LD Jan/Feb 2014 - Environnment vs Resources - Negative Part 1

Resolved: Developing countries should prioritize environmental protection over resource extraction when the two are in conflict.

For the introduction and definitions to this topic, click here.
This is the first of a two part exploration of the Negative position of the topic.

The Neg Position

When I first started researching the Neg position I assumed it would be easy to find evidence which weighed heavily in favor of the benefits of resource extraction for developing countries.  Unfortunately, there is the undeniable reality that such activities do impact the environment in ways that can be very easily construed as favorable to the Aff case. In fact, the wealth of opinions and papers which speak of environmental harms and the resource curse  soon had me thinking this was going to be a one-sided debate.  If there is a lesson in this, I suppose, it is keep researching and eventually one will see cracks in the armor.  I did.  What I present here is one such approach.  You should try to read and evaluate it for the concepts it attempts to reveal and then dig in deeper with your own research.  The value structure of the Neg position will be examined in a future post.  This is the contention debate. Well...one approach, anyway.

The Keys to the Future

The environmental impact of humans upon the planet is profound. Fact. And worse, because all emerging, industrialized societies need resources, the extraction, processing and consumption of resources comes with significant environmental cost.  Neg cannot easily deny this fact.  We acknowledge that today, our economies are driven by a scarcity of resources, many of which are non-renewable and often taken with significant environmental impact.  Paradoxically, these resources are enabling the development of new technologies and methods which will reduce the impacts of scarcity and environmental degradation.

Barbier 2013:

Today, we are on the verge of a new era, the “Age of Ecological Scarcity”. For the first time in history, fossil fuel energy and raw material use, environmental degradation and pollution may be occurring on such an unprecedented scale that the resulting consequences in terms of global warming, ecological scarcity and energy insecurity are generating worldwide impacts. If humankind is to succeed in overcoming these global problems, we need to find the next “new frontiers” of natural resources and adapt economic development accordingly. This will require developing low-carbon sources of energy, processes of production and technological innovation that require less environmental degradation and pollution. It will also mean instigating institutional changes, creating global carbon and environmental markets, and implementing new policies to foster a new era of “sustainable” economic development.

The technological advances needed to drive the new low-impact economy necessary to sustain our future is financed by the development of our global economy. The evidence will show, as we utilize our resources to expand wealth, we improve our environment.

The Development - Environment Link

In order to develop new technologies we need resources.  Extracting resources may create negative environmental impacts.The good news for Neg, as the level of development improves, the impact on the environment improves.

Berstam 1990:

The existing scarce long-term data suggest not only non-proportionality of pollution with respect to economic growth, but also non-linearity and concavity. Whenever long-term data exists, it shows the pollution decelerates over decades of economic growth. Even global aggregate data, which puts together different stages of development and different economic systems working in opposite directions, still shows marked deceleration of emissions.

This research is confirmed in other studies as well.  While the factors which drive the relation are complex and debated among scholars, the empirical data generally confirms the idea.  It is said, in keeping with the philosophy of Malthus, the poor have little concern for the environment when they are thinking about their next meal.  So, societies which can meet their basic needs will undertake higher-order projects to improve their lives. The relationship between national wealth and environmental impact is described as the Environmental Kuznets' Curve resembling an inverted U-shape curve.

Levinson:

Some forms of pollution appear first to worsen and later to improve as countries’ incomes grow. The world’s poorest and richest countries have relatively clean environments, while middle-income countries are the most polluted. Because of its resemblance to the pattern of inequality and income described by Simon Kuznets (1955), this pattern of pollution and income has been labelled an ‘environmental Kuznets curve’ (EKC). To date, the practical lessons from this theoretical literature are limited. Most of the models are designed to yield inverse-U-shaped pollution-income paths, and succeed using a variety of assumptions and mechanisms. Hence, any number of forces may be behind the empirical observation that pollution increases and then decreases with income. Moreover, that pattern cannot be interpreted causally, and is consistent with either efficient or inefficient growth paths. Perhaps the most important insight is in Grossman and Krueger’s original paper: ‘We find no evidence that economic growth does unavoidable harm to the natural habitat’ (1995, p. 370). Economists have long argued that environmental degradation is not an inevitable consequence of economic growth. The EKC literature provides empirical support for that claim. 

Based on the empiric of the EKC we can conclude that one mechanism for solvency of environmental impacts exists in increasing the wealth of nations. Especially those nations which are the source of the world's resources.

The Resource - Wealth Link

Many poor, developing countries are sitting on natural resources worth billions and in some cases trillions of dollars.  These countries can gain benefits for their citizens by extracting these resources.  The potential for developing countries to help themselves is enormous with respect to their present situations.  The Neg can argue we can not let the mistakes of the past be a deterrent to advancement.  It is possible for developing countries to reap benefits.

Oxfam 2009:

This situation should, and can, change. For those countries that depend on extractive industries, the income generated by this sector could be transformed into an opportunity if it is used properly. According to estimates by Intermón Oxfam (see Table 3, Annex 29), countries such as Angola, Chad, Nigeria, Ecuador, and Venezuela could use hydrocarbon exports to significantly increase their public spending per capita on education and health by 2015, investing 20 per cent of estimated tax revenues in education and 16 per cent in health. Angola for example, could multiply its spending on health by a factor of between eight and ten. Fiscal tools – taxes and public spending – are the main instruments that governments can use to improve the share of benefits accruing to the state and thus the sums available for public use. Fair systems of taxation and spending allocation policies that focus on universalising health care and improving the quality of education are necessary in countries with rich natural resources. Bolivia saw oil and gas revenues rise from $448m in 2004 to $1.531bn in 2006, due to the redistribution of profits agreed in contracts after 2005, although the revenues still needed to be allocated to increase social spending. Indonesia and Norway are good examples of countries with significant revenue from natural resource extraction, where public spending is aligned coherently with long-term development goals.

While past contracts for resource extraction have proven to be predatory in nature and have failed to yield significant benefits for the host countries, there is no reason that should be the model for all future activities.  There is an awareness of the environmental impacts of resource extraction but we can not let our concern for the environment over-ride our need for resources.  In fact, there is no reason we cannot approach the problem is a cooperative way. Those governments which have resources, and have arranged their affairs and contracts properly, do in fact realize positive benefits.  This is evidenced in Eastern Europe mining operations.

Urge-Vorsatz:

The mining industry has stimulated population imigration [sic] and thus promoted development. Historically, mining extraction activities have originated settlements in countries abundant with natural resources, such as gold, silver, coal and other minerals. Accessibility of the raw materials variously determined the pattern of residence, distribution of goods and types of settlements. Usually human settlements were created and maintained by groups of miners occupying simultaneously a given territory and sharing a limited stock of resources. Nowadays, the relationship between the development of the mining industry and urban growth is much more profound, particularly in developing countries and in countries in transition due to the presence of FDI [foreign direct investment]. In fact FDI is considered a tool to reach basic economic goals: stability, growth and knowledge transfer. By means of multinational corporations, which create new jobs and promote population migration, FDI leads to an increase in the population of certain urban settlements. Overall, the internationalization of capital markets, the internationalization of production processes by means of FDI, and the increasingly important role of multinational corporations may lead to positive consequences for the environment of a particular human settlement, mainly because of using less environmentally damaging technologies.

Models For Solvency

Foreign direct investments is one representative means for achieving the compatible goals of resource extraction with minimal environmental impact.  Foreign investors are already on the negative side of the Kuznets curve and bring their technology and environmental awareness with them.

Urge-Vorsatz:

Foreign direct investment plays an essential role in improving the national economies of developing countries and countries in transition and can be determined as a vehicle for attracting additional private investment. On the other hand, there is debate among policy makers and environmental activists concerning the implications of this trend for the environment and the social conditions of local populations. FDI may encourage environmental protection activities within human settlements. It may help to enhance awareness about environmental factors, increase efficiency of resource use, and provide new resources to cope with existing environmental problems.  According to Zarsky (1999) MNCs [multinational corporations] which have superior technology and management systems can promote better environmental performance in FDI host countries.  This can be explained by the fact that Organizations for Economic Co-operation and Development (OECD) usually have up-to-date cleaner technology and better environmental management systems, often due to their higher regulatory requirements. Indeed, world-wide sales of pollution-abatement equipment and related services are estimated at a total sum of US$ 200 billion with 90% of toal output being accounted for by OECD countries. Moreover, in their home countries MNCs perceive pressure from "green consumers" to introduce environmentally sound management practices.

Additional programs being explored by the World Bank builds certain safeguards into the investment terms which encourage good results.  The Country System Approach inhibits exploitation by corrupt recipient governments (i.e. the developing countries) requiring the legal and regulatory framework necessary to ensure a favorable outcome.

Larsen 2013:

In light of the world’s changing economic and political dynamics, developed and developing nations have over the past decade agreed on a set of principles and actions to guide development efforts. These are outlined in the Paris Declaration on Aid Effectiveness (Paris Declaration) and subsequent agreements from meetings in Rome, Accra, and Busan. These documents highlight the principles of “ownership” and “mutual accountability.” Ownership over development is not easily defined. It is clear, however, that it entails giving voice to those most affected by development processes, including both governments and members of the public in developing countries.

The various implementations of this approach can be explored in detail in the referenced paper. The take-away, in my opinion, is the idea that investments in resource extraction are not being undertaken without a concerted effort to recognize and mitigate the negative impacts of the activities and this can only serve to accelerate movement toward the negative side of the Kusnets curve.

Achieving Balance

Negative will face plenty of opposition in this debate.  Even among scholars, there is substantial debate regarding the mechanisms and validity of the theories which explain the relationships between resource extraction and environmental degradation.  In order for Neg to win the contention level debate, Neg needs to hold its ground on the empirical data and show that solvency is possible despite the fact that some projects fail to yield the expected results in the short-term.  The path to the negative side of the Kusnets curve takes time.  In the meantime, and even if the judge refuses to accept the empirical data or rejects the solvency potential of FDI or Country Systems Approaches, there remains an over-arching recognition that environmental degradation is a global problem and the developed nations know it.  Continued exploitation of poorer countries is unsustainable.  We need resources, and we need a healthy environment.  Therefore, rather than prioritize one goal over another, we must assume a balanced point of view.

I will leave this part of the analysis with this worthwhile excerpt regarding the a British Columbia First Nation group as it examines the question of environmental protection versus resource extraction.

Hume 2013:

Darlene Simpson, chief negotiator for the Skii km Lax Ha, says almost every mine built in British Columbia comes with an environmental cost to native communities. But she knows there is something worse: poverty."

"The hardest thing for me is the question of where you find the balance between resource extraction and environmental protection. Every project has a cost attached to it, a cost to the land. Most of my life has been about hunting and fishing. Now it’s about dealing with human capacity. I understand the environmental risk – but seeing people getting healthy and leading a better life makes it worth it to me.” Ms. Simpson says families are transformed when a member of a household gets a good job. “You see people who were down and out, who had nothing, developing skills and becoming proud of who they are,” she said. “I see kids we employ helping their parents [financially] or helping their brothers and sisters. … I see them putting their own kids into organized sports more. It is healthy for the whole community.”

Click here to look at part two - the Neg Values.

Sources:

Oxfam Briefing Paper December 2009
Lifting the Resource Curse; How poor people can and should benefit from the revenues of extractive industries
http://www.oxfam.org/sites/www.oxfam.org/files/bp134-lifting-the-resource-curse-011209.pdf

Global Economic Development, Natural Resources and History; The World Financial Review
Edward B. Barbier; 2013
http://www.worldfinancialreview.com/?p=732

Human Settlement Development - Vol II Mineral extraction and the urban environment: the role of foreign direct investment in economies in transition and developing countries; Diana Urge-Vorsatz, Maia An
http://www.eolss.net/sample-chapters/c14/e1-18-04-06.pdf

The Wealth of Nations and the Environment; Working Papers in Economics; The Hoover Institute, Standord University
Mikhail S. Bernstam, 1990
http://hoohila.stanford.edu/workingpapers/getWorkingPaper.php?filename=E-90-12.pdf

Environmental Kuznets Curve (entry in forthcoming New Palgrave Dictionary of Economics 2nd edition)
Arik Levinson (undated)
http://www9.georgetown.edu/faculty/aml6/pdfs&zips/PalgraveEKC.pdf

Does Foreign Direct Investment Harm the Host Country’s
Environment? Evidence from China
Feng Helen Liang, Haas School of Business, UC Berkeley, April 12, 2006
http://faculty.haas.berkeley.edu/fenliang/research/pollution%26fdi/fdi_pollution.pdf

STRIKING THE BALANCE: OWNERSHIP AND ACCOUNTABILITY IN SOCIAL AND ENVIRONMENTAL SAFEGUARDS
World Resources Institute
GAIA LARSEN WITH ATHENA BALLESTEROS, April 2013
http://www.wri.org/sites/default/files/pdf/striking_the_balance_social_and_environmental_safeguards.pdf

Why one first nation band is embracing mining, despite its environmental impacts
MARK HUME, VANCOUVER — The Globe and Mail
Published Sunday, Feb. 03 2013
http://www.theglobeandmail.com/news/british-columbia/why-one-first-nation-band-is-embracing-mining-despite-its-environmental-impacts/article8158085/