Economic Progress Doesn’t Have to Come at Great Environmental Cost
New research shows that the tradeoff between growth and ecological preservation is not always inevitable, and that we can design effective policies that deliver win-win solutions.
This post, written by affiliate Teevrat Garg, Assistant Professor of Economics at the School of Global Policy and Strategy at the University of California, San Diego, is part of a series of posts for Earth Day guest-authored by CEGA affiliates.
The rapid loss of forests represents one of the great environmental tragedies of our time. According to Global Forest Watch, levels of tree cover loss remains at one of the highest points since the turn of the millennium. Preserving forest ecosystems is a key component of the Sustainable Development Goals (SDGs). The situation is particularly upsetting because one of the few countries making good progress on stemming the tide of deforestation — Brazil — has unfortunately reversed course with the Bolsonaro government expanding the scale of deforestation in the Amazon.
Deforestation has global and local consequences.
Deforestation has profound negative consequences both globally and locally. First, the release of carbon in forest stocks to the atmosphere is an important contributing factor to climate change (IPCC, 2019). Second, there are significant local consequences. My recent work shows that deforestation has been associated with an increase in Malaria and dramatic increases in local temperatures in Indonesia. In fact, we found that deforested areas had temperatures 8.3C (or 15F) higher than nearby forested areas. In work under review, my colleagues and I show that these massive temperature spikes result in losses in productivity and cognitive function. Other work has shown that higher temperatures lead to increased morbidity and mortality. Especially in poor areas, rapid ecological changes have the potential to push vulnerable communities into poverty traps.
The choice between economic growth and the environment is a false one.
While some avenues of economic growth have environmental consequences, preserving the environment doesn’t have to come at the expense of economic activity. In a forthcoming paper I wrote with Sam Asher and Paul Novosad, we find that in India, the construction of over 100,000 rural roads designed to provide economic opportunity to previously unconnected villages had very little effect on forest cover, despite concerns to the contrary. The “null” effect was consistent across villages with high and low levels of socio-economic activity. However, in the same paper we also found that the expansion of key highways had a large negative effect on forest cover representing at least 25% of the fiscal cost of the program. None of this is to say that we shouldn’t build highways, but rather that we should take into account the ecological cost.
India also provides other promising examples. In a recent working paper, my colleague Ajay Shenoy and I examine the effect of one of India’s most generous place-based economic policy that provided massive subsidies and tax-exemptions to spur economic and industrial activity in the newly created state of Uttarakhand in Northern India. Remarkably, we find that even though the policy increased growth by at least 70% and as much as 300% there were very little negative consequences for forest cover. It is likely that this stark contrast between economic and ecological consequences of the policy was driven by a simple caveat — the policy had an explicit pro-environment mandate that precluded environmentally detrimental industries from receiving the subsidies or tax benefits.
In ongoing work, my colleagues Ryan Abman, Yao Pan, Saurabh Singhal and I find that this win-win proposition could extend to the agricultural sector. Theoretically, the effects of increases in agricultural productivity on forest cover are ambiguous. On the one hand, increases in productivity can reduce pressure on land clearing especially when farmers are otherwise constrained in expanding the scope of cultivation. On the other hand, by increasing the returns to agricultural land, improvements in agricultural productivity can increase pressure on land clearing. We take advantage of the quasi-experimental rollout of a program by BRAC Uganda to improve agricultural productivity and practices. We find that the program improved agricultural productivity, farmer profits and decreased deforestation in villages that received the program relative to otherwise identical villages that did not. One of the key factors was that the farmers increased the practice of crop rotation and reduced shifting cultivation, a key driver of deforestation in Sub-Saharan Africa.
Of course, there are many examples when the pursuit of economic progress has come at great environmental costs. Recent research and some of my work shows us that this tradeoff is not inevitable — we can design effective policies that deliver win-win solutions.
References:
Asher, Sam, Teevrat Garg, and Paul Novosad. “The ecological footprint of transportation infrastructure.” (2020). Forthcoming in Economic Journal.
Barrett, Christopher B., Teevrat Garg, and Linden McBride. “Well-being dynamics and poverty traps.” Annual Review of Resource Economics 8 (2016): 303–327.
Burgess, Robin, Francisco Costa, and Benjamin A. Olken. “The Brazilian Amazon’s Double Reversal of Fortune.” (2019).
Carleton, Tamma, Michael Delgado, Michael Greenstone, Trevor Houser, Solomon Hsiang, Andrew Hultgren, Amir Jina et al. “Valuing the global mortality consequences of climate change accounting for adaptation costs and benefits.” (2018).
Garg, Teevrat. “Ecosystems and human health: The local benefits of forest cover in Indonesia.” Journal of Environmental Economics and Management 98 (2019): 102271.
Garg, Teevrat, and Ajay Shenoy. “The Ecological Impact of Place-Based Economic Policies.” (2020).
Masuda, Yuta J., Brianna Castro, Ike Aggraeni, Nicholas H. Wolff, Kristie Ebi, Teevrat Garg, Edward T. Game, Jennifer Krenz, and June Spector. “How are healthy, working populations affected by increasing temperatures in the tropics? Implications for climate change adaptation policies.” Global environmental change 56 (2019): 29–40.
White, Corey. “The dynamic relationship between temperature and morbidity.” Journal of the Association of Environmental and Resource Economists 4, no. 4 (2017): 1155–1198.
