Development and the environment

Economic growth must be redefined in terms of quantitative environmental costs of producing and consuming commodities.

The crisis of the environment poses as much a threat to the life support systems of earth as to our national economy. People living on this planet in peril are rethinking development to incorporate environmental concerns into the process of economic growth. So must we in Pakistan. Current policy thinking in Pakistan is premised on the presumed efficacy of the market mechanism and so focuses entirely on economic growth through ‘liberating’ markets. The environment issue is excluded from the growth agenda. It may, therefore, be therapeutic to introduce the concept of sustainable development into this single-minded devotion to markets and growth.

The integration of the need to balance economic growth with the imperative to conserve the natural environment has come to be known by the term sustainable development. It is defined as development that enables the needs of the present generation to be fulfilled without undermining the ability of future generations to meet their needs.

When the first UN World Commission on Environment and Development (WCED), in the mid-1980s, led by Norwegian Prime Minister Gro Harlem Brundtland, conducted its hearings with some of us in South Asia, three dimensions emerged as being essential to sustainable development.

Firstly, the concept of economic growth must be redefined in terms of quantitative measurements to incorporate the environmental costs of producing and consuming commodities. This was based on the recognition of an inherent limitation of the market mechanism: individual investors consider environmental damage to be an ‘external’ cost and, therefore, it is not included in the private profitability calculus on which project choice and; thereby, the overall growth process, is based. This view introduced the need to ‘govern’ markets to include the social cost of environmental damage into private as well as public sector investment decisions.

Secondly, equity must be integrated with economic growth. The idea was that inequality and high levels of poverty may place such acute stresses on society that the sustainability of growth could be undermined. Thus was introduced the idea that poverty reduction cannot simply be seen as the ‘trickle-down’ effect of growth, but rather must be an independent policy objective. Here, again, there was a recognition that the market mechanism, left on its own, could well increase inequality (as it has actually done in many countries). Furthermore, poverty reduction through market-based growth may not be fast enough. Thirdly, a concern for the welfare of future generations must modulate the attempt by the present generation to maximise its own material welfare. The idea here was that technological change, production methods and waste disposal practices must be shaped by public policy so as to minimise environmental damage: hence the notion of ‘green growth’.

The UN WCED report catalysed not only the new field of environmental economics, but also led to a new policy framework: governments across the world are now attempting to craft new institutional structures that could shape project selection, technological change, forms of production and social life for sustainable development. Pakistan’s policy makers may do well to eschew the current apotheosis of the market. Growth must be seen not just as an accretion of goods and services but must enable what Aristotle called ‘human functioning’. It must be conducted in the context of human life, empathy for the poor and concern for the natural environment. Only then can growth be in harmony with our own nature and with Nature.

Published in The Express Tribune, August 28^th, 2011.