Thursday, May 29, 2008

Drinking Water in Developing Countries and Pollution in the West

Readers Question:. From an economic perspective, provide an explanation of the following quotation: “In an underdeveloped country, don’t drink the water; in a developed country, don’t breathe the air.” (Jonathan Raban, 1976).

I don’t usually answer readers questions on this blog, but, this looked quite interesting.

The first part of the sentence is relatively straightforward. Underdeveloped countries (less developed is the more pc term we use these days) struggle to have sufficient economic resources to provide the basic necessities of life. Even clean drinking water is a luxury many can’t afford.

The more difficult question would be why so many people don’t have access to clean drinking water when the world economy is relatively affluent? According to End Water Poverty 1.1 billion lack access to clean water. Furthermore, the crisis is said to claim the lives of 5,000 children a day. Lack of clean water is said to cost the African economy the equivalent of 5% of GDP every year. Clearly there is an economic and social benefit to improving water supplies and sanitation but there is both a lack of political will and basic resources, especially in rural areas.

In theory, aid from developed countries could help to solve the problem; but, there are several problems.

  • AID accounts for a very small % of developed countries GDP
  • Even when AID is given, it is often tied aid not focused on the most important projects.
  • It is difficult to get aid to work effectively. (Does Aid increase Economic welfare)

‘In A Developed Country Don’t Breathe The Air.’

One immediately thinks of China. 20 years ago, the Chinese were famous for everyone cycling - and as a consequence of the low industrialisation hey had relatively good air quality. 20 years of rapid economic expansion in China has led to an unprecedented improvement in living standards; but, at the expense of more pollution, especially from an increasing number of cars.

Thus the economic expansion of China is a mixed blessing. True, some people have more income, but, in some cities it is dangerous to go out running because of the bad air quality. Paula Radcliffe, Britain’s marathon runner was understandably worried about the pollution in China for the Beijing Olympics. In China the problem is also exacerbated by a high population density.

Of course, economic development doesn’t have to lead to worse air quality. Britain introduced strict pollution laws after the great smogs in London of the 1950s. Better technology could lead to pollution free engines.

Even now, we have the potential to improve air quality a lot within developed countries. The problem is an unwillingness to change from polluting energy sources to emission free energy sources. It is a clear case of market failure and highlights the issue that economic growth doesn’t necessarily improve living standards.

If the political will was there, developed countries could have improved GDP but also good air quality. But, who wants to pay higher tax on petrol to subsidise emission free engines?

Does GDP measure economic Development?
Does Economic Growth bring increased happiness?

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