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1 Development and Environment

This Report explores the two-way relationship between development and the environment. It describes
how environmental problems can and do undermine the goals of development.
There are two ways in which this can happen. First, environmental quality, if the benefits from rising
incomes are offset by the costs imposed on health and the quality of life by pollution, this cannot be
called development.

Second, environmental damage can undermine future productivity. Soils that, are degraded, aquifers
that are depleted, and ecosystems that are destroyed in the name of raising incomes today can
jeopardize the prospects for earning income tomorrow.

Environmental protection is one area in which government must maintain a central role. Private markets
provide little or no incentive for curbing pollution. Strong environmental policies complement and
reinforce development.

It is often the poorest who suffer most from the consequences of pollution and environmental
degradation. Unlike the rich, the poor cannot afford to protect themselves, from contaminated water;
in cities they are more likely to spend much of their time on the streets, breathing polluted air;

Table 1 outlines the potential consequences for health and productivity of different forms of
environmental mismanagement.
Clean Water and Sanitation

1 billion people in developing countries do not have access to clean water and the 1.7 billion who lack
access to sanitation. They contribute majorly to 900 million cases of diarrheal diseases every year, which
cause the deaths of more than 3 million children; 2 million of these deaths could be prevented if
adequate sanitation and clean water were available.

The economic costs of inadequate provision are also high. Many women in Africa spend more than two
hours a day fetching water.

Clean Air

Emissions from industry and transport and from domestic energy consumption impose serious costs for
health and productivity. Three specific problems stand out for their effect on human suffering.

Suspended Particulate Matter

If emissions could be reduced so that the WHO standards were met everywhere, an estimated 300,000
to 700,000 lives could be saved each year.

Lead

High levels of lead, primarily from vehicle emissions, have been identified as the greatest environmental
danger in a number of large cities in the developing countries.

Indoor Air Pollution

Women and children suffer most from this form of pollution, and its effects on health are often
equivalent to those of smoking several packs of cigarettes a day

Soil, Water, and Agricultural Productivity

Soil degradation, in particular, is the cause of stagnating or declining yields in parts of many countries.
Erosion can also damage economic infrastructure, such as dams, down-stream. Even when erosion is
insignificant, soils may suffer from nutrient, physical, and biological depletion.

Greenhouse Warming
The International Panel on Climate Change (IPCC) states that average world temperatures may rise by 3°
Celsius by the end of the years in the next century under their "business as usual" scenario, with a range
of uncertainty of from less than 2° Celsius to more than 5° Celsius.
Economic Growth and the Environment

The earth's "sources" are limited, and so is the absorptive capacity of its "sinks."

Figure 3 illustrates how rising economic activity can cause environmental problems but can also, with
the right policies and institutions, help address them.
Three patterns emerge:

1. Some problems decline as income increases. This is because increasing income provides the resources
for public services such as sanitation and rural electricity.

2. Some problems initially worsen but then improve as incomes rise. Most forms of air and water
pollution fit into this category. However, it occurs only when countries deliberately introduce policies to
ensure that additional resources are devoted to dealing with environmental problems.

3 Some indicators of environmental stress worsen as incomes increase. Emissions of carbon and of
nitrogen oxides and municipal wastes are current examples.

The key is, once again, policy. In most countries and firms have few incentives to cut back on wastes and
emissions.

Policies for Development and the Environment

Two broad sets of policies are needed to attack the underlying causes of environmental damage. Both
are necessary. Neither will be sufficient on its

1. Building on the Positive Links

Policies that seek to harness the positive links between development and the environment by correcting
or preventing policy failures, improving access to resources and technology, and promoting equitable
income growth.

 Removing distortions

Logging fees in a sample of five African countries ranged from 1 to 33 percent of the costs of replanting.
Irrigation charges in most Asian countries covered less than 20 percent of the costs of supplying the
water. And pesticide subsidies in a sample of seven countries in Latin America, Africa, and Asia ranged
from 19 to 83 percent of costs.

 Clarifying Property Rights.

When people have open access to forests, pastureland, or fishing grounds, they tend to overuse them.
Providing land titles to farmers in Thailand has helped to reduce damage to forests. The assignment of
property titles to slum dwellers in Bandung, Indonesia, has tripled household investment in sanitation
facilities. Providing security of tenure to hill farmers in Kenya has reduced soil erosion.

2. Targeted Policies to Change Behavior

Policies targeted at specific environmental problems: regulations and incentives that are required to
force the recognition of environmental values in decision making.
Policies designed to change behavior are of two broad types: those based on incentives (*market-based"
policies), which tax or charge polluters according to the amount of damage they do, and those based on
quantitative restrictions ("command-and-control" policies), which provide no such flexibility. Economic
incentives have been used for years in indirect, or blunt, forms such as fuel and vehicle taxes (most
OECD countries), congestion charges (Singapore), and surcharges on potentially damaging inputs such as
pesticides and plastics (Denmark and Sweden).

The appropriate choice among instruments will depend on circumstances. For many developing
countries blunt instruments that avoid the need for detailed monitoring will be attractive.

Several lessons can be drawn from recent experience:

a. Standards should be realistic and enforceable. Better to have fewer and more realistic standards that
are truly implemented.

b. Controls must be consistent with the overall policy framework. Many well-intentioned policies have
been thwarted by other policies that pull in the opposite direction.
Brazil's concern about overfishing off the Bahia coast was undermined in the early 1980s by government
subsidies for new nylon nets.

c. A combination of policies will often be required. Because environmental damage is frequently caused
by different actors and for different reasons, a single policy change may not be enough.

Removing Impediments to Action

 Counteracting Political Pressures-

Stopping environmental damage often involves taking rights away from people who may be politically
powerful. Industrialists, farmers, loggers, and fishermen fiercely defend their rights to pollute or to
exploit sources.

A second reason for disappointing performance has to do with the inability of governments to regulate
themselves.

 Improving Information

Ignorance is a serious impediment to finding solutions. Governments often make decisions in the
absence of even rudimentary information.

 Involving Local People

A participatory process is essential. Local participation also yields high economic and environmental
returns in implementing programs of afforestation, soil management, park protection, water
management, and sanitation, drainage, and flood control.