Page 49

A N A N A LY T I C A L F R A M E W O R K F O R I N C LU S I V E G R E E N G R O W T H

then improves—an environmental Kuznets curve.1 In this framework, the environment eventually improves as national income rises because the environment is a “superior good” (a good whose consumption increases more than proportionately with income). 2 The framework implies that poor people care less about the environment than wealthier people, give priority to consumption over environmental quality, and act upon these preferences. Once basic needs have been met, this argument goes, people place greater weight on the environment, leading to investments in environmental protection and clean-up that increase environmental quality, assuming appropriate collective action proves possible. Economic growth will therefore automatically lead countries to environmental protection. There are serious flaws in this argument. First, a distinction needs to be made between environmental impacts that affect welfare through income and consumption and those that affect welfare through the amenity value of environmental assets. In urban areas, poor households that struggle to feed and house themselves will indeed place a lower priority on the amenities provided by a park than wealthier households might. However, they care deeply about the absence of solid waste management and its results—dengue epidemics, clogged urban drains, and the destruction of their homes and small businesses by floods. In rural areas, protecting forests to prevent the extinction of rare animals may not be a priority for households that struggle to feed themselves (unless of course the poor can share in the benefits from wildlife protection). But the same households are likely to care about protecting soil quality and managing water flows, which allow them to grow crops. Second, even when poor communities care about the environment, they may not have the “voice” to make their concerns heard. Policies implemented in developing countries may be more representative of the preferences of the elite than of the poor or may reflect institutional constraints, such as those imposed by poorly defined property rights (as in open access resources).

FIGURE 1.1

31

The three pillars of sustainable development

Economic sustainability

Sustainable development

Social sustainability

Environmental sustainability

Note: Economic and social sustainability, on the one hand, and social and environmental sustainability, on the other, have been found to be not only compatible, but also largely complementary. Not so with economic and environmental sustainability, as growth has come largely at the expense of the environment—hence, the dotted line on this figure—which is why green growth aims to ensure that economic and environmental sustainability are compatible.

Third, it is difficult to infer preferences about collective goods from individual behavior. Cities offer many more jobs and opportunities than rural areas but also much higher levels of local pollution. The fact that people move from rural areas to cities does not mean they would not prefer slightly fewer opportunities and higher environmental quality. Their preferences are not completely revealed by the binary choice of “moving or not moving to the city,” because they do not have a continuum of choices of increasing opportunities and decreasing environmental quality. Fourth, because the influence of environmental quality and welfare is often indirect, people may not link environmental problems (such as water or soil quality) to the health problems they confront. 3 Better information, not just higher incomes, may be needed if individuals are to demand higher environmental quality at earlier stages of development. Even developed countries are only beginning to address the complex issue of

Inclusive Green Growth  
Inclusive Green Growth  

As the global population heads toward 9 billion by 2050, decisions made today will lock countries into growth patterns that may or may not b...