Economic growth vs environmental degradation: Bangladesh case

Muhammad Shafiullah and Faridul Islam | Published: February 11, 2019 21:14:42 | Updated: February 11, 2019 21:24:18

Among the major aims of economic policy for Bangladesh, economic growth has a high priority. Reaching the Gross Domestic Product (GDP) growth target has led to increased industrialisation and initiation of a number of mega-projects all at more or less the same time. Additionally, a growing population and rapidly expanding urbanisation have raised the spectre of an environmental crisis. The problem has come under the microscope of economists. A related issue in this context is the Environmental Kuznets Curve (EKC), which posits an interesting relationship between an economy's income level (a measure of development) and environmental emissions, on a per capita basis. The EKC is derived from the Kuznets curve that was proposed by American Economics Nobel Laureate Simon Kuznets in the mid-1950s. The Kuznets curve is an inverted U-shaped (parabolic) relationship between inequality and per capita income in an economy. To put it simply, when an economy is poor, growth will exacerbate income inequality, in part due to large-scale rural-urban migration. However, as the level of income rises and crosses a certain threshold, people become more aware. This leads to changes in the composition of their goods basket even as the rural-urban migration diminishes. Beyond the threshold point of per capita income (called the turning point) inequality will decline as the economy grows. A hypothetical Kuznets can be seen in Figure 1. However, Kuznets curves based on real world data are rarely as smooth or symmetrical as is seen in the following figure.

The EKC extends the basic idea of the Kuznets curve by measuring environmental degradation - often proxied by pollution/carbon dioxide (CO2) emissions - versus income level. The explanation: at low levels of development the economy will get polluted due to emphasis on growth. However, as people become more affluent and environmentally aware, further economic growth can be achieved at the expense of the environment. The result is a similar inverted U-shaped relationship between pollution and income per capita.

How does this situation look for Bangladesh? Figure 2 plots Bangladesh's CO2 emissions and level of real income, both on a per capita basis, using data from 1972 to 2014. The figure is steep, showing a positive association between the two series - indicating that Bangladesh now sits on the left half of the curve, perhaps approaching the turning point. This means that economic growth in the nation is being achieved at the expense of the environment. However, the plotted line does not appear linear and for higher values of income, it appears to have moderated with the rising trend - possibly further growth will be less harmful to the environment.

So, the question may arise, why is this important? Is economic growth not the first priority for Bangladesh to achieve middle-income country status by 2021? There is no denying that macroeconomic growth is an indispensable and the most essential condition for development. However, it is necessary to realise that, in economics, everything has a price - called an opportunity cost in the discipline. Growth coming at a price - environmental degradation - has important socioeconomic implications, something no developing country should relegate to the back-burner.

Firstly, the environment and economy are not mutually exclusive. In the short term, the two may appear disjoint, but in reality, they are closely related from a long-term perspective. It is of importance that both be incorporated for a sustainable economic growth, otherwise the citizens will face serious repercussions later. Denial will not help! In particular, environmental degradation will damage human health and ultimately the prospect of economic wellbeing. They are two sides of the same coin - they must be allowed to move together. To this day, a large fraction of Bangladesh's population depends on the environment for their livelihoods. The list includes agriculture, fishing, forestry and horticulture to name a few. 

Environmental awareness has never been a major part of the curriculum in academia, which resulted in poor knowledge about it. The impact can already be seen in deforestation and reckless cutting of hills; destruction of wetlands; depletion of soil nutrients; emissions of harmful particulates in the air; and most importantly water pollution-surface and ground-inter alia. Natural calamities like floods, cyclones and tidal-bores leave marks of severe environmental and socio-economic dent. The shortage of clean drinking water has been assuaged, which reduced the incidence of tropical disease, through the efforts of aid agencies like UNICEF. However, a new menace - arsenic contamination surfaced, making headlines in the 1990s, and with it took the people and the land as victims of the poison. Clearly, for a sustained wellbeing in the long run, this matter needs to be addressed. Some of the notable public policies include National Environment Policy, National Conservation Strategy and National Environment Management Action Plan, aimed at protecting the environment and natural resources, controlling pollution and strengthening the legal framework to prosecute/punish the offenders. The Department of Environment (DoE) has done some remarkable job thus far, but more is needed. Continued rise in soil salinity and other concerns have the potential to exacerbate food and agricultural production. The impact of environmental damage on health and the toll it takes on productivity of workers and the added cost on the economy has been well-documented. Environmental degradation has other long-term effects on the economy. These are: loss of cultivable land, damage to property and lives lost due to extreme weather events, increased health care costs, decline in quality of life, inter alia. Bangladesh is expected to be one of the worst victims of global climate change in spite of very negligible contribution to this catastrophe.

Secondly, environmental degradation leads to economic injustice. Those who bear the brunt of the adverse effects of pollution are often not the ones contributing to it. On one hand, the more affluent enjoy the benefits of modern amenities - cars(s), electronic devices, air, gadget-filled spacious homes, too often having far more of them than what is needed. Usages of these items are generally not environment friendly and release pollutants. On the other hand, the poor are adversely affected by its use elsewhere -a classic case of negative externality. For example, much of the waste in a city is generated by the well-off households. This waste is dumped in empty spaces, water-bodies and rivers. The poorer households who live in the slums, around which much of the rubbish is dumped, suffer from odour, contamination of food, air and water. These dumps are the breeding grounds of bacteria which are disease-causing agents. In a rural setting, crop failures attributable to the environment can have far reaching implications.

Lastly, Bangladeshi culture has evolved with nature. Nature is still an integral part of their lives. Most Bangladeshis are proud of their country; the rich history and the cultural heritage. The irony is that most of them do not seem to care about how they are affecting nature through their daily activities. This is caustic, as environmental destruction in Bangladesh is very real!

In conclusion, like humans, a country's environment-including unique flora and fauna-is its valuable resource. If a society destroys the environment, it is bound to bring destruction upon itself. This is why nature should not be taken for granted and be overexploited. It is in the economy's best interest to ensure sustainable economic growth and to preserve and protect Bangladesh's environment. This in turn will help ease the pressure on those who are closely tied to the environment. The environment can also act as a buffer against natural calamities and help ease food crisis.

Dr. Muhammad Shafiullah is an Assistant Professor of Economics at the University of Nottingham Malaysia.

Professor Faridul Islam teaches Economics at Morgan State University, U.S.A.

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