Environmental degradation and poverty

13/12/2004

I received comments about this site from an old university friend who works in Latin America for a major environmentalist organisation. He had some compliments and many criticisms, food the latter including that ‘there is only a superficial varnish of conservation biology and you don’t touch political issues like overconsumption and rural poverty’. He is somewhat right, cystitis because — mostly due to lack of time — I have not treated with detail all those issues. I will start with poverty.

It is possible to claim that poverty is closely linked to many environmental problems. If one lives in poverty environmental problems tend not to be at the top in one’s list of worries. This probably is because this would imply long term planning, and one is in survival mode. A typical example of poverty and its interaction with the environment is that large part of natural forests deforestation — particularly in the Third World — it is due to harvesting for firewood by poor people. Another one is that reproduction rate (and therefore larger populations that exert more pressure on the environment) is higher in poorer societies.

Richer societies tend to develop a preoccupation for the natural environment — and can dedicate resources to improve it. An increase of living standards is often accompanied by a reduction of birth rate. Graphical representation between income and a series of ‘quality of life’ indicators can be found at Gapminder’s site. Environmental conditions and quality of life tend to improve when societies become richer. Then the questions are Why are some countries poor? and How do we get people out of poverty?

In The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (you can read the introduction here), Hernando de Soto argues that developing countries have failed because most people have dead capital.

Even the poorest people save… but they hold these resources in defective forms: houses built on land whose ownership rights are not adequately recorded, unincorporated businesses with undefined liability, industries located where financiers and investors cannot see them. Because the rights to these possessions are not adequately documented, these assets cannot readily be turned into capital, cannot be traded outside of narrow local circles where people know and trust each other, cannot be used as collateral for a loan, and cannot be used as a share against an investment.

My old friend’s comments and the previous quote reminded me of some lectures on ‘rural development’ at university, where with another friend we questioned the approach proposed by the lecturer. ‘Weren’t we just perpetuating a subsistence level but not increasing living standards?’ ‘Wasn’t the lack of clear property rights (going back to old Spanish institutions like mayorazgo) one of the main causes of environmental degradation in Chile’s IV region?’

Rather than continuous handouts, poor countries need help on implementing reforms that transform all the wealth in their informal economies into capital. Doing this will certainly contribute to improve environmental conditions in the Third World. Going back to my university days: developing a drought-tolerant tree species for firewood is a nice thing to do, but will do very little on improving living standards in a permanent way, because it doesn’t tackle the roots of the problem.

Filed in economics, environment

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