The Ecologist’s Approach to Sustainable Development

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For the latest thinking about the international financial system, monetary policy, economic development, poverty reduction, and other critical issues, subscribe to Finance & Development (F&D). This lively quarterly magazine brings you in-depth analyses of these and other subjects by the IMF’s own staff as well as by prominent international experts. Articles are written for lay readers who want to enrich their understanding of the workings of the global economy and the policies and activities of the IMF.

AS ECOLOGISTS take on a larger role in economic decision making, they bring a systemwide perspective, a long-term view that underscores prevention, and a package of ecological practices that reinforce sound socioeconomic development.

Traditionally, ecology—the structure and function of the natural environment—was of little relevance to those interested in human affairs. But in recent years the situation has changed, reflecting a more sophisticated perception of the way humans influence the use and conservation of natural resources. Where natural resources were once considered a “free good” and unlimited growth prevailed, today’s attitudes embrace three fundamental ecological principles:

• Human economic activity is a subsystem that operates within a larger, but finite, ecosystem. Disordering of the ecosystem (e.g., depletion and pollution) eventually interferes with the life-support systems sustaining the economy.

• As expanding economic activity and growing human populations use increasing amounts of natural resources and produce ever-increasing volumes of waste, the limits (or carrying capacities) of ecosystems are being exceeded.

• Some development impacts will, if drastic enough, cause long-term, and even irreversible, environmental changes. For example, when tropical forests are felled and soil exposed, the minerals (already in short supply) are leached by the rain and the soil hardens, preventing forests from regenerating and crops from being reestablished.

As a result of the new awareness, ecologists now play a vital role in defining human use and management of forests, wetlands, and coastal areas and in balancing the interactions among humans, livestock, and the plants and soil supporting them. Ecologists also have a growing involvement in the design and implementation of development projects, as governments move to protect air and water quality, conserve natural resources, and support economic development with sound environmental management.

The challenge for ecologists is how best to measure and predict what happens to the relevant natural system, or “ecosystem,” when development takes place. They might be asked to advise on where to locate an industrial plant and how the resulting pollutants should be treated—essentially measuring the absorptive capacity of a receiving lake or river. They might also be asked to predict harvests and stocks of natural resources, based on which factor is in least supply and its availability (e.g., nutrients in tropical agricultural soils). When the structure and processes of an ecosystem are understood, equations can relate essential traints in a predictive model.

As ecologists become increasingly drawn into the development process—initially, the concerns were local pollution and health, whereas, now, the concerns are regional and even global—they are helping to shape the new, more environmentally aware development agenda. For them, the strategy is threefold: (1) encouraging the integration of ecological considerations into economic and sectoral development policies; (2) devising anticipatory and preventive strategies for development projects; and (3) demonstrating that sound ecological policies also benefit development.

A systemwide approach

Ecologists bring a systemwide perspective, focusing on the dynamic nature of complex environmental problems, with their multitude of links and indirect effects. Many of these effects are manifest either at distant locations (downstream effects) or in the future (the gradual depletion of soil nutrients). In forest management, for example, harvesting usually induces significant changes in the forest ecosystem (as measured by such indicators as topsoil depth and infiltration capacity), which in turn affect productivity. But changes also occur off site, with soil loss leading to a potential decrease in fish production and reduced reservoir storage capacity.

For the past 10–15 years, ecologists have relied on national conservation strategies, environmental profiles, environmental sector reviews, and ecological or natural resources profiles to help move sustainable use higher on the political agenda and strengthen the relevant agencies in many countries around the world. These tools have also proved useful in determining the optimal use of natural resources on a sustainable basis, the nature and dynamics of social and technological change, trade-offs between total exploitation of natural resources and their conservation, and benchmark indicators in the integration of conservation with development.

In the last two to three years, the World Bank, along with other aid agencies, has adopted another of the ecologists’ tools—environmental action plans. By fall 1993, some 22 developing countries had completed such plans, and others were in the process of preparing them. These plans describe a country’s main environmental problems and identify policies, institutional measures, and investments that address them. Although these plans are still in a formative stage, they are beginning to play a role in preventing serious and irreversible environmental degradation.

Prevention better than cure

As policymakers have come to realize that curing degraded ecological systems is extremely expensive, time-consuming, and often impossible, environmental policies aimed at anticipating significant ecological and socioeconomic impacts—rather than simply reacting to them—have taken on new importance. For example, tropical forests, grasslands, coral reefs, mangroves, and many other unique habitats are being rapidly destroyed; species extinction is accelerating; and in 8 of the world’s 17 ocean fishing areas, the amount of fish caught between 1987 and 1989 exceeded the lower range of the estimated sustainable catch.

But the application of anticipatory and preventive environmental raises further difficulties. Such policies may require action in advance of both scientific certainties and political acceptance of demonstrated adverse impacts. Moreover, the knowledge needed to predict environmental damage is often weak or absent. To address these difficulties, ecologists increasingly rely on environmental assessments aimed at determining the potentially significant environmental impacts of a proposed development project. In fact, since October 1989, the World Bank has required that all proposed investment projects be screened in this manner, leading to the redesign of numerous projects. In the Lower Guayas Flood Control Project in Ecuador, for example, a flood control channel was rerouted to spare a reserve that contained the threatened Horned Screamer bird and the last of western Ecuador’s tropical dry forest.

Valuing ecosystems: the Bintuni Bay mangroves

The precise economic value of ecological assets is difficult to assess. This is partly owing to the lack of information on the “market value” of ecological “goods and services,” and partly owing to uncertainty about the dynamics of ecosystems, as well as problems of quantifying certain “nonmarket” values.

Nonetheless, in 1991, policymakers in Indonesia tried to quantify ecosystem benefits before deciding what to do with one of the largest remaining mangrove forests—304,000 hectares surrounding Bintuni Bay in Irian Jaya. One proposal urged conserving most of the area, another expanding exploitation for the production of woodchips for export. At risk were the economic benefits of near-shore shrimp and fish, as well as the livelihood of local inhabitants and protection from farmland erosion.

A Canadian-funded cost-benefit analysis compared the proposals, taking into account links with the other economic benefits of the different ecosystem functions (fisheries, timber, minor products and local uses, erosion control, and existence values). The study concluded that a selective cutting approach covering 25 percent of the total mangrove area would maximize the asset value of the resource. However, an important caveat was the extent of uncertainty about actual links among ecosystem functions meaning the penalty for “guessing wrong” could be quite high. A more conservative approach might have been in order, including adopting additional measures (such as selective cutting and replanting) to mitigate the adverse effect that timber cutting might have on the different ecosystem functions.

Although environmental assessments may continue to be the predominant environmental planning technique for the foreseeable future, a key drawback is that they operate on a piecemeal, sectoral basis, often precluding a comprehensive and integrated view (e.g., multiple use of natural resources and the capacity to consider common waste collection, treatment, and disposal systems). Likewise, the degree to which a particular project’s exploitation of resources (energy and raw materials) is at variance with overall regional needs may go unappraised. An important step toward full integration of ecological factors into mainstream economic decision making must now be to expand the application of environmental assessments so that they can provide guidance to policy-based lending—which, after project lending, is the second-largest use of Bank resources.

Good ecology/good economics

Ultimately, ecologists will be effective in influencing policy only if they can demonstrate that sound ecological policies will promote, not hinder, sustainable economic development. This requires a partnership with economists—a partnership that is being developed, both in estimating the economic cost of damaged ecosystems and the economic benefits of conserving such systems (see box).

Even so, the structure of government decision making often works against the best policies being adopted. Natural resource agencies—which typically are charged with both regulating and promoting natural resource use—have found it difficult to move from exploitation to sustainable use, in part because of the intense competition for increasingly scarce budgetary resources and the consequent pressure to produce results that can be reflected quickly in improved economic performance. In addition, well-defined and generally accepted measures of environmental and natural resource management performance are in short supply. This may explain why a central agency with broad powers to protect the environment is often unable to persuade, for example, a forestry department to develop forests on a sustainable basis, or an agriculture department to regulate the use of fertilizers and pesticides.

The answer to these problems lies in restructuring these institutions. Consensus suggests that a new facility at the highest levels of policy formulation is needed so that environmental policies cutting across the jurisdictional lines of existing agencies can be identified and analyzed. In all this, economic analysis has a major role to play. Through natural resource assessments, economic tools can help determine the desirability of environment- related projects, their design and location, the need for introducing new incentives or removing misguided ones, and the policy instruments necessary for sustainable development.


Finance & Development, December 1993
Author: International Monetary Fund. External Relations Dept.