Chapter 7 Environment and Economic Growth: Conclusion and Looking
7.1 Summary of the findings
Asia is one of the most emerging and fast developing economies of the world, and hence, the sustainable development path followed by Asian countries will definitely have a huge impact on the global economy. This study taking per capita ecological footprint as an indicator of human demand for nature analyzed the path of sustainability followed by selected Asian countries with different income groups. The study first conducted a time series trend analysis of ecological footprint per capita (along with the components of EF), biocapacity per capita and adjusted net savings to understand the status of natural capital and the total stock of capital of the selected countries. The findings of the analysis show that the selected countries vary greatly in both their demand for and supply of natural resources over time. All the selected countries have an increasing per capita ecological footprint and declining biocapacity indicating that they have overshot their demand for the natural resource. The total stock of capital, i.e. adjusted net savings has an increasing trend which indicates that the total stock of capital is positive, but has been achieved at the cost of degradation of natural capital.
Hence, based on the time series trend analysis, it can be concluded that the declining ecological reserves of all the selected countries —high, upper middle and lower middle-income — make them, in environmental terms, ―weakly sustainable nations‖.
The human demand had exceeded the global19 biocapacity since the mid-1970s in all the selected Asian countries, which has led to an environmental degradation.
This overshoot since then has been growing and the countries continue to follow a weak sustainability path by replacing natural capital by man-made capital. There is a possibility that growth-oriented development of these countries may further widen this gap. However, as Galli et al. (2012) have already pointed out, the major concern in these countries is the growing population, which has a positive relationship with resource utilization. The high population pressure in these countries has continued to put pressure on natural resources, especially in the case of lower middle-income group despite of declining population growth rates. Due to the large population size these countries may take a longer time to reach the per capita income of high-income countries and during that time, there could be irreversible damage to the natural resources of these countries. Increasing adjusted net savings and a steady increase in the ecological footprint per capita indicate that they are following a path of weak sustainability. It remains to be seen how long these countries will continue to move on this path, as at present the economies of these countries are mostly dependent on natural resource intense sectors (see Sachs and Warner, 1997; Coxhead, 2004).
The panel data analysis, across the income groups-high, upper middle and lower middle - identified the underlying factors driving the per capita EF in the selected Asian countries. The result indicates that economic growth is the common factor responsible for driving the per capita EF in all the three income groups of countries - high, upper middle and lower middle to have a significant impact on the natural capital. We found that high-income countries, showed a continuous increase in the per capita EF although they are endowed with low per capita BC.
They have higher levels of consumption-based impacts, which drive the ecological footprint. They need serious policies to limit and change the direction of the trend (Niccolucci et al., 2012). For these HI countries, along with GDP per
19It is meant that the per capita demand in the selected Asian countries has crossed the availability of natural capital per capita at the global scale (Appendix 13).
capita urbanization also plays a significant role in driving the per capita EF.
Although HI countries have huge EF, to restore natural capital they are following green growth strategy by integrating natural capital into the decision-making process as we have seen in Chapter 6, and but we are yet to see its impacts on EF.
In the case of UMI countries, the panel data regression models found that GDP per capita is the significant contributor in driving the economic growth and also for putting pressure on the natural capital of these countries. Further for LMI countries, GDP per capita, and biocapacity are the significant contributors to the increasing trends of per capita ecological footprint. However when population growth rate is considered, it is found that its magnitude of influencing the environment has been declining as it is influenced by various factors like social institutions, government policies, technological changes, ecological conditions, individual behavior etc. (Jorgenson and Clark, 2010). All the selected upper middle and lower middle income groups are also following the same pattern of growth like the high income countries and have experienced a rapid transition from an ecological surplus to ecological deficient countries. Inequity in access to resource and benefits from economic growth continues to be a big challenge in these countries, which has resulted in poverty and low quality of life. Hence, they are also unable to develop policies to meet the requirements of sustainable development, as at present their priority lies in improving the quality of life for vast segment of population now living in poverty through higher economic growth. They are thus confronted with the dual challenge of achieving ecological as well as socio-economic dimension of sustainable development. Thus these countries are also following a weak sustainability path and will continue to do so as natural capital has not received much attention in the decision-making process.
Overall, the findings suggest that per capita ecological footprint can be influenced by multiple factors like economic growth, population and population growth rate, urbanization, consumption patterns, export demand etc. and it is therefore important to balance economic development and exploitation of natural resources.
There is a need to deeply understand the threats economic activities pose on
natural resources and how it leads to resource limitation. To know these critical limits, realistic knowledge regarding interaction between natural capital and human well-being is required (Pelenc & Ballet, 2015). Human wellbeing depends on the wellbeing of the natural capital and if natural capital is not integrated in socio – economic policies they may not be left with enough resources to support their productive activities. Natural capital is crucial for the welfare of all species as well as for sustainable economic growth. But it is declining at an accelerated rate due to man-made activities in all the ten selected Asian countries. The selected Asian countries are faced with challenges of both environmental and social dimensions. Many of the Asian countries are facing the negative impacts of the monetary and financial crisis. Along with that, there are challenges due to climate change such as sea-level rise, natural resource depletion, environmental degradation, which could threaten food security, energy security and human safety. It is already seen in this study that economic growth which is demanding more from the domestic as well as global natural resources, is the major contributing factor in increasing per capita ecological footprint. So the growth strategies are to be revised in such a manner that natural capital can be incorporated into development and financial planning. The Philippines and Indonesia are only two countries among all the 10 selected Asian countries which are implementing Ecological Footprint accounts as a framework to mainstream their natural resources and to integrate it with the social wellbeing. However a Proper understanding of natural capital is a thrust area to attain SD goals in these countries.