticides & water result in their overuse 3. Government policy may require clearing the land of trees in order to obtain title to the land

IV. Potential solutions to environmental problems in LDCs A. Technical solutions are needed to provide the physical remedies for environmental degradation

B. Economic and institutional solutions are needed to provide the necessary incentives for behavioral changes 1. As incomes increase population growth decreases 2. As an economy grows it has more money for addressing environmental problems

3. Subsidies a. May be needed to encourage conservation 1) Government cost-share for soil conservation measures such as terraces, tree planting, windbreaks b. Eliminate subsidies on pesticides & water to reduce overuse

4. Taxes a. Reduce production of externalities 1) Tax on pollution should result in less being produced

5. Regulation a. Costly to enforce b. Incentive to cheat c. Needs to be combined with economic incentives

6. Creation of secure property rights provides incentives for long-term conservation 7. Improved information reduces corruption & lowers costs of environmental protection