Development, Economic growth and implication on Environment IAS Target

Relationship Between Environment and Economic Growth!

22 Feb 2020

Category : Economical Issue

Topic: Relationship Between Environment and Economic Growth!

In recent years, there has been growing apprehension about pollution of environment, climate change and degradation as they affect future development of both developing and developed countries. In year 1992, representatives of more than 150 countries met at Rio, in Brazil to discourse the environmental issues and their effects for future development of the globe. And this meeting at Rio is called the United Nations Conference on Environment and Development (UNCED) or “Earth Summit”.

This conference or Earth Summit clearly explained:

  • The connections between natural development and natural environment
  • Put forth the concept of sustainable development
  • Conference facilitated the cooperation between several countries to diminish environmental degradation.
  • Earth Summit mainly focused on reduction of emission of greenhouse gasses (GHG) like carbon dioxide in order to shield adverse climate change, that is, global warning in future which if not prevented will have dreadful consequences for the development and welfare of the population, both in developing and developed countries.

The skirmish between economic growth and environment is harsher today than ever before, especially in developing countries like India with fast increasing population and mass poverty. The developing countries are making persistent efforts to balance their need for fast economic growth with the environmental concerns for keeping their natural base together.

In India, as in other under-developing countries, the adoption of development strategy based on:

  • Industrialisation on Large scale,
  • Energy-saving technologies
  • Biochemical-based agricultural technology,
  • Ignoring indigenous development prototype based on locally self-sufficient technologies lead to environmental degradation.

In this article, we will discuss various environmental issues and the severe impact of climate change and discuss the need for sustainable development. The ecological crisis that threatens the country has led to distressful situation.

Our PM urged upon the State governments:- control environment pollution, Fight climate change, and clean rivers.


This statement shows the fact that India’s growth is increasingly taking place at the cost of its environment. This shows that we are not making adequate efforts to ensure sustainable development. To stop the next decline in our natural resources and protect environment from pollution, rigorous regulations and incentives are required. Due to extensive corruption prevailing in the bureaucracy the rules regarding the use of our natural resources and protection of environment have been flouted with freedom. There are number of examples when the Ministry of Environment and Forests has flouted all norms to give clearance to doubtful projects at the cost of environment and communities that mainly depend on it.

Population and Environment

Environmental Kuznets Curve (EKC)


The EKC hypothesis is shown in an inverted U-shaped curve depicting the relationship between per capita income and environmental deterioration.
  • During the initial period of economic development, where per capita income is low, worsening of environmental quality is caused by rapid urbanization and industrialization.
  • Once per capita income goes up, the trade-off between income growth and environmental quality will cease to exist.
  • With mounted financial and technological capabilities, we can retrieve the environmental quality to specified levels.

In reality, the EKC is a myth since an increase in per capita income doesn’t bring desirable levels of implement to the environment. Realistic evidence across countries shows that numerous attempts to increase per capita income cause more environmental deterioration.

The Indian context

  • A 2013 World Bank study reported that in India, a higher level of economic growth maintained in the past charged, 3.75 trillion worth of environmental deteriorate cost.
  • Another study by the World Bank has revealed that India’s air pollution alone led to welfare loss equal to 7.69% of its GDP in 2013.
  • In fact, development policies give more priority to employment and income generation, improvement of pollution control policies is very down.
Ex:
Pollution control measures improved in the dying and bleaching units located in Tiruppur, Tamil Nadu, for above 25 years didn’t achieve any pollution reduction. It has caused irreversible damage to the agriculture and livestock sectors in that zone. In current scenarios, the cost of a commodity covers merely the private cost of production, not the damage cost. This makes the commodity moderately cheaper leading to more output and demand, and more pollution and environmental damage cost as well. Many cities in India have earned dishonor for being the most adulterated in the world.

Poverty and Environment

Both environmental degradation and poverty reduction are unavoidable global issues that have a lot in common, but are often treated separately.

Consider the following points:

  • Human activities are the reason of mass species extinction rates higher than before, presently approaching 1000 times the normal rate;
  • Human-induced climate change is threatening a bleaker future;
  • The United Nations 1998 Human Development Report discloses:
    • Approx.20% of the world’s population in the highest-income countries records 86% of total private consumption expenditures’ the poorest 20% a minuscule 1.3%
    • To highlight this disparity ahead, consider that approximately 1 billion people suffer from hunger and some 2 to 3.5 billion people have a deficiency of minerals and vitamins and some 1.2 billion suffer from obesity
    • Around 1 billion people live on less than a dollar per day, the official measure of poverty. Although, half the world nearly 3 billion people lives on less than two dollars per day.

Issues about environment, economics and politics are inter-linked through the way humans meet their surroundings and with each other.

What is the impact of Poverty on Environment?

For instance, Nepal and Bangladesh have suffered from various environmental issues like increasingly devastating deluge, often believed to be resulting from extensive deforestation. Forests around the world face mounted pressure from agricultural businesses, timber companies, and local populations that use forest resources. Some environmentalists, from rich nations raise concerns about increasing populations putting extreme pressure on the world’s resources as the current major source of environmental issues. This makes a scary situation for third world development and poverty mitigation. Humans are mainly responsible for many problems of the planet today, not all humans have the same impact on the environment.
It is important to consider, for instance, that the consumption of just the world wealthiest fifth of humanity is so much more than the rest of the world, as mentioned at the beginning. Thus, concentrating on population growth in this way may be over-simplistic. However, this does not mean we can be contented about future population burdens. Sustainability is critical for the world’s majority to develop without following the environmentally damaging processes of the world’s currently developed/advanced nations. Further, adding to the complexity is that resource usage is not necessarily particularized. That is, while there perhaps a finite amount of say oil in the ground, we may have not discovered it all, and further, overtime the use of those resources may increase in efficiency or inefficiency. So, this means an earth could sustain a high population (probably within some limits) but it is a blend of things like how we use resources, for what purpose, how many, how the utilization of those resources change over time, etc, that defines whether they are used uselessly or not and whether we will run out of them or not.

Business and Natural Environment

The degradation of natural environment of an economy and its impact on the people and how are business firms concerned with this environmental issue?

The business firms are connected to the natural environment in two manners:

  • First, they need natural resources like land (for establishing industries), energy sources (coal, petroleum, gas etc), wood and water for their production work. In the present state of technological development, the advanced industries do not depend on the natural resources to the extent the industries depended on them in the initial stages of industrial development in 19th century. Nevertheless, they need land to establish industrial plants and consume energy from fossil fuels.
  • In another aspect, production in industries resulting in degradation and pollution of environment. It is now well-known that industries and vehicular traffic in the urban zones is great polluter of water and air which damage the health of the people and represents social cost imposed on the society. Because of these severe effects, the industries which pollute water and air need to be regulated to prevent them from causing heavy damage to the health of the people. Bhopal gas tragedy is the best example of polluting industries in the urban areas which pose risk to the life and health of the people.

In Bhopal thousands of people died and thousand others suffered from severe damage to their health as a result of leakage of gas from pesticides producing industrial unit owned by an MNC (Union Carbide Ltd.) operating in the residential area without proper safeguards.

The Impact of Richer Nations on the Environment

The relationship between the rich and poor, and the impacts on the environment go deep. Economics is all about efficient allocation of resources to meet everyone’s needs. Though, international power politics and ideologies have continued to affect policies in such a way that decision-making remains focused in the hands of a few narrow interests. The consequence is that the world’s resources are distributed to meet a few people’s wants, not everyone’s needs.
Indian activist and scientist, Vandana Shiva, reveals in her work that many people have been pushed into poverty due to politics and economics like concentrated land rights, force from industry to exploit the environment in ways that disrupt diversity and affect local populations, etc. She also reveals that the downtrodden have a lot of knowledge about their environment and are often sustainers and efficient users of it because they can identify their link to it for their survival.
Excessive third world debt burden has meant that it has been difficult to prioritize on sustainable development. Unfair debt, imposed on the third world for decades by the global institutions, the International Monetary Fund (IMF) and World Bank through their severe Structural Adjustment programmes (SAPs). They have opened up economies rapidly, in socially, politically, and environmentally destructive ways, while requiring a prioritization on debt repayment and cut backs on health, education and other significant services. They have increased concentration on generating just a few cash crops and other commodities mainly for export, using environmentally damaging industrial agriculture, which reduces biodiversity, requiring costly inputs like environmentally damaging pesticides and fertilizers to make up for the loss of free services a diverse farm ecosystem would provide.
Mainstream economists and politicians have been criticized for focusing on economic growth in ways that avoids humanity and the environmental costs. May be, one of the harshest ironies is how food and farm products flow from regions of hunger and need, to regions where money and demand is focused. Farm workers, and women especially, are amongst the world most hungry. For years, wealthy countries have been some polluting industries to poor countries, but still generating mainly for rich countries. This has been possible in so far as it is cheaper than to pay for costly environmentally clean technologies that people demand.

How Environment and Poverty are Related Issues?

The above just scratches the surface, but highlights the interconnectedness of humanity, the environment and all other forms of life. Actually, we can’t take the environment for granted. Humanity has a responsibility not only to each other, but to the environment as well, because the environment has long sustained us and can only continue to do so if we protect it. Technological solutions, like more environment friendly technologies, while extremely important, do not address underlying social, political, and economic causes. Just as a doctor highlight the need to prevent illnesses in the first place, and resort to cures when required, so too do we need to understand these deeper problems in a more holistic manner. The interconnectedness requires more identification if environmental degradation, poverty and other global problems start to be addressed.
Focusing on one aspect without others is similar to those blind men looking at just a part of the elephant. A form of environmentalism that avoids humanity as a significant part of the solution, of economic dogma that forgets about our basic needs, and of forms of development that avoid environmental concerns all add up to many problems for the world’s people and fragile ecosystems. Some of these problems are so big we don’t even see them even when we think our eyes are open.