Slide 1Slide 2Environment and Third World CountriesSlide 4Slide 5Slide 6Slide 7Sustainable DevelopmentModels of the environmentCommon Property ResourcesSlide 11Environmental PoliciesChapter 10Environment and DevelopmentEnvironmental Challenges•Deforestation•Global warming, climate change•Depletion of national resource•Air pollution•Clean water shortage•Soil qualityUN Millennium Goal to “ensure environmental sustainability”Environment and Third World Countries•Livelihood of more than half of the economically active population in developing countries depends on environment through-Agriculture-Forest products -Animal husbandry-Fishery etc.•Will affect the poorest 20% of the poorest in urban and rural areas• Population pressures resulting in deforestation, urbanization and resultant pressures on infrastructure and health provision and education•Cultivation of marginal land and falling productivity of land resulting in lower income•Health consequences of environmental problems are more severe for the poor as they do not have resources to spend on insurance or protect themselves against – poor sewage system, air pollution or contaminated water•Third world countries first priority is to reduce poverty, as the incidence of poverty is very high on these countriesEnvironment and Third World Countries•What would be the shape of Environmental Kuznets Curve? Will it be different for advanced countries and third world countries?(Assignment: write a paragraph here. Read pg.487 and draw an environmental Kuznets Curve. Label your axis properly.)Is growth good for third world countries from environment point of view? Environment and Third World Countries•400 to 700 million people – mostly women and children in poverty – are adversely affected by indoor pollution due to the dependence on biomass fuels – wood, straw, manure etc.- 4 million childhood deaths due to dangerous fumes & smoke (from chronic respiratory illness)•Lack of clean water and sanitary conditions resulting in water-borne disease – once again, poorest people are the hardest hit group of the population(Assignment: Read pg. 485-496 and collect statistic supporting the statements made in these slides.)Environment and Third World Countries•Woman (and young children) and their health is affected by deforestation as they have to walk several miles to fetch water or wood.Environment and Third World CountriesSustainable Development•Is it Growth vs. Environment? Is there a trade-off between the two goals?•Sustainable development is defined as follows“meeting the needs of the present generation without compromising the needs of the future generations”•Overall stock of capital includes-Physical manufactured capital such as machines, factory, roads-Human capital – knowledge, skills-Environmental capital – forests, soil, waterA sustainable development path requires a balanced approach to growth. However, there are challenges due to substitution and complementarities between physical and environmental capital.Models of the environment•Privately owned resources•Market Resource Allocationab0PDMCQ*Marginal benefit and costUnits of resourceTotal net benefit is maximized when Marginal benefit = Marginal cost of extracting one more unit of the resourceCommon Property Resources•There are externalities involved in the ownership and use of natural resources – tragedy of the commons•Environmental goods – a different market for pure air, safe water•Property rights issuesCommon Property ResourcesIn case of private ownership MPL = WIn case of commonly owned resources APL = W and MP of the worker is below the wage rate and social welfare must fall.0L*LCDAP*CWWMPLAPLReturn to laborNumbers of laborersEnvironmental Policies•Pro-poor policies require equitable distribution of natural assets (land etc.) and proper property rights policies•Privatization, foreign investment and regulations, must be adjusted to make the system work for the poor.•Proper taxation policies to capture externalities•Better pricing policies•More open trade policies of developed countries•Development assistance(Read pg. 512-516 and case study: Philippines pg.