Population Growth and the Environment: A Neoclassical View

By Adil Husain

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Population growth has traditionally been held responsible for a major proportion of worldwide environmental degradation. This includes everything from deforestation to water scarcity and global warming. Population control policies are considered key to conserving resources and protecting the environment. However, in most developing countries, there are other factors such as shortsighted government policies, inefficient markets, an uneven distribution of wealth, and a lack of mobility that contribute towards environmental degradation and result in diminishing returns on land. Therefore, the effectiveness of regulating population growth as a means to conserving or improving the environment is a doubtful measure. 

In "An Inquiry into Population, Resources and Environment", Theodore Panayotou provides his analysis of the interplay between population and the environment. His methodology includes the use of evidence from several regions of the developing world and examines responses at the household, community and national levels.  

Accommodating Population Growth within the Household

In a rural, agrarian society, an additional child has the marginal utility of contributing two more hands towards helping the family sustain its standard of living. Typically, the child’s partaking in household work ranges from gathering open-access natural resources such as fuel wood and water, to household chores and helping raise younger siblings. This model of a child’s participation in the household workforce means that a large number of children would enable the family to gain a greater share of available resources. Therefore, assigning property rights to open-access resources might act as a disincentive for households to have large families. Property rights would safeguard the environment from over-exploitation even if the population growth rate were low. An additional child could be an incentive for a household to intensify its use of agricultural land and water resources and introduce fertilizers to augment output. However, a lack of available rural micro-credit with low interest rates keeps poor farmers from investing in improving agricultural productivity. With an unaffordable agricultural intensification option, families resort to non-farm employment but since capital-good manufacturing industries and public services are concentrated in urban areas, non-farm employment is difficult to find. Low income and the inability to augment agricultural output results in greater aggressiveness by the population in diminishing open-access natural resources which are costless to utilize but sometimes impossible to replace.

Rural-Urban migration is the by-product of declining rural incomes and the over-exploitation of natural resources. However, since most migrant workers possess little education, capital or marketable skills, they find themselves in city-slums and as contributors towards urban overcrowding. There is often a strong urban bias in the economic and investment policies in developing countries, and migrants often find themselves using urban ‘open-access’ resources—such as public property, urban infrastructure, unused private property—much in the same way as they used rural resources. This behavior once again favors those with more children because it functions on the ‘rule of capture.’ It is tempting to blame population growth for this problem, but the real problem lies with large-scale institutional and policy failures—such as a failure to improve agricultural productivity or to create non-agricultural employment in rural areas.  

Accommodating Population Growth within the Community

 Communities can identify the necessity of protecting open-access resources against overexploitation launch programs to regulate the use of such resources. Panayotou cites examples of such local responses in India and Kenya. In traditional communities, a system of regulation can be found that is maintained by peer group pressure, custom, and the implicit or explicit allocation of responsibilities and rights of access to community members who protect the resource both for their individual and communal benefits. It is the assertion of state ownership over forests, land, water and other natural resources that breaks apart the traditional system of resource protection, giving rise to open-access properties conducive to producing larger families within the community.

 Accommodating Population Growth within the National Economy

Population growth has varying levels of impact on different nations depending on the state of the nation’s economy, the availability of natural resources, and the presence of technological change. Population growth may signify a decline in social welfare and the exhaustion of natural resources in a closed and stagnant economy that has fixed natural resources, no capital accumulation and no technological progress. According to Panayotou, even in a closed economy with no technological progress, an effort to conserve depleting natural resources by reducing waste and by substituting scarce resources for abundant ones can work as long as resource commodity prices accurately reflect the true scarcity of resources and prices are unblemished by government subsidies.

Increases in the prices of scarce resources would compel economy. However, in most human societies, there is at least some degree of technological progress, and therefore, an accurate pricing of scarce resources can propel technological advancement. In the presence of international trade and technological change, population growth has no simple or direct relationship with environmental degradation. Trade enables nations with scarce resources to import commodities from foreign sources while conserving their own domestic resources. Even the exporting country does not necessarily experience environmental degradation if trade is based on comparative advantage and resource depletion and environmental costs are priced into the transaction. Some would argue that benefits from technological progress in resource conservation are achieved at the expense toxic air pollutants. However, if market prices reflect resource scarcities and the cost of pollution, such pricing would be a direct incentive for technological innovation to keep the pollution to a minimum. 

Evidence Relating Population Growth with the Environment

Panayotou and Sungsuwan conducted an econometric study of deforestation in Northeast Thailand using panel data from 1973-82. They found that rural residents cleared forests in order to obtain more agricultural land and accommodate the growing population. In addition, farmers preferred to use fuel wood instead of kerosene. Kerosene would require some cash payment whereas fuel wood, a common resource good, was virtually ‘free.’ However, tempting as it may be to blame population growth for the deforestation, it is important to consider that without a) the open-access of forest resources together with stagnating or falling real rural incomes b) an inadequate system of property rights allocation and lack of access to credit c) scarce non-agricultural employment and d) low education and therefore mobility, population growth alone would not have led to significant deforestation in Northeast Thailand. Similarly in Java, Indonesia, the absence of an effective system to internalize the environmental costs of the intensive use of land led to resource degradation. However, after governmental policy reforms that reduced policy bias against farmers, relaxed interest rates and introduced rural credit programs, Java was in a better position to absorb a growing labor force. Pakistan relies extensively on a system of canal irrigation to sustain its agricultural lands. However, half the area served by the Indus Water Basin is water logged, saline, or both. The cause lies not in over population, but in mismanagement and wasteful use. If irrigation water were not so heavily subsidized, or free, farmers would have an incentive to utilize the resource more effectively, perhaps by lining the canals to reduce seepage and waste.

Conclusion

The link between population growth and environmental degradation is not a direct one. When the cost of environmental degradation or resource use is accurately represented in the market, when property rights are assigned in order to combat ‘the tragedy of the commons,’ when laws and regulations exist and are strictly enforced, when the distribution of wealth and education in urban and rural areas is more balanced, population growth need not lead to environmental degradation. In the presence of technological progress, population growth can actually lead to more utility in resource use, and an improvement in environmental conditions. Therefore policymakers should a) emphasize on economic reforms that secure a functioning market economy that captures and translates resource use in an accurate way and b) promote social reforms and help local communities safeguard their surrounding resources by investing in them and enabling them to benefit from these reforms.

References

Theodore Panayotou, "An Inquiry into Population, Resources and Environment" in The Impact of Population Growth on Well-Being in Developing Countries, Dennis Ahlburg, Allen C. Kelley and Karen Oppenheim Mason (editors), Springer-Verlag, New York, 1996, Ch. 5, pp. 259-298