ENVIRONMENT, INCOME, AND DEVELOPMENT IN SOUTHERN AFRICA

It is widely believed that rural forest and agricultural resources in Southern Africa are overused, in the sense that both biomass and harvest levels are significantly below levels of maximum sustainable yield. However, economic theory suggests that high interest and time preference rates cause the economic optimum to coincide with generally-observed patterns. In addition, low income may be the driving factor behind high interest and time preference rates. In macro-economic terms, Southern Africa may be experiencing a productivity crisis. This leads to a downward shift in the labor demand curve, and an equilibrium result with undesirably low wage rates, high unit labor costs, and high and growing unemployment. In this context, the imposition of pollution control costs might worsen an already negative macro-economic picture. The mechanism would be a reduction in exports and an increase in imports. The productivity problem, in turn, may be a result of social factors unique to Southern Africa. Improvement in these social conditions could resolve much of the economic problem of low productivity. A review of the literature on technology transfer and green technologies offers little basis to presume that new technologies can alter this picture. One approach to positive remedies is to examine international solutions. Three kinds of potential environmental policies are: (A) tradeable pollution permits, (B) leveraged World Bank environmental adjustment programs, and (C) international petroleum taxation and income transfer. Given Southern Africa's unique position as a source of global industrial raw materials, it should be possible to develop policies that simultaneously enhance income levels and environmental protection.


Issue Date:
1993
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/11891
Total Pages:
20
Series Statement:
Working Paper 7




 Record created 2017-04-01, last modified 2017-08-23

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