Resources, Environment, and Economic Development - Land and Soil

Land and Soil In summarizing recent human impacts on land resources, GEO-5 took a perspective that aligns with our expanded circular flow model from Chapter 1. The report noted that: many terrestrial ecosystems are being seriously degraded because land-use decisions often fail to recognize noneconomic ecosystem functions and biophysical limits to productivity. For example, deforestation and forest degradation alone are likely to cost the global economy more than the losses of the 2008 financial crisis. The current economic system, built on the idea of perpetual growth, sits uneasily within an ecological system that is bound by biophysical limits.31 According to a 2002 analysis, the impacts of humans are evident on 83 percent of the world’s total land area, and 98 percent of the land area where it is possible to grow major crops.32 The two largest categories of human land impacts are agriculture and forestry. Nearly 5 billion hectares of land (about 40 percent of the world’s total land area) are devoted to growing crops or providing pastureland for animals. Total global agricultural area has remained relatively constant since the 1960s, but crop production has increased by a factor of 3.7.33 In other words, the same amount of agricultural land produces, on average, nearly four times the harvest as it did 50 years ago. The increase in crop production has been greatest in middle-income countries, where yields have grown by a factor of 5.3. Agricultural gains have also been substantial in low-income countries. As we saw in Chapter 1, the human population is projected to grow to nearly 10 billion by 2050. Can agricultural yields be expanded even further? A 2010 analysis concludes that there is considerable potential to increase yields. 34 The current production efficiency of wheat is estimated to be only 64 percent of its global potential. The efficiency of corn production is even lower—only 50 percent of its potential. But efforts to boost agricultural productivity through increased use of fertilizers, pesticides, and irrigation water, can have negative environmental consequences. As GEO-6 notes: Current land management cannot [meet food demand in 2050] while preserving ecosystem services, [preventing] the loss of natural capital, combating climate change, addressing energy and water security, and promoting gender and social equality. … [M]onocultural farming systems, sometimes assumed to be more productive and profitable, are often associated with environmental degradation and biodiversity loss.35 It is possible that agroecological techniques may hold the key to both increasing productivity and regenerating farming ecosystems; we will discuss these issues in detail in Chapter 16. Compared to previous GEO reports, GEO-6 places a particular emphasis on sustainable soils management. Soil contamination occurs in developed and developing countries from industrial sites, agriculture, and waste disposal. Particularly in the Middle East and North Africa soil contamination from oil production and mining is increasing. A second soils issue discussed in the report is soil salinization – an accumulation of salt that reduces agricultural productivity. Declining productivity from salinization is evident on an estimated one-third of irrigated agricultural lands worldwide, with yield losses approaching 50% for some grain crops. Sustainable soils management is also an important tool to mitigate climate change. The amount of carbon that is stored in soils can be increased with agricultural policies such as limiting soil tillage, letting crop residues decompose rather than burning them, and planting crops with extensive root systems that store carbon. Finally, an estimated half of the world’s soils have been lost in the last 150 years due to erosion.36 Soil erosion not only reduces agricultural productivity, it also increases flooding damages and leads to sedimentation in rivers that harms aquatic species. Many of the same agricultural practices that increase soil carbon sequestration also reduce erosion. Environmental issues associated with forested land are also crucial. Forests cover 31 percent of the world’s land area. The rate of global deforestation has slowed since the 1990s, with annual net forest loss declining from 8 million to 5 million hectares. But as Figure 2.7 shows, forest trends vary dramatically in different parts of the world. The figure shows the annual net change in total forest area in different regions over three time periods: 1990–2000, 2000–2010, and 2010–2020. In Europe and Asia forest area increased during all three time periods. The large increase in forest area in Asia during the 2000s was primarily due to a massive forest planting effort in China. 37 Significant deforestation is occurring in South America (including the Amazon Forest in Brazil) and Africa. While net deforestation is slowing in South America, it is increasing in Africa. We will discuss forestry issues in more detail in Chapter 19. Figure 2.7 Net Change in Forest Area, by World Region and Time Period Net Change (million hectares per year) -5 -4 -3 -2 -1 0 1 2 3 Asia Europe North and Central America South America Africa 1990-2000 2000-2010 2010-2020 Source: FAO, 2020. Freshwater While water is a resource that is renewed through natural processes, only a limited amount is available for human use at one time. Freshwater availability can decline over time, such as when glaciers are lost due to global warming. Pollution can make a water source unusable for a particular activity, such as drinking or fishing. The availability of water varies significantly across the world—while water is abundant in some areas, it is quite scarce in others. The number of people living in water-scarce areas is expected to increase from nearly 2 billion in the mid-2010s to potentially more than 3 billion in 2050.38 Global water use increased by a factor of 6 in the last 100 years.39 Water demand is projected to continue increasing the future, as shown in Figure 2.8. We also see that most of the world’s water use, about 70%, is for agricultural purposes including irrigating crops and raising livestock. Figure 2.8 World Water Withdrawals, Actual and Projected, by Sector 5000 Billion Cubic Meters 4500 4000 3500 3000 2500 2000 1500 1000 500 0 2014 Agriculture 2025 Municipal Industry 2040 Energy Source: IEA and OECD, 2016. Many countries are becoming increasingly dependent upon groundwater, which is essentially a nonrenewable resource. For example, India has increased its groundwater withdrawals by a factor of 10 since 1960, and China has also significantly expanded its use of groundwater.40 Some countries in the Middle East, including Qatar, Saudi Arabia, and the United Arab Emirates, obtain 95 percent or more of their total water supply from groundwater.41 In most places of the world, extraction of groundwater is essentially unregulated, meaning that farmers and other users are able to pump all they want.In summarizing freshwater issues, GEO-6 finds that: The per capita availability of freshwater in the global water cycle is decreasing with population growth, coupled with the associated agricultural, industrial and energy requirements, while the continents are becoming drier in many places due to climate change impacts. Increasing numbers of people are at risk of ‘slow-onset disasters’ such as water scarcity, droughts and famine. Such events sometimes lead to increased migration and social conflicts. … Freshwater ecosystems are disappearing rapidly, representing a high rate of loss of biodiversity and ecosystem services. 42 The key to addressing the world’s freshwater challenges is to increase the efficiency of water use, particularly in agriculture. Economists often find that water is under-priced, or not priced at all, which encourages inefficient use. As we will see in more detail in Chapter 20, water pricing can be an effective tool to motivate conservation. Chemicals and Waste Of the six impacts we are summarizing in this chapter, the impacts of chemicals and waste on the environment are perhaps the least understood. According to GEO-5: There is an extensive but incomplete body of scientific knowledge on the impacts of chemicals and wastes on humans and the environment, with particular information and data gaps on the uses, emissions, exposure pathways and effects of chemicals. Global understanding of the complexity of properties and environmental impact of chemicals and wastes is therefore markedly deficient. 43 The global chemicals industry has expanded significantly in recent decades, with annual production growing from less than $200 billion in 1970 to more than $5 trillion by 2016.44 As seen in Figure 2.9, global production of basic chemicals increased by a factor of 2.5 between 1990 and 2019, and is projected to grow a further 40% by 2030. Prior to 2000, chemicals production took place primarily in developed nations. But since then production has shifted to developing countries, with China now being the world’s largest producer. Some data suggest that chemicals use is slightly declining in developed countries, although trends vary across countries.45 Figure 2.9 Growth of Global Chemicals Production, 1990–2019, with projection to 2030 Production Index (1990=100) 400 350 300 250 200 150 100 50 0 1990 2000 2010 2020 2030 Source: UN Environment, 2019c. Note: Chart based on global production of basic petrochemical building blocks, including ethylene, propylene, butadiene, benzene, toluene and xylenes. Approximately 250,000 chemicals are commercially available, but little data are available on the environmental impacts of the vast majority of chemicals. We do know that chemicals are widely distributed throughout ecosystems—for example, more than 90 percent of water and fish samples worldwide show evidence of pesticides. Estimates of human health impacts from chemicals exposure are incomplete, particularly in developing countries. Those living in poverty are often subjected to more exposure to chemicals; children are particularly vulnerable. The generation of waste is also increasing significantly. According to the World Bank, the amount of municipal waste generated per-person doubled worldwide from 2002 to 2012, with further increases projected for the future. 46 Waste generation is generally higher in richer countries. But once again, projections suggest that most of the increase in waste in the future will be a result of economic development in low- and middle-income countries. About half of all waste generated worldwide is disposed of in landfills. Close to 20 percent of waste is recycled, and 15 percent is incinerated to produce energy. The disposal of waste is a major public health concern in many low- and middle-income countries where wastes are discarded in open dumps near slums. People who then pick through these dumps for valuable items are often exposed to medical and hazardous wastes. A growing concern in recent years is exposure to electronic waste—see Box 2.2 for more on this issue. We discuss waste and recycling further in Chapter 17. Box 2.2 E-waste The global generation of electronic waste (e-waste), including computers, cell phones, small and large appliances, and televisions, is increasing exponentially, especially in developing countries. For example, the number of cell phones sold worldwide increased from about 120 million in 2007 to over 1.5 billion in 2020.47 The disposal of e-waste is of particular concern because these products contain small amounts of commercially valuable metals, including silver, palladium, and gold, along with dangerous substances such as lead and dioxin. Thus, when scavengers access e-waste they may expose themselves to toxins in the process of extracting the salable components. Also, toxic chemicals can leach into water supplies or be released into the air. The health effects of e-waste disproportionally affect children in developing countries because they frequently perform the work of picking through e-waste and because toxins such as lead are more damaging during children’s developmental years. According to the United Nations, of the 54 million tons of e-waste generated globally in 2019, only 17% was properly collected and recycled. The amount of e-waste generated annually is expected to increase by 40% by 2030, or an average of about 20 pounds per person. 48 The majority of e-waste is generated in developed nations, but much of this waste is exported— often illegally—to developing countries. One of the world’s largest e-waste dump sites is the Agbogbloshie site in Ghana. It is estimated that 40,000 people in the area are being exposed to toxic chemicals. Soil samples in the area contained lead levels over 18,000 parts per million (ppm) while the allowable level of lead in soil in the United States is only 400 ppm. 49 Efforts are underway to ensure that e-waste is properly recycled or safely disposed of. As of 2019, 78 countries had enacted legislation governing e-waste, up from 44 countries in 2014.50 In 2014 the European Union instituted a new directive on waste for electrical and electronic equipment. The goal of this legislation is to increase the portion of e-waste that is properly treated. Shops selling electronic products are required to accept smaller e-waste items, while manufacturers are required to accept larger items for recycling. Other provisions encourage the reuse of products and design improvements that avoid the use of toxic chemicals.51 2.4 OPTIMISTS AND PESSIMISTS What can we conclude from our brief overview of economic and environmental trends? Do these trends provide a reason to be optimistic or pessimistic about the future? There are no simple, clear-cut answers to these questions. One may reach an optimistic conclusion based upon the evidence of continued, although unequal, economic and human development, with increasing per capita food consumption and living standards refuting the simple Malthusian hypothesis. But on the other hand, negative environmental impacts have generally increased, including global impacts such as climate change, species loss, and ocean pollution, as well as local and regional impacts such as deforestation, depletion and pollution of water supplies, and build-up of toxic wastes. And looking ahead, climate change presents humanity with perhaps its greatest, and most complex, environmental challenge. Debate is ongoing concerning the resource and environmental factors that contribute to, and could eventually limit, economic growth. In 1972 a Massachusetts Institute of Technology research team published a study titled The Limits to Growth, which used computer modeling to estimate future global trends for five key variables: pollution, industrial output, population, food, and resources. The model’s basic conclusion was that continuing along a business-asusual path, without major policy or behavioral changes, would deplete available resources, leading to a significant decline in industrial output and food supplies, starting around 2020, followed by a declining population. The authors revised their model in 2004, reaching the same conclusion of eventual global collapse under a business-as-usual scenario but pushing back the onset by a decade or two. Their model predicts that by the middle of the twenty-first century the world will witness a reduction in food production, industrial output, and population, with further declines later in the century. The authors emphasized that collapse is avoidable if modest limits are put on material production and society invests heavily in sustainable technologies. A 2012 book by one of the original authors of The Limits to Growth, Jorgan Randers, looks ahead 40 years to 2052,projecting that resources such as food and energy will generally be sufficient, but that global GDP growth will slow and the effects of climate change will become more severe in the latter half of the 21st century. 52 The results of The Limits to Growth models have been criticized as overly pessimistic, akin to the original Malthusian hypothesis which under-estimated the potential of technological improvements.53 Critics also contend that while nonrenewable resources are being depleted in an absolute sense, new discoveries and more efficient use of resources mean that resource depletion is insufficient to cause a Malthusian crash in the foreseeable future. Supporters of the limits-to-growth model emphasize that the actual data have generally tracked the projections of the business-as-usual model.54 They also note that the critical point is not whether new resources can be discovered but whether resources can be extracted and consumed at a rate sufficient to meet growing demands without unacceptable environmental damage. Probably the most far-reaching environmental impact of increased consumption is climate change, together with the other issues of biodiversity loss, water shortages, forest loss, soil depletion, and chemical pollution that we have reviewed. In this text we do not offer a definitive opinion on future trends, but later chapters will provide extensive information to develop informed opinions about the future. The focus of this book is on assessing policy options, rather than promoting a particular viewpoint. While analysts differ greatly regarding appropriate policy responses, few dispute the importance of global environmental and resource issues. As we will see, both a market-oriented approach stressing economic system adaptability and an ecological approach stressing biophysical systems and constraints have important roles to play in devising policy responses. 2.5 SUSTAINABLE DEVELOPMENT Rather than approaching environmental questions as a secondary issue after we have dealt with the basic economic issues of production, employment, and output growth, both environmental and ecological economists recognize that economic production is ultimately linked to the quality of the environment and the availability of natural resources. This becomes only more evident as the scale of economic production increases. While environmental and ecological economists may define sustainable development differently, both assert that policy changes are necessary in order to achieve truly sustainable outcomes. We now turn to a more detailed discussion of sustainable development, and what its policy implications are for various environmental issues. Recall that the standard view of economic growth is defined in terms of per capita GDP, meaning that total GDP must grow faster than population. Sustainable development, for both environmental and ecological economists, is about more than simply keeping GDP, or GDP growth rates, above a particular level. Thus, we need new measures of human and ecological well-being in order to determine whether outcomes are sustainable. Environmental economists emphasize the maintenance of human well-being—something that is dependent on more than GDP, such as the quality of the environment, the availability of leisure time, and the fairness of political systems. Ecological economists emphasize the maintenance of the ecological base of the economy—fertile soils, natural ecosystems, forests, fisheries, and water systems— factors that are generally excluded from GDP. As we will see in Chapter 10, various metrics have been developed that either adjust GDP or provide an alternative. These new measures can help in assessing progress toward sustainability. Incorporating sustainability into both traditional environmental economics and ecological economics suggests significant policy changes in many areas, including the following: • • • • • Current agricultural practices generally seek to maximize short-term food production by relying heavily on chemical inputs. A focus on sustainability will require consideration of the impact of industrialized agriculture on soil health, ecosystems, water quality, and climate change. Fisheries have been mostly unregulated in the past, often leading to severe exploitation. A focus on sustainability would ensure that harvest levels are set to maintain the health of fisheries. The impact of fishing on the health of non-target species also needs to be considered. Forests have been similarly historically managed to maximize short-term profits at the expense of forest and ecosystem health. Sustainable forest management would not only set harvest levels that are sustainable for the long term, but also maintain or improve biodiversity and water quality. Sustainable forest management can also be a powerful tool against climate change as trees are a significant carbon sink. Current energy policies often seek to obtain energy at the lowest overall cost. Sustainable energy policies consider costs more broadly, incorporating the current and long-term environmental impacts such as air pollution, land degradation from mining, and climate change. While the world currently receives most of its energy from fossil fuels, sustainable energy policies require a transition towards renewables and energy conservation. Current production processes often involve the introduction of artificial chemicals and plastics into the environment. Sustainable production implies the use of recyclable or biodegradable materials, with drastic limitation on the emission of wastes and pollutants to the environment. 2.6 A LOOK AHEAD We will cover these issues, and many others, in more detail in Chapters 11-20. We will discuss further reasons for both optimism and pessimism. But regardless of whether you lean more toward the optimistic or pessimistic viewpoint, we hope you will see that economic analysis can be a powerful tool in progressing toward a more sustainable world. We will discover numerous examples where economists (both traditional and ecological) recommend policy reforms that consider human well-being, future generations and ecosystem health. SUMMARY Economic growth over time reflects both population and per capita GDP growth. This growth depends on increases in capital stock and technological progress, as well as increased supplies of energy, natural resources, and the capacity of the environment to absorb waste. While predictions by the British classical economist Thomas Malthus that population would outgrow food supplies have not proved accurate, population and economic growth have imposed increasing strains on the environment. Since 1960, unprecedented rates of growth have more than doubled population, more than tripled world agricultural production, increased energy use five-fold and economic production by a factor of seven. A review of global environmental trends in six areas—air, biodiversity, oceans, land and soils, freshwater, and chemicals and waste—reveals a mix of successes and ongoing challenges. For example, the ozone layer is healing due to the phaseout of CFCs and other chemicals. However, current global climate commitments are insufficient to limit warming to below 2 degrees Celsius. While the Limits to Growth models have predicted that unrestrained growth would lead to ecological and economic collapse, so far technological progress and some policy responses have prevented the worst predictions from occurring. While natural resources are unlikely to run out, issues of unequal distribution and ecological impacts such as biodiversity loss and climate change are central in modern debates about the Malthusian hypothesis. The concept of sustainable development attempts to combine economic and environmental goals. Sustainable techniques and policies for agricultural production, forest and fishery management, energy use, and industrial production have significant potential but have yet to be widely adopted. The question of the sustainability of economic activity has already become a major issue and will be even more important in coming decades. KEY TERMS AND CONCEPTS absorptive capacity of the environment biodiversity GDP growth rate gross domestic product (GDP) Malthusian hypothesis meta-analysis natural capital nominal GDP real GDP resource curse hypothesis DISCUSSION QUESTIONS 1. Can we safely say that history has refuted the Malthusian hypothesis? What main factors have worked against Malthus’s perspective? Do you identify similarities between the original Malthusian hypothesis and current environmental issues? 2. What are the major environmental issues that are of overriding concern in the twenty-first century? Considering air, water, land, biodiversity, and pollution issues, which do you think pose the greatest threat to human prosperity and ecological systems? 3. How do you think we need to approach environmental issues differently in developed and developing countries? What do you see as the main environmental challenges in each?