Copyright 2003 Pearson Education Inc Chapter 11 Slide

Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 1

The Environment and Development Chapter 11 Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 2

Economics and the Environment n n Environmental issues affect, and are affected by, economic development Poverty and ignorance may lead to nonsustainable use of environmental resources Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 3

Environment and Development: The Basic Issues n Sustainable development and environmental accounting Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 4

Environment and Development: The Basic Issues Sustainable net national product is: Where GNP is Gross National Product Dm is the depreciation of manufactured capital assets Dn is the depreciation of environmental capital Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 5

Environment and Development: The Basic Issues Alternatively, sustainable net national product is: Where GNP Dm Dn R A is Gross National Product is the depreciation of manufactured capital assets is the depreciation of environmental capital is expenditure needed to restore environmental capital is expenditure required to avert destruction of environmental capital Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 6

Environment and Development: The Basic Issues n n n Sustainable development and environmental accounting Population, resources, and the environment Poverty and the environment Growth versus the environment Rural development and the environment Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 7

Environment and Development: The Basic Issues, cont’d n n Urban development and the environment The global environment Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 8

The Scope of Environmental Degradation: A Brief Statistical Review n Environmental problems have consequences both for health and productivity Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 9

Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 10

Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 11

Rural Development and the Environment: A Tale of Two Villages n n Representative African village Representative South American village Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 12

Traditional Economic Models of the Environment n Privately owned resources Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 13

Figure 11. 1 Static Efficiency in Resource Allocation Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 14

Figure 11. 2 Optimal Resource Allocation over Time Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 15

Traditional Economic Models of the Environment n n Privately owned resources Common property resources Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 16

Figure 11. 3 Common Property Resources and Misallocation Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 17

Traditional Economic Models of the Environment n n Privately owned resources Common property resources Public goods and bads: regional environmental degradation and the freerider problem Limitations of the public goods framework Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 18

Figure 11. 4 Public Goods, Normal Goods, and Free-Rider Problem Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 19

Urban Development and the Environment n n The ecology of urban slums Industrialization and urban air pollution Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 20

Figure 11. 5 Pollution Externalities: Private versus Social Costs and the Role of Taxation Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 21

Figure 11. 6 Increasing Pollution Externalities with Economic Growth Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 22

Urban Development and the Environment n n n The ecology of urban slums Industrialization and urban air pollution Problems of congestion and the availability of clean water and sanitation Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 23

The Need for Policy Reform n n The recognition that action to reduce environmental hazards has been insufficient is now widespread However, budgets are limited Better pricing policies would improve matters Inclusion of women in the design of environmental policy is important Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 24

The Global Environment: Rain Forest Destruction and Greenhouse Gases n n n Many scientists are alarmed by recent evidence regarding ozone depletion and global warming Economists also are concerned with the costs of global climate change The solutions seem to involve both LDCs and industrialized countries Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 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 Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 26

Policy Options in Developing and Developed Countries, cont’d n How developed countries can help LDCs – trade policies – debt relief – development assistance n What developed countries can do – emissions controls – R&D – import restrictions Copyright © 2003 Pearson Education, Inc. Chapter 11 Slide 27

Concepts for Review n n n n Absorptive capacity Biomass fuels Clean technologies Common property resource Consumer surplus Debt-for-nature swap Deforestation Copyright © 2003 Pearson Education, Inc. n n n n Desertification Environmental accounting Environmental capital Externality Free-rider problem Global warming Greenhouse gases Chapter 11 Slide 28

Concepts for Review, cont’d n n n n n Internalization Marginal cost Marginal net benefit Ozone depletion Pollution tax Present value Private costs Producer surplus Property rights n n n n Copyright © 2003 Pearson Education, Inc. Public bad Public good Scarcity rent Social costs Soil erosion Sustainable development Sustainable national income Total net benefit Chapter 11 Slide 29