Nature and Capital

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Muhammad Tahir

If we take a cursory look at the economic growth of countries in the past century we find a complex relationship between economic growth and the environment.

Take the Millennium Ecosystem Assessment (2003) report. It found that out of 24 ecosystem services 15 were being used in unsustainable manner, natural resources (such as minerals and metals) consumption continues at a rapid pace.

Countries interested in high economic growth use much natural capital. The growing economy also means higher levels of consumption, more cars, new high rise buildings and more energy consumption. But how much a growing economy will increase environmental risk depends on the scale and composition of the economy. For example, if economic growth is largely driven by services sector then environmental risk may be less. But if engine of economic growth is industries and manufacturing then environmental risk is higher because manufacturing industries use natural capital at high level without considering the critical threshold of such energy resources. We can take the example of China, which is experiencing high economic growth, leading to high employment and high consumer spending. China accounts for 47 % of global coal consumption. According to China’s Xinhua news report, there are currently 5.18 million vehicles running on the roads of Beijing compared to 3.13 Million vehicles in 2008. This phenomenon is taking a high toll on the environment, particularly in its major cities like Beijing. The capital city of China is facing worst environmental problem of air pollution with dense smog and soot encasing the whole city and northern China.

At the same time we can say that while economic growth leads to high environmental risk, it also provides the opportunity to meet the environmental challenges. Once a country reaches a certain economic growth it can take steps to invest in environmental security measures. One of the measures is using natural capital in a sustainable manner. Investing in research and development of new production techniques and shifting towards the policy of a low carbon and resource efficient growth.

The US has spent around $ 15 billion since 1990 on 30,000 river and wetland restoration projects. Similarly, in Japan “Ta Shizen Gata Kawa Zukuri” (Nature-oriented River works) were initiated 1990 to conserve and restore water bodies and their bio-diversity.  Such initiates are possible only when a country has enough economic resources. Japan after World War II experienced high economic growth but at the cost of polluted rivers and water bodies which affected a large section of population. But higher education level accompanies economic growth and that means more and more people become aware of environmental problems. Moreover, in order to retain good quality of life after achieving high economic growth policy of environmental conservation becomes imperative.

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