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Chapter 11 Slide 2Copyright © 2003 Pearson Education, Inc.
The Environment and Development
Chapter 11
Chapter 11 Slide 3Copyright © 2003 Pearson Education, Inc.
Economics and the Environment
Environmental issues affect, and are affected by, economic development
Poverty and ignorance may lead to non-sustainable use of environmental resources
Chapter 11 Slide 4Copyright © 2003 Pearson Education, Inc.
Environment and Development: The Basic Issues
Sustainable development and environmental accounting
Chapter 11 Slide 5Copyright © 2003 Pearson Education, Inc.
Environment and Development: The Basic Issues
nm DDGNPNNP *
Sustainable net national product is:
WhereGNP is Gross National ProductDm is the depreciation of manufactured
capital assetsDn is the depreciation of environmental
capital
Chapter 11 Slide 6Copyright © 2003 Pearson Education, Inc.
Environment and Development: The Basic Issues
ARDDGNPNNP nm *Alternatively, sustainable net national product is:
WhereGNP is Gross National ProductDm is the depreciation of manufactured
capital assetsDn is the depreciation of environmental
capitalR is expenditure needed to restore
environmental capitalA is expenditure required to avert
destruction of environmental capital
Chapter 11 Slide 7Copyright © 2003 Pearson Education, Inc.
Environment and Development: The Basic Issues
Sustainable development and environmental accounting
Population, resources, and the environment
Poverty and the environment Growth versus the environment Rural development and the environment
Chapter 11 Slide 8Copyright © 2003 Pearson Education, Inc.
Environment and Development: The Basic Issues, cont’d
Urban development and the environment
The global environment
Chapter 11 Slide 9Copyright © 2003 Pearson Education, Inc.
The Scope of Environmental Degradation: A Brief Statistical Review Environmental problems have
consequences both for health and productivity
Chapter 11 Slide 12Copyright © 2003 Pearson Education, Inc.
Rural Development and the Environment: A Tale of Two Villages
Representative African village Representative South American village
Chapter 11 Slide 13Copyright © 2003 Pearson Education, Inc.
Traditional Economic Models of the Environment Privately owned resources
Chapter 11 Slide 14Copyright © 2003 Pearson Education, Inc.
Figure 11.1 Static Efficiency in Resource Allocation
Chapter 11 Slide 15Copyright © 2003 Pearson Education, Inc.
Figure 11.2 Optimal Resource Allocation over Time
Chapter 11 Slide 16Copyright © 2003 Pearson Education, Inc.
Traditional Economic Models of the Environment Privately owned resources Common property resources
Chapter 11 Slide 17Copyright © 2003 Pearson Education, Inc.
Figure 11.3 Common Property Resources and Misallocation
Chapter 11 Slide 18Copyright © 2003 Pearson Education, Inc.
Traditional Economic Models of the Environment Privately owned resources Common property resources Public goods and bads: regional
environmental degradation and the free-rider problem
Limitations of the public goods framework
Chapter 11 Slide 19Copyright © 2003 Pearson Education, Inc.
Figure 11.4 Public Goods, Normal Goods, and Free-Rider Problem
Chapter 11 Slide 20Copyright © 2003 Pearson Education, Inc.
Urban Development and the Environment The ecology of urban slums Industrialization and urban air pollution
Chapter 11 Slide 21Copyright © 2003 Pearson Education, Inc.
Figure 11.5 Pollution Externalities: Private versus Social Costs and the Role of Taxation
Chapter 11 Slide 22Copyright © 2003 Pearson Education, Inc.
Figure 11.6 Increasing Pollution Externalities with Economic Growth
Chapter 11 Slide 23Copyright © 2003 Pearson Education, Inc.
Urban Development and the Environment The ecology of urban slums Industrialization and urban air pollution Problems of congestion and the
availability of clean water and sanitation
Chapter 11 Slide 24Copyright © 2003 Pearson Education, Inc.
The Need for Policy Reform
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
Chapter 11 Slide 25Copyright © 2003 Pearson Education, Inc.
The Global Environment: Rain Forest Destruction and Greenhouse Gases
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
Chapter 11 Slide 26Copyright © 2003 Pearson Education, Inc.
Policy Options in Developing and Developed Countries 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
Chapter 11 Slide 27Copyright © 2003 Pearson Education, Inc.
Policy Options in Developing and Developed Countries, cont’d How developed countries can help LDCs
– trade policies– debt relief– development assistance
What developed countries can do– emissions controls– R&D– import restrictions
Chapter 11 Slide 28Copyright © 2003 Pearson Education, Inc.
Concepts for Review
Absorptive capacity Biomass fuels Clean technologies Common property
resource Consumer surplus Debt-for-nature swap Deforestation
Desertification Environmental
accounting Environmental capital Externality Free-rider problem Global warming Greenhouse gases
Chapter 11 Slide 29Copyright © 2003 Pearson Education, Inc.
Concepts for Review, cont’d Internalization Marginal cost Marginal net benefit Ozone depletion Pollution tax Present value Private costs Producer surplus Property rights
Public bad Public good Scarcity rent Social costs Soil erosion Sustainable
development Sustainable national
income Total net benefit
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