Deck 22: International Environmental Agreements

Question 1

What is the relationship between economic growth, population growth, and environmental quality in developing countries?

Answer 1

Economic growth and environment quality in developing countries:
It is often argued that economic growth of developing countries do not account for environmental quality. In simple words, national income accounting in developing countries ignores the environmental aspect. Many environmentalists even argued that economic growth and environmental quality are inversely related.
Generally, developing countries are growth oriented, and thereby less restricted environmental laws are implanted in order to boost up the nominal GDP. Growth in nominal GDP will ensure economic growth in developing countries. However, less strict law would affect the environment quality of the developing countries.
Hence, in case of developing countries economic growth and environmental quality are inversely related.
Population growth and environment quality in developing countries:
Environmentalists generally argue that population growth and environmental quality are inversely related. In developing countries, population growth is quite high. High growth in population means increase in per capita pollution that is more people will cause more pollution. Thus, population growth would result to deterioration of environmental quality due to over use and exploitation of resources.
Hence, in case of developing countries population growth and environmental quality are inversely related.

Question 2

Environmental pollution is, for the most part, reversible, in the sense that it can be decreased if the appropriate steps are taken. What are the pros and cons, therefore, of using sustainability as a criterion for evaluating environmental policies?

Answer 2

Pros and cons of sustainability criterion of environment policy evaluation:
Sustainability criterion of environment policy discusses more about environmental quality including the concepts of economic vitality and social equity. Moving towards sustainability means people has to understand and realize the potential of improving the environmental quality rather than degrading stating socio-economic differences between countries.
Sustainable equity for future generations requires that our today's economic activity should not degrade the capital upon which economic activity would depend further.
Hence, sustainable equity at global level requires that the process of economic activity by the current generation in one part of the world does not degrade ecological, human, social or manufactured in any other part of the world, and should allow the future generation to choose another level, which could be either higher or lower level of environmental quality.

Question 3

When a multinational business firm from the developed world opens operations in a developing nation, should it be held to the environmental standards of its country of origin or to those of the country in which it is operating?

Answer 3

Decision of a MNC towards the emission standard of its operation in developing nations:
In general, it is suggested that emission standard should be same across countries, in order to prevent multinational business firms of developed countries to take operational benefits from the less restrictive environmental laws. This universal emission standard is based on the assumption of universality efficient level of emission and universality socially desirable environmental quality.
However, in actual the socially desirable environmental quality varies from society to society, from region to region, from state to state and from one nation to another. Socially desirable environment quality of a developing country is expected to be relatively low and the environment regulation laws are expected to be less restrictive in nature than that of a developed country. This is because, developing countries would be more growth oriented.
Environment regulation laws of developing countries reflect their socially desirable environment quality or their socially desired tradeoff between environmental quality and conventional output or their collective choice towards the environmental quality. Operation of firms under any other environmental law would result to worse off of the people of that developing nation.
Hence, a multinational business firm of a developed country should choose the environmental laws of the developing countries while operating in that developing country.

Question 4

Suppose we introduce a new criterion, "administrative feasibility," for evaluating environmental policies in developing countries. How might this affect choices among different types of policies?

Question 5

Refer to Figure 21.1. How would a technology transfer from country A to country B alter the PPC?
FIGURE 21.1 Production Possibilities Curves of Developed and Developing Countries