Trade-Off Between Economic Development and the Environment


Economic activities across the world occur following people’s pursuit for environmental development that would yield better living standards and higher quality of life. In the realm of such economic activities and the natural environment, lies the interplay of many interactions due to resources drawn from the same environment. In the linkages between economic and environmental systems, there exist various trade-offs and synergies that result from any model formed by these linkages. Nonetheless, certain important aspects of the environment such as environmental quality and sustainability vis a vis economic development need urgent redress in all objectives of development, from local to international levels. This research uses a simple model of the input-output model to assess the trade-offs occurring in the relationship between economic activities and environmental quality. This research work aims at showing some possible means of reconciling the trade-off which is inherent in the association between economic development and the natural environment by identifying multiple functions of the environment in the various human activities.

Some of the environmental functions identified at this level include the provision of services of ubiquitous value and tangible materials used as inputs in a variety of processes characterizing the process of further production of capital goods. Based on the insights of Pearson (2000), the research also focuses on future trends in economic growth as measured by indicators such as GDP/GNP per capita against environmental quality. In summary, the study examines the linkages between primary and secondary economic activities and natural environmental resources. In the end, we attempt to outline a simple understanding of sustainable economic developments based on the discussions that result from our findings.

Linkages and trade-offs

Economists generally consider production as a function of labor and capital. Similarly, the linear association of utility directly relates to the consumption of goods. Since this model does not apply in this form in practice, the trade-offs resulting from resource use may go into reuse, recycling, recovery and pollution control. As the population of the world increases, societies across the world continue to harvest more resources to meet their needs. Developing and developed nations alike continue to harvest primary materials from the environment to put up infrastructure and extract other resources to meet their food needs.

Research continues to show that many times; economic models tend to ignore non-quantifiable aspects of the environment such as beautiful scenery, flowing rivers, oceans the lawns formed by extensive grass in parks, and solar radiation. However, this does not imply that they are of any less value. Economics also often fails to account for renewable resources used with little attention to their natural replenishing ability (Scott, p. 17).

Economics roots of environmental degradation emanate from economic activities aimed at wealth creation through trade. In this respect, we consider the effects of primary production and processing of raw materials on environmental quality and quantity. Generally, economic activities create negative effects in the environment before the resulting area undergoes reformation to its original states. Environment-economics nexus creates variables useful in explaining environmental degradation.

Economies across the world developed by extracting natural resources from their immediate environment. This occurs in all sectors of the economy thus fishing from water resources, timber from forests, building stones, and metals from quarries. Since the resources cannot be used in their natural form, they have to undergo processing in factories and other processing plants. While every country aims at yielding a high GDP per capita, they generally encourage communities to spend more of their manpower on capital resources and production. They also perform these tasks to meet the consumption demands of the country’s citizens (Rompella, p. 48).

In developing nations and developed countries alike, the first stages of production involve the extraction of resources from the environment. This usually causes dereliction that poses serious risks to environmental quality and quantity. Mining, in particular, is associated with environmental degradation as vast land is subjected to drilling and blasting causing dust and noise that degrades the environment. Where building stones are used in the construction of huge commercial blocks, the developments take place in environments that harbor other natural features of great importance. For instance, the creation of commercial residencies on beaches usually interferes with the normal physiological functioning of the surrounding aquatic system. Similarly, constructions of industries aimed at producing goods and creating overhead services in the economy lead waste into flowing channels that deposits them in the sea.

In situations like this, the concern of businesses is to limit or avoid direct depositing of waste on land. However, world economies trap themselves in compromising situations where the marine environment suffers pollution that leads to degradation of the earth’s environment as the general air circulation remains relatively the same. A particular feature linking economic development to environmental degradation emerges from the reality of pollution to both local and international environments. This concept borrows heavily from the world’s growing population that subjects economies to intense demand for energy and essential social needs. From the basic model of production and utility functions, consumption of goods and services from the primary basis for using environmental resources to meet these growing demands (Higgitt, p. 16).

This has led to the creation of huge energy plants in different countries. Fortunately, these plants use coal, natural gas, and fuel from landmines to generate power used in homes and commercial settings. As the power drives the various machines designed to easily work and multiply returns on capital, the plants produce emissions in form of smoke, dust particles, and gases that go into the atmosphere as waste. Research shows that economies produce energy and process raw materials in a proportionate volume to the size of their population. In sharp contrast to this phenomenon is the finding that some of the world’s highest producers of economic goods stemming from the utilization of environmental resources are also the highest emitters of these wastes. Thus, over time, non-renewable resources decline to minimal scarcity as gases with the potential of altering the general state of the atmosphere such as carbon dioxide and oxides of sulfur degrades the natural composition of the stratospheric ozone. Similarly, effluent emitted from facilities designed to support economic activities, such as pharmaceutical industries, food processing industries, and a variety of other chemical plants channel to the external environment cause environmental degradation (Krutill, p. 98).

Balancing the effects of environmental degradation and economic activities requires adequate environmental accounting that incorporates principles of environmental conservation in the models of economic development. These models appear abstract in their approaches to accounting for depleting non-renewable economic resources. Research shows that declining resources would attract high prices and cost more mining to occur (Decker, James, and Robert M. Anderson, p. 2).

From the analysis of environmental accounting and cost-benefit analysis, balancing environmental quality and economic activities proves challenging in many countries. However, international economic models continue to make tremendous efforts towards improving environmental quality. According to Pearson (2000), the models adopted from international conventions for clean atmosphere, constitute policies and laws that augment models used in cost-benefit analysis. From theories, we learn that clean environments involve economic activities based on clean energy sources, production, and consumption patterns that consider the effects of the activities on both local and regional environments (Stowell, p. 246).

Thus, a clean environment according to (Barnes, p. 181) refers to conditions of production and consumption in an economic environment interplay that focuses on little emission of wastes. Even if wastes emissions occur in fewer quantities, environmentalists’ observations show that the specific wastes create minimal alterations to the states of the environment. When economic activities use energy sources from renewable sources and communities across the world adopt methods that aim at improving the lifespan of a resource, and then a cleaner environment results from recycling of wastes and reuse of material made from non-biodegradable sources.

Clean environment from the perspective of cost-benefit analysis models includes resource use and waste emissions that take into account conservation of the natural environment. For instance, (Parson 337) indicated that all countries with less than 10% forest cover on their total landmass risk-averse effects of erratic weather patterns following recent dramatic changes in climate. Since economic activities with positive effects depend on the natural environment. International functions trademarked by the sale of agricultural products and services of capital goods used in the production process critically demand careful use of all resources that form the factors of production. Therefore, a clean environment means the controlled use of artificial productivity enhancers such as fertilizers to avoid soil depletion, the use of hydropower and solar panels as well as wind energy among other sources of noncommercial energy. This is contrary to the predominantly used coal and natural oil that has continued to pose serious threats to international economics and the environment (Stern, p. 75).

The government’s environmental policy toolkit clearly separates economic policy from environmental policy. This occurred following considerable achievements of developed nations and the developing world with little attention to the actual long-term values of natural resources. Thus, the policy creation and ratification followed the long and careful study of depleting non-renewable resources amidst the capitalists’ urge for immediate high returns from environmental resource exploitation. The environmental policy toolkit seeks to exert constraints on the levels of resource extraction against associated economic activities. Having realized the long-term benefits of environmental conservation, the government included policies from international agreements on the environment suitable for guiding the use of resources in the country. Without enacting authorities such as Environmental Protection Agency and state agencies to enact these laws, their formulation would remain largely incomplete. Thus, the government developed a strategy to oversee the use of our resources while still maintaining economic activity that yields the production of commodities for the economy (Nordhaus, p. 56).

Besides the forces of demand and supply that drive the world market, many economies realize the growing concern to generate more material from the environment to meet the international demand. This has led to the overuse of artificial materials that enhance the productivity of resources from the environment albeit little attention to their effects. As countries acquire market share in global trade, it places upon them a great challenge to keep abreast with intense completion from rival nations presenting almost similar products. Hence, trade from raw materials in developing countries and finished goods from the developed world impacts environmentalists’ views of creating sustainable conditions for harvesting the raw materials from the environment and mitigating wastes resulting from their processing activities (Global climate change, p.145).

International trade as controlled by large international and multinational companies remains a major threat to the environment as they generate large volumes of wastes almost s in every country. This waste ranges from solid packets of the products that pile as an eyesore in some cities and create awful stench when the investors have reaped their rewards, to clouds of smoke and gaseous emissions emanating from factories that process these products for franchises in different parts of the world. Through international linkages of commodities transported across the continents, various economic systems promote activities that necessitate protection policy for the environment because it forms the primary basis of human functions (Johansen, p. 29).

Curbing cross-border pollution caused by TNCs is a major challenge to international environmental accounting as economies have developed the tendency to align their requirements with these companies. Through their franchises, TNCs have dominated international trade by creating a ready market for their products through a massive advertisement that heavily influences consumption habits across the world. However, these countries remain adamant about creating significant awareness of environmental quality through different media. Coincidentally, massive production attributed to TNCs in different parts of the world allows for the compromising stance of environmental policy implementers to affect them. Since they also help governments generate their revenue through taxes, TNCs conveniently cause pollution in a way that demands the direct intervention of state and federal governments to interject in mitigating their wastes (Gentry, Donald and Laura, 1010).

Clearly, international economics aims at developing strategies for the proper management of international common property resources. Since the dynamic state of the atmosphere represents a unitary space shared by all villages on the planet, it has gained tremendous ground right from the agreements that sought to promote the advancement of transboundary water and forests resources. From the lowest level possible to the highest and centralized level of management, common property resources comprising mainly sea and the atmospheric space frequently experience pollution and at times form the arena of conflict because nations fight for its ownership.

However, with treaties and conventions, signed by concerned nations, countries have managed to address the problems of pollution and resources utilization with shared benefits to all countries involved. Drawing from the US-Canadian watershed agreement, and International marine policies, it emerges that management of international Common Property Resources excels through collective effort rather than an individual decree by some superior central authority. To this end, the UN through various bodies such as UNEP and HABITAT among other agencies continues to strike well-balanced approaches for resources utilization, informal blueprints such as bilateral and multilateral business and pollution control.

Such agreements on transnational pollution aim at addressing environmental issues such as Global Warming and Climate Change, transnational companies include large institutions involved in the mass production of essential commodities like foodstuffs, energy and pharmaceuticals. The production processes of the giant internationals found in this category are usually accompanied by huge waste emissions in sum, leading to alteration of local and global air composition. UNEP (2006) shows that global warming results from the concentration of Chlorine, Fluorine, and Carbon Compounds in the atmosphere. When these gases that also comprise sulfur and nitrogen oxides rise into the stratosphere, they trap incoming solar radiation in the stratosphere thus causing global warming.

Recent studies (Musila, p. 68) cast a bad picture of life on earth following the expected devastating effects of climate change and global warming. While the recent rapid changes in climates attribute to human activities on all continents, global warming occurs as dramatic effects of economic activities on the wide marine and terrestrial environments. Independent of any country’s level of economic development, every community has a share of the blame resulting from the spoils of the environment-economic nexus that is global warming and climate change. From the developing countries that mainly present agricultural products to the world market, to highly industrialized nations that sell automotive technology devices, climate change, and global warming have significantly diluted the economic flow of the world market. To a great extent, the volatility of market prices in international trade and recessionary tendencies reflect climate change as an important factor in countries’ ability to cope with the growing changes (Krutill, p. 52).

From the views of (Gardner, p. 47) economists and environmental enthusiasts continue to find fewer options to settle the debate of priorities in satisfying human needs and maintaining a quality environment in its ideal form. From each group’s school of thought, at least some common deportment occurs that acts as the genesis of solving the problem. For example, both scholars admit a common future of everyone in the events of deteriorating environmental conditions as people countries seek vanity in opulence from the exploitation of environmental resources.

Nonetheless, following the principles of sustainable development that advocate for harvesting only a proportionate amount of environmental resources to meet our needs, considering the demands of the next generation of humans, economies have the potential of developing with the knowledge of the environment around us. Consequently, nations extremely hit by natural catastrophes in the rumors and realities of environmental degradations as a precursor to climate change, have significantly demanded integration of non-quantified values of the environment in their economic models (Bowden, p. 64).

According to Simon Kuznets integrating environmental values into a country’s economy critical helps to offset the tradeoffs between economic development and natural environment quality. This often causes economic inequality to trade soon after the depletion of natural resources supporting economic activities. Therefore, sustainable development may take various perspectives depending on the country and its indicators of development. For example, rapidly industrializing nations usually conserve and preserve some areas in their territory at the expense of mass production. Similarly, parks and reserves in many parts of the world are part of major initiatives by countries, acting in one accord to enhance economic development through environmental sustainability.

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