Development and the Environment

Abstract

The environment is vital to supporting life and providing inputs for production. Over the last three decades, there has been increasing concern about the effects of economic activity on the environment. In particular, it has been argued that economic growth has caused serious environmental damage and that the current state of the environment will constrain future economic development. The poor of developing countries are often dependent on the natural environment for their livelihood and even their continued existence. Thus, damage to the environment and the relationships between the environment and the economy are often thought to be of more importance to developing than to developed countries. Figure 9.1, taken from the World Development Report 1992 (World Bank (1992)), shows how selected environmental indicators vary with economic development, as measured by per capita income. This chapter provides an introduction to the economic analysis of the relationships between the environment, development and the economy.

¹This chapter has been written by my colleague Dr John Peirson. He is grateful to Michael Common and Douglas Peirson for helpful comments.