Lesson 4: Linkages between environment and economy –
OBJECTIVE: As globalisation spreads and intensifies across the globe, few environmental sanctuaries remain. Areas considered “reserves” or “protected” are increasingly under pressure to be made available to economic exploitation. In this lesson you will come to recognize how un-checked economic activity can undermine the environmental resources and processes upon which it ultimately relies upon.
You will discover economic tools with which policy-makers and environmental managers can effectively manage the environment while protecting it at the same time. A set of “what to do” tips will allow you to reflect upon your own, individual economic and lifestyle choices and how they impact upon the environment.
Worlds apart, ever drifting?
Consumers in high-income countries—about 16 percent of the world's population—accounted for 80 percent of the money spent on private consumption in 1997—$14.5 trillion of the $18 trillion total. By contrast, purchases by consumers in low-income nations—the poorest 35 percent of the world's population—represented less than 2 percent of all private consumption.
The kind of resource-intensive production that is commonplace in developed countries cannot be replicated in a large number of other countries without causing serious environmental damage and destruction. Economic development based on fossil fuels is proving to be an increasingly unsustainable option around the world. Apart from pollution problems resulting from burning of fossil materials, for many low-income countries access to such materials is more and more limited. Basing development models exclusively on a finite resource is a shortsighted strategy. Higher income nations often are little inclined to vigorously explore and pursue non-fossil development options as they assume they will continue to be able to secure fossil materials at prices they can afford. Public and individual consumption choices frequently have direct negative impact on the environment. Without Government regulation, the private sector tends to shun and avoid investment in less-polluting production technology.
Specifically, fossil-based production forms often require moving or processing of large quantities of primary natural resources that do not end up being used in the final product. For example, fabricating the automobiles and other metal-intensive products for which Japan is well known requires mining and processing a yearly per capita equivalent of about 14 metric tons of ore and minerals. Growing the food required to feed a single U.S. resident causes about 15 metric tons of soil erosion annually.
In Germany, producing the energy used in a year requires removing and replacing more than 29 metric tons of coal overburden for each German citizen, quite apart from the fuel itself or the pollution caused by its combustion. The public and private sectors are integral components of society. They must sustain environments in which people can work and live and in which societies can thrive. This is especially true in the fast evolving, market-dominated global economy. The success or failure of the collaborative efforts among government, business and communities determines the progress a society can make. Growth of consumption measured as GDP, has been used as a measure of development and indeed for quality of life in a given society for a long time. This has been a misleading measure, as many of the hidden costs of quantitative-oriented growth have important impacts upon the possibilities for longer-term, sustainable development.
While the GDP is a useful measure of the gross expenditures or income of an economy, it is an inadequate measure of the overall economic, social and environmental well-being of households, communities, businesses, governments and the environment. Often, GDP fails to account for the full costs of the depletion of natural resources such as oil and gas, ecological degradation, air pollution, and many social costs such as crime and automobile crashes. Moreover, the GDP fails to account for unpaid work, such as volunteerism, parenting, and eldercare. GDP does not discriminate between expenditures that society might view as regrettable and as detracting from their well-being; the GDP simply adds these up as part of an economic growth statistic.
Finally, the GDP does not account for inequitable sharing of the benefits of economic growth— income and wealth, within and across nations and their peoples.
