||Promoting Growth and Fighting Poverty or Reducing Greenhouse Gases: The Conundrum for Developing Countries?
October 01, 2014 | Saumya Umashankar Web Exclusives
, Poverty , Greenhouse Gases
There is a popular emotional appeal in favour of the environment while positing a trade-off with growth–development comes from the consumption of scarce natural resources that release greenhouse gases and damage the environment for centuries to come; green is clean and economic growth is dirty. But when the same issue is queried as a trade-off between fighting poverty and preserving the environment, the response is not as easy.
The Intergovernmental Panel on Climate Change (IPCC) reports that the atmospheric levels of greenhouse gases (GHGs) – carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O) – have all increased since 1750. In 2011, the concentrations of these greenhouse gases exceeded pre-industrial levels by about 40per cent, 150 per cent, and 20 per cent, respectively . Concentrations of GHGs now substantially exceed the highest concentrations recorded in ice cores during the past 800,000 years.
The mean rates of increase over the past century are unprecedented in the last 22,000 years . Predictions for the 21st century, varying from the alarmist to the optimistic, indicate an unprecedented increase in mean global surface temperatures, melting of glaciers and continental ice shelves, rise in mean sea levels and extreme climate changes. IPCC projections on baseline scenarios without additional mitigation show global mean surface temperatures increasing by between 3.7oC to 4.8oC in 2100 as compared to pre-industrial levels . A 1oC increase in mean surface temperature is projected to cause 5-15per cent reduction in crop yields and 3-10per cent increase in precipitation with resultant flooding risks . Glaciers continue to shrink affecting fresh water resources.
Scientists estimate that of the cumulative anthropogenic emissions of GHGs, two-thirds have been caused by fossil fuels combustion and industrial activity, and the balance due to deforestation and other land-use changes . Evidently, accelerated human activity, primarily led by the development paradigm, of the last two centuries and specifically in the last fifty years, has been the primary cause for GHG emission. The energy intensity of development, the carbon intensity of energy, the total population and land use changes, all led by human activity, together determine GHG accumulation in the environment . Land use changes are, in turn, affected by demands on resources placed by a growing population and the energy intensity of development. More people mean greater GHG emission, all other factors remaining the same. Thereby, it stands to reason that if population numbers stabilise, attempts to mitigate GHG emissions would be more successful.
The figure above shows that developing countries have higher rates of population growth and fertility levels than developed nations. Of the ten countries expected to face the largest increase in population from 2010 to 2050 (aggregating 1.4 billion out of the total anticipated increase of 2.5 billion), nine are developing nations . Of these two are in South Asia and six in Africa – the lesser developed amongst the developing nations. The imperative to reduce environmental degradation through GHG emission has to factor in immediate measures to stabilise population growth in developing nations.
The pursuit of equitable growth leading to the elimination of poverty may thus be the best instrument to stabilise the absolute number of people on our planet, which would directly assist in environmental stabilisation.
This empirical argument finds basis in the 2014-Environmental Performance Index Report . The 2014 EPI ranks 178 countries over twenty indicators reflecting national level environmental data across nine categories covering environmental ecosystem vitality and environmental parameters affecting public health. The results show that wealth correlates positively with environment related outcomes though at every level of development, some countries do better than others. The countries with the poorest EPI scores fall in Sub-Saharan Africa, the least developed region globally.
Besides population, the other variable affecting environmental degradation is the nature of development, specifically the sources of energy used. Reducing the carbon intensity of energy requires recourse to more environment friendly energy sources. Data published by IPCC on the lifecycle of GHG emissions from broad sources of electricity generation technologies in g CO2 equivalent per kWh  correlated with levelised cost of generation  indicate that the cheapest sources– natural gas and coal¬– are the highest pollutants.
As developing countries embark on the path of development, constraints on availability of finances dictate the adoption of the cheapest energy sources, though they may be polluting. Economic growth is then accompanied by environmental degradation.
The Pollution Haven hypothesis argues that developing countries with poor environmental regulations and lax enforcement become the haven for the locum of pollution through shift of production to these nations . Development models built around extraction of abundant natural resources in poor countries lead to exploitation of the people without commensurate gains in fighting poverty or sustainable growth . Such models of development leave the nation dirtier without being richer. However, the Environmental Kuznets Curve (EKC) framework postulates an inverted U-shaped relationship between environmental pollution and per capita income .
It argues that the inverted U-relationship is a conjunction of three factors – the scale effect which suggests an increase in pollution when an economy grows, the composition effect referring to structural changes in the economy consequent to growth over years and its long-term environmental effects and the technology effect which posits a reduction in emission due to technological advances arising from long-term growth. The EKC framework’s assumption is that wealthier nations become more willing to channel resources for technological innovation to promote a cleaner environment. The internalisation of environmental externalities into the production process, through taxation or higher standards, resulting in higher costs becomes acceptable in dominant public discourse.
Over the past thirty years, China has brought more people out of poverty in the shortest time as compared to any other nation. The energy source fuelling China’s rapid growth drive was cheap, but highly polluting, coal. In 2012, China’s share in the world economy on PPP basis was 15per cent , its share in the world population was 20per cent , but its share in world CO2 emissions was 29per cent . However in the same year, China’s CO2 emissions increased at the slowest rate in over a decade. The world-wide recession and a general slow-down in the Chinese economy had a role to play in the reduction in CO2 emissions.
Nevertheless, an increase of 23per cent in hydropower generation as compared to a small increase of 0.6 per cent in thermal power generation, and relatively smaller increases of 4.7 per cent in steel production and 5.3 per cent increase in cement production contributed cumulatively to the reduced rate of growth in CO2 emissions. The energy intensity per unit of GDP declined by 3.6 per cent, twice as fast as in 2011 while the GDP grew by 7.8per cent, about 3per cent lower than the decadal average growth . It is public anger over the polluted urban environment fostered by three decades of breath-taking economic progress that has propelled China to respond through energy efficiency improvements in recent years. Drawing conclusions on trends from one year’s results may not be appropriate; one would have to wait for data of subsequent years to conclude if China has crossed the hump of the Environmental Kuznets curve.
Emerging economies as well as developed nations have shown a reduction in CO2 emissions from fossil fuels and cement production per unit of GDP over 1990-2012 demonstrating a change in the carbon intensity of energy through adoption of alternate sources of energy, investments in transport infrastructure and technological innovations in use of conventional sources. Renewable energy sources– hydropower, nuclear, wind, solar, geothermal and bio fuels¬– have increased to supply 19per cent of the global final energy consumption . In 2012, half of the electricity generating capacity added globally came from renewable energy sources.
Reduction in energy intensity, however, has to be structured around local economy dynamics. Brazil, for example, aggressively pursued a policy of promoting bio fuels by blending fossil fuel, its large sugar industry producing ethanol for blending. Countries where the market demand-supply position for sugar was balanced, like India, dithered on the blending mandate to protect the market equilibrium in sugar prices. When the United States of America and some other developed countries pushed for blending mandates, corn prices rose to historic levels in 2007-08. Developing countries are more likely to sacrifice sustainability initiatives when confronted with side-effects in the form of higher food prices that affect the poor.
The popular argument that urbanisation and consumption patterns of middle and high income groups cause environmental degradation needs closer scrutiny. The richest quintile of the world’s population accounts for 83per cent of total private consumption expenditures. By contrast, the poorest quintile accounts for 1per cent . The low resource consumption of the poor individually does not place a burden on the environment. As the poor move up the income ladder, the resource intensity of their footprint increases, causing greater environmental impact.
Several studies show that economic development that bypasses the poor, results in greater deprivation. The quest for environmental sustainability is then likely to be advanced by the further impoverishment of the poor. The interaction between the environment and the poor has a more complex relationship than that between the environment and the poverty of nations.
Advancement of the human condition is a key element of development. Poverty cannot be measured solely by income or lack of it; deprivation of the essential determinants of living determines poverty . . Ignoring poverty and concentrating on protection of the environment is unlikely to succeed as long as accessible opportunities exist for the poor to move up the income ladder.
To promote the green cause, the pursuit of growth is in itself insufficient; a necessary condition is the presence of good governance to respond to people’s desires. This possibly explains intra-regional differences in growth and environmental focus – why the Dominican Republic is greener and economically better off than Haiti with similar resource endowments or why Botswana does better than Angola . Environmental costs are internalised into the production process when there is public understanding of the long-term consequences of the accumulation of these costs. Acceptance of a taxation system and regulatory processes that promote the environment’s sustainability follow. Environmental standards are then monitored and uniformly enforced through robust institutional structures to prevent perverse incentives.
Scientific innovation for greener technologies requires devotion of resources – both public and private– to what people seek. More importantly, accountable governments are, more often than not, likely to promote equitable development through public policy interventions and investments. The thirst for technological innovation arises from a felt need and the capacity of the economy to invest in research and development. Both factors have their roots in economic growth.
Prosperity makes cleaner and greener surroundings valued by citizens. Financial resources are made available by governments and citizens to promote development of new technologies. Common evidence shows that as growth consolidates, “green capital”, the accumulation of the idea of environmental value, gathers strength.
Governments must be able to hear and respond to public clamour. They must have the strength in their institutions to effectively drive change. What has helped create the clamour in recent times are high oil prices, the world’s dependence on fast-depleting fossil fuels, the information explosion through the internet and the growing realisation that reducing fossil fuel energy intensity is both good economics and green politics.
The author is a student of Class XII in Delhi Public School, R.K Puram