Do Economic Growth and Environmental Conservation Go Together?

Table of Contents

1. Introduction

2. Saving and Accounting for Natural Capital and Wealth

3. Natural Resources are Priceless

4. Natural Resource Degradation

5. Water Problem in Bangladesh

6. Economic Growth vs. Social/ Environmental benefit

7. Conclusion

1. Introduction

Economic growth is one of the most important economy goals, especially in a developing country. The objective of economic growth is to raise the people’s standard of living. During the industrial revolution, manufactured capital-- money, factories, machinery-- was the principal factor in industrial production; natural capital was considered only a marginal input of the production. Uncontrolled use of natural capital makes our environment vulnerable. Dr. Jay Forrester, professor at the Sloan School of Management at MIT, predicted that "sometime in the next hundred years, if then current-trends in population growth, industrialization, and resource depletion continued unchanged, the world would face actual physical limits to growth."[ii] General awareness of this issue arose with the publication of the Brundtland report, Our Common future, in 1987. The most remembered quote from the Brundtland report is the definition of sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”[iii] What will be the process of development that will not compromise the ability of future generations to meet their own needs? In my point of view, I think that sustainable growth a concept which will refer to do in the rest of this paper is pure development, must happen in such a way that 1) every person is treated equally. “The pattern of investment should be so designed as to ensure a balanced development of various sectors.”[iv] Pure Development depends on sustaining the total wealth-- produced, human, institutional, and natural-- of which economic growth is just one factor.

1. Saving and Accounting for Natural capital and Wealth

We all know that natural resources play a vital role for the economic development

of a country. We can see this importance of natural resources by analyzing the

following graph.

Figure 1: shares of wealth by income group, 2000

Source: Where is the Wealth of Nations? World Bank 2006. Oil States Excluded.

This graph shows the total wealth of low, middle, and high income countries. According to Kirk Hamilton, this wealth can be divided into three categories. As he writes, Produced capital is the familiar blend of buildings, machines, and Natural capital is the value of agricultural land, forests, and subsoil resources such as minerals and energy. ‘Intangible’ capital is the value of everything else—human capital, social capital, and governance. In poor countries, natural capital is a larger share of total wealth than produced capital. So, the depletion of natural resources is a serious problem in poor countries.

3. Natural Resources are Priceless

We should know that environment is a source of multiple, interrelated qualities. For example, soil, Biologist Evan Eisenberg explains that “one teaspoon of good grassland of soil may contain 5 billion bacteria, 20 million fungi, and 1 million protoctists”[v] Biologist F.O. Wilson has commented that “the multitudinous diversity of obscure species don’t need us. Can we say with certainty the same about them?”[vi] Many economists continue to believe that natural and manufactured capitals are interchangeable, that one can replace the other. Look at this human-oriented list and try to think that if it is possible for technologies to replace these services:

1. Production of oxygen
2. Maintenance of biological and genetic diversity
3. Purification of water and air
4. Storage, cycling, and global distribution of freshwater
5. Regulation of the chemical composition of the atmosphere
6. Maintenance of migration and nursery habitats for wildlife
7. Decomposition of organic wastes
8. Sequestration and detoxification of human and industrial waste
9. Natural pest and diseases control by insects, birds, bats, and other organisms
10. Production of genetic library for food, fibers, pharmaceuticals, and materials
11. Fixation of solar energy and conversion into raw materials
12. Management of soil erosion and sediment control
13. Flood prevention and regulation of runoff
14. Protection against harmful cosmic radiation
15. Regulation of the chemical composition of the oceans
16. Regulation of the local and global climate
17. Formation of topsoil and maintenance of soil fertility
18. Production of grasslands, fertilizers, and food
19. Storage and recycling of nutrients[vii]

The answer is no. Technologies can not replace these services. The best example of this environment importance is "Biosphere 2", "it took a $200 million investment to Minimally keep eight people alive for two years"[viii] Now try to think how much it would cost to replicate all of the functions in the preceding list? These are priceless.

4. Natural Resource Degradation

Another important matter of economic development is limiting factors. Former

World Bank economist Herman Daly believes that “humankind is facing a historic

Juncture: for the first time, the limits to increased prosperity are due to the lack not of

Human- made capital but rather of natural capital."[ix]

A limiting factor is one that prevents a system from surviving or growing if it is absent. If marooned in a mountain snowstorm, you need water, food, and warmth to survive; the resource in shortest supply limits your ability to survive. One factor does not compensate for the lack of another.[x]

Similarly, we can not survive without an ecosystem. We should know that there

are many limiting factors and the ecosystem is one. We can not think of our existence

without an ecosystem. So, we should not think that achieving high economic growth

alone necessarily lead to the development of a country.

5. Water Problem in Bangladesh

I think the most critical problem for Bangladesh is water scarcity. Water scarcity is gradually increasing density of the population. "A growing scarcity of fresh water is a major impediment to not only food production and the health of the ecosystem."[xi] In Bangladesh, water is an especially serious problem for poor people.

Studies have indicated that:

The Indian- based centre for Sustainable Development recently provided figures for Bangalore showing that upper middle and the middle classes receive on average over 200 litres of water per capita per day (lpcd). Compared to this, slums only receive about 66 lpcd on an average. Research in Bangladesh has exposed that in certain slums (bustees) in Dhaka, it is as 5-10 lpcd.[xii]

There is a saying attributed to W.H Auden that "few have died for lack of love; many have dies for lack of water”.[xiii] We also need to minimize system loss in the water sector. As the World Bank estimates, "corruption undermines efficiency in the water sector by 20 to 40 percent."[x]





6. Economic Growth vs. Social/ Environmental Benefits

To solve the problems of a country, I think the process of development needs to be thought differently. It is really important to know how freedoms of development are working among the people of a country. According to Amartya Sen “their relevance for development does not have to be freshly established through their indirect contribution to the growth of GNP or to the promotion of industrialization. As it happens, these freedoms and rights are also very effective in contributing to economic progress"[xv]

He also writes:

Development is a process of expanding the real freedoms that people enjoy. In this approach, expansion of freedom is viewed as both (1) the primary end and (2) the principal means of development. They can be called respectively the "constitutive role" and the "instrumental role" in development.[xvi]

On the other hands instrumental freedoms are:

(1) Political freedoms (2) economic facilities (3) social opportunities (4) Transparency guarantees and (5) protective security.[xvii]

Why am I telling about these freedoms? I think that freedom of choice has deep relation with the development process.

At present, deforestation rate is very high in Bangladesh. Due to high pressures on the forest resources, development continuation is not taking place in this sector.

The average annual destruction of forest land in the country was 8000 ha in 1980 and subsequently it increased to 38000 ha in 1981-90 according to FAO (1993). But probably the rate of destruction of forest is more severe than the official statistics. It is very difficult to estimate the real picture indeed.[xviii]

If the development process happens in this way, a country will face difficult problems in the long run. We are trying to solve one current problem, but at the same time, we are creating many new problems too. For example, we are using forest resources indiscriminately. As a result we are making other resource vulnerable too.

We should know that freedom works for two distinct reasons. Because of constitutive freedoms and instrumental freedoms, people are exploiting natural resources drastically. People in the developing countries are finishing their natural resources very quickly and accordingly they are facing problem rapidly. Unequal distribution of income is another serious problem in developing countries and another obstacle to the pure development process. From the human development report 2005, it is seen that unequal share of income or consumption between rich and poor is very large in Bangladesh. In the year 2000, the richest 10% have access to resources consumption 26.7%. On the other hand, only 10% poor people have access to resource consumption 3.9%. So, people in developing countries are living in a cycle where they are becoming poorer and poorer. I do not know whether we should call Bangladesh developing country or an under developed country. For this reason, developing countries need to focus on education and wealth.

7. CONCLUSION

To make economic growth fruit, we have to sustain our total wealth-- produced, human, institutional and natural. “The basic point is that the impact of economic growth depends much on how the fruits of economic growth are used"[xix] How can we sustain our total wealth? I think we need to follow the "capital investment" rule where sustainable yield will calculate these resources. We can classify our natural resources into two types. One is stock resources and another is flow resources. Stock resources are gas, oil, minerals, whereas flow resources are forest, land, water river e.t.c. As stock resource is limited and their replacement time is at least 1000 million years. We need to use these resources carefully. On the other hand, flow resources replacement time is within human life span. for example: we assume that our total natural resources is 100 and we invest 10 for 10% annual interest rate, our annual rate of return will be 1. For the next year we will invest 11. Then that year our annual return will be 1.1. I am giving this example and trying to make it clear that we need to achieve an annual rate of return which will be of use for our economic development only. Initial investment will be always 100. We also need to improve our human resource in order to sustain our total wealth. If we want to make human resource strong, we need education and health care first. I think these two things are a further condition of the development process.” A poor economy may have less money to spend on health care and education, but it also needs less money to provide the same services, which would cost more in the richer countries."[xx] "Japan’s economy development was cleary much helped by the human resource development related to social opportunities that were generated."[xxi] We can make economic growth, but first we have to look after our environment. In the conventional paradigm to attain economic growth the concept of "grow first and clean later” was the underlying principle. In the last decade, particularly after the Rio summit in 1992, it has been realized worldwide that sustainable development can not be achieved without environmental conservation."[xxii] Finally, I think that if we can do all this, we will enable the country to progress towards a sustainable environment and a pure development process.

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[ii] Natural capitalism, PAUL HAWKEN, AMORY LOVINS, L. HUNTER LOVINS, p.144

[iii] The sustainability revolution, Andres Rewards, foreword by David W. Orr, p.17

[iv] modern economic theory, k.k dewett, p.653

[v] Natural capitalism, PAUL HAWKEN, AMORY LOVINS, L. HUNTER LOVINS, p.150

[vi] Natural capitalism, PAUL HAWKEN, AMORY LOVINS, L. HUNTER LOVINS, p.151

[vii] Natural capitalism, PAUL HAWKEN, AMORY LOVINS, L. HUNTER LOVINS,p.153

[viii] Natural capitalism, PAUL HAWKEN, AMORY LOVINS, L. HUNTER LOVINS, p.153

[ix] Natural capitalism PAUL HAWKEN, AMORY LOVINS, L. HUNTER LOVINS, p.157

[x] Natural capitalism, PAUL HAWKEN, AMORY LOVINS, L. HUNTER LOVINS, p.157

[xi] Strengthening cooperation and security in south Asia post 9/11, edited by farooq sobhan, p.147

[xii] Better management of water resources by Muhammad zamir, Dhaka courier, THE BIZARRE IN BANGLADESH POLITICS,29 September 2006 vol. 23, issue 10, p.20 www.dhakacourier.net

[xiii] Water resource management in Bangladesh: limitations and uncertainties by Engr. Md. Amirul hossain and Engr. Mizanur Raman, The new nations , Bangladesh independent news source, editorial page, internet version: last updated Monday 16 oct, 2006

[xiv] Better management of water resources by Muhammad zamir, Dhaka courier, THE BIZARRE IN BANGLADESH POLITICS,29 September 2006 vol. 23, issue 10, p.21 www.dhakacourier.net

[xv] DEVELOPMENY AS FREEDOM BY AMARTYA SEN, P.5

[xvi] DEVELOPMENY AS FREEDOM BY AMARTYA SEN, P.36

[xvii] DEVELOPMENY AS FREEDOM BY AMARTYA SEN, P.38

[xviii] Depletion of tropical forests with particular reference to Bangladesh, by Nawshadul haque, member of the academic staff in the forestry & wood technology discipline, Khulna University and postgraduate student at the University of Sydney.

[xix] DEVELOPMENY AS FREEDOM BY AMARTYA SEN, P.44

[xx] DEVELOPMENY AS FREEDOM BY AMARTYA SEN, P.48

[xxi] DEVELOPMENY AS FREEDOM BY AMARTYA SEN, P.41

[xxii] BANGLDESH: STATE OF THE ENVIRONMENT 2001, P.119