Economic growth and the environment

Dennis Anderson

No 979, Policy Research Working Paper Series from The World Bank

Abstract: The author argues that efficient solutions to environmental problems are a means of improving a country's economic growth prospects and that policies to improve economic growth prospects will help environmental problems be addressed. Among other points he makes: The costs of avoiding pollution or environmental damage are often less than the costs of incurring it. The costs of incurring such damage take many forms, including the impact of air and water pollution on health and amenities, the loss of time and output caused by urban congestion, the health implications of hazardous wastes and poor waste treatment and disposal practices, and the decline in productivity of soils and forests that results from unsustainable agricultural and forestry practices. With exceptions, environmental problems cannot be addressed by market forces alone. In some instances, the costs of environmental damage may be borne wholly or partly by agents other than those responsible for the damage. Some sort of tax, law, regulation, or framework for negotiation will be required to bring about a convergence of private and social interests in reducing damagein an economically desirable way. When policies are not in place, economic growth may intensify environmental damage and eventually be retarded by it. By contrast, when the right policies are in place, not only may such damage (and its impact on growth) be reduced to low levels, but economic growth may help to achieve environmental improvements - through, for example, raising the finance for water and sanitation facilities or for the maintenance of forest and wildlife reserves. The most effective way to reduce environmental damage from economic activities and their expansion is to address it directly - to delink it from economic activities, so to speak - by introducing environmentally superior technologies and practices. Reducing population growth would help relieve environmental pressures in urban and rural areas, but these effects would be small in relation to two other measures: reducing waste and inefficiency and introducing environmentally superior technologies and practices. For the most part, environmental policies succeed because of certain behavioral responses they may cause - in particular, a range of substitutions and technological and managerial changes that give rise to environmentally inoffensive practices. The evidence that pollution has a disproportionately higher impact on low-income groups is overwhelming.

Keywords: Environmental Economics&Policies; Water and Industry; Town Water Supply and Sanitation; TF030632-DANISH CTF - FY05 (DAC PART COUNTRIES GNP PER CAPITA BELOW USD 2; 500/AL; Sanitation and Sewerage (search for similar items in EconPapers)
Date: 1992-09-30
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Citations: View citations in EconPapers (10)

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