Project GCP/SYR/006/ITA – Phase II FAO-ITALIAN GOVERNMENT COOPERATIVE PROGRAM

1. Project GCP/SYR/006/ITA – Phase II FAO-ITALIAN GOVERNMENT COOPERATIVE PROGRAM Environmental Economics and Sustainable Development Donato Romano Department of Agricultural and Land Economics University of Florence and International Consultant to the FAO

2. Objective: sustainability of rural development policies  relevant concepts and methods Background: Basic microeconomics Materials: • outline and reading list:contents. schedule and references • course notes

3. Week Time Sat Sun Mon Tue Wed Thu 9.30-10.15 G1 G1 10.15-11.10 G1 G2 G1 G2 G1 W1 11.10-11.55 G2 G2 G1 11.55-12.40 G2 G1 G2 G1 G2 12.40-13.25 G2 G1 G2 G1 G2 9.30-10.15 G1 Seminar G1 10.15-11.10 G1 G2 G1 G2 G1 W2 Field visit 11.10-11.55 G2 G2 G1 11.55-12.40 G2 G1 G2 G1 G2 12.40-13.25 G2 G1 G2 G1 G2 9.30-10.15 G1 G1 Test G1 10.15-11.10 G1 G2 G1 G2 Test W3 11.10-11.55 G2 G2 G1 11.55-12.40 G2 G1 G2 G1 G2 12.40-13.25 G2 G1 G2 G1 G2 • Evaluation: • homeworks • quizzes: 1 per week • final test: Wed. Nov 27th Schedule:

4. Population • Every year. more than 93 million people are being added to the world’s population of 6 billion • More than 82 million of these additional people per year will be born in Third World countries • Rapid population growth can have serious consequences for the well-being of humanity worldwide

5. Table 1.1. Estimated World Population Growth through History Year Estimated Population (Million) Estimated Annual Increase in the Intervening Period 10.000 B.C 5 A.D. 1 250 0.04 1650 545 0.04 1750 728 0.29 1800 906 0.45 1850 1.171 0.53 1900 1.608 0.65 1950 2.576 0.91 1970 3.698 2.09 1980 4.448 1.76 1990 5.292 1.73 2000 6.057 1.70 Population historical records

6. Population historical records

7. Table 1.2. World Population Growth Rates and Doubling Times: A Historical Review Period Approximate growth rate (percent) Doubling time (years) Until 1650 0.002 35.000 1650-1750 0.3 240 1850-1900 0.6 115 1930-1950 1.0 70 1960-1980 2.3 31 mid 1990 1.7 43 Population historical records

8. Population geographic distribution

9. 3.0 LICs excl. China & India 2.5 LMICs 2.0 LICs Annual population growth rate (%) 1.5 1.0 HICs 0.5 0.0 1960 1965 1970 1975 1980 1985 1990 1995 Years Population geographic distribution

10. Table 1.3. Dependency Ratios in Selected World Regions Regions 1960 1970 1980 1990 2000 World 0.739 0.765 0.711 0.642 0.605 High income 0.590 0.578 0.526 0.491 0.491 Middle income 0.755 0.777 0.711 0.656 0.582 Low & middle income 0.779 0.811 0.750 0.670 0.626 Low income 0.791 0.826 0.768 0.675 0.644 Low income. excluding China and India 0.834 0.905 0.900 0.857 0.804 East Asia & Pacific 0.788 0.813 0.706 0.546 0.509 Europe & Central Asia 0.603 0.599 0.561 0.550 0.508 Latin America & Caribbean 0.867 0.882 0.794 0.691 0.607 Middle East & North Africa 0.899 0.963 0.910 0.861 0.729 South Asia 0.781 0.822 0.781 0.730 0.681 Sub-Saharan Africa 0.867 0.912 0.938 0.937 0.905 Population age structure

11. 2150 Year two-child family achieved Year ultimate fertility achieved 2035 2150 2150 2025 2150 2005 2040 The hidden momentum

12. per 1,000 40 birth rate 30 death rate growth rate 20 10 Stage I Stage II Stage III Stage IV 0 1840-50 1890 1910 1990 time The demographic transition (in W. Europe)

13. per 1,000 B 40 birth rate 30 A 20 B death rate 10 A Stage I Stage II Stage III 0 1900 1950 1965-70 time The demographic transition (in LDCs)

14. C A' Goods consumed by parents (Gp) G 3 E 3 A E 4 G 4 E 2 I G 4 2 G 1 E 1 I 3 I 2 I 1 B" D B B' F F F F 1 3 2 4 Number of desired children (Cd) The microeconomic theory of fertility

15. The microeconomic theory of fertility • Policy implications: • an increase in the education of women and a consequent change in their role and status, • an increase in female non-agricultural wage employment opportunities, which raises the price or cost of their traditional child-rearing activities, • a rise infamily income levels through the increased direct employment and earnings of a husband and wife or through the redistribution of income and assets from rich to poor, • a reduction in infant mortality through expanded public health programs and better nutritional status for both parent and child, • the development of old-age and other social security systems outside the extended family network to lessen the economic dependence of parents on their offspring.

16. Other Other Population Population factors factors growth growth Fixed Fixed Frontier Frontier Technology Technology resources resources resources resources Cropland Cropland Urban Urban Forest Forest Range Range Forest Forest Range Range Cropland Cropland Colonization Colonization Farm size Farm size Overcrowding Overcrowding Fuel wood Fuel wood Overgrazing Overgrazing brings land brings land falls falls occurs occurs declines declines occurs occurs degradation degradation Agr Agr . . producti producti - - Prices Prices Land conflicts Land conflicts vity vity falls falls may rise may rise occurs occurs + + - - - - - - - - - - Other Other Poverty Poverty factors factors Population-Environment-Poverty Links

17. Table 1.4. Carrying Capacity in 2000, by Region Input level Africa Southwest Asia South America Central America Southeast Asia Average Low 1.6 0.7 3.5 1.4 1.3 1.6 Interim 5.8 0.9 13.3 2.6 2.3 4.2 High 16.5 1.2 31.5 6.0 3.3 9.3 Carrying capacity

18. Table 1.5. Carrying Capacity in Sahelian and Sudanian Zones of West Africa Zone Sustainable population Actual Actual Per crops Per fuelwood Per livestock Per total rural population total population Saharan .. .. 0.3 0.3 0.3 0.3 Sahelo-Saharan .. .. 0.3 0.3 2 2 Sahelian 5 1 2 7 7 7 Sahelo-Sudanian 10 10 5 15 20 23 Sudanian 15 20 7 22 17 21 Sudano-Guinean 25 20 10 35 9 10 Carrying capacity

19. Table 1.7. Population Density and Farming Intensity, by Farming Farming System Farming intensity Population density Climate Hunter/gatherer 0 0-4 Unknown Forest fallow 0-10 0-4 Humid Bush fallow 10-40 4-64 Humid or semi-humid Short fallow 40-80 16-64 Semi-humid, semi-arid, high altitude Annual cropping 80-120 64-256 Semi-humid, semi-arid, high altitude Population pressure and technological change

20. Greenhouse effect

21. Greenhouse effect • Whyshould this greenhouse effect be thought of as a problem? • The additional warming is what causes concern: • many potentially damaging effects • somebeneficial ones • The gases producing this layer around the earth are: • water vapor, • carbon dioxide (CO2), • methane (CH4), • nitrous oxide (NO), • some chlorofluorocarbons (CFCs), and • ozone (O3)

22. Table 2.1. Contributions of Greenhouse Gases to Global Warming Type of gas Carbon dioxide equivalence 1990 emissions (millions of tons) Percentage share over 100 years Carbon dioxide 1 26,000 66.0 Methane 21 300 16.5 Nitrous oxide 290 6 4.5 CFCs 12.0 CFC-11 3,500 0.3 n.a. CFC-12 7,300 0.4 n.a. HCF-22 1,500 0.1 0.4 Other n.a. n.a. 0.6 Greenhouse effect These gases are a mix of natural events and anthropogenic factors determining the relative contributions of these gases is complex

23. Greenhouse effect • Two features: • uncertainty • commitment to some degree ofwarming. • Two policy responses: • prevention (to reduce trace gas emissions) • adaptation

24. Greenhouse effect • Projected scenarios (IPCC estimates): • scenario A - business as usual: no controls are exercised over current rates of emission growth  global mean temperatures will increase 1°C by 2025 and 3°C by 2100 compared with temperatures in 1990, i.e. a rise of 0.3°C per decade • scenario B: deforestation is halted, natural gas is substituted for coal, which has a higher carbon content, and energy conservation measures are adopted  a rise of 0.2°C per decade • scenario C: increasingly strict abatement measures are undertaken, and energy from fossil fuels is aggressively replaced by renewable energy  warming is held to 0.1°C,

25. Table 2.2. Possible Change in Climate, by Region and Season (scenario A) Region and Latitude Temperature change as a multiple of global average Rainfall Summer Winter Arctic and Antarctic areas (60°-90°) 0.5-0.7 2.0-2.4 Enhanced in winter Major food-growing regions of North America and Europe (30°-60°) 0.8-1.0 1.2-1.4 Possibly reduced in summer Much of developing world (0°-30°) 0.9-1.7 0.9-1.7 Enhanced in places that have heavy rains today Greenhouse effect

26. Effects of global warming • Projected scenarios (IPCC estimates): • Rise in regional temperature: mid-latitude regions • summer soil moisture may be reduced, and crops could be affected by summer droughts; • reduction of water supplies, both of surface water and groundwater aquifers • changes in hydrological regimes • Rise in sea level: melting mid- and high-latitude small glaciers • andice sheets mean rise in sea level of 6 cm a decade • loss of low-lying land to the sea • salt intrusion to freshwater systems and groundwater • storm surges that cause floods • Frequent and severe events: alteration of the frequency and • variability of events related to the weather • droughts, storms, and floods may be more frequent and severe

27. Effects on LDCs • LDCs more dependent than DCson NR  more sensitive to changes in climate • the agricultural systems of many LDCs are based on low-lying deltaic land flooding and saltwater intrusion • many agricultural systems rely on natural rainfall rather than irrigation systems  problems with changes in rainfall patterns • many small LDCs are island communities at special risk from severe weather events such as hurricanes and cyclones • the very poverty of many LDCs will preclude them from undertaking the adaptive policies, such as sea defenses, that may be needed

28. Ozone layer depletion • Stratospheric ozone blocks ultraviolet radiation from the sun •  depletion of the ozone layer increases the incoming UVR: • increase of skin cancers • suppressions of the immune system in the human body • eye disorders • reduced or distorted growth in plants • Cause (mid 1970s): chlorofluorocarbons (CFCs) • depletion of the ozone layer • contribute to global warming  1989:Montreal Protocol

29. Loss of Biodiversity Biodiversity is the totality of genes, species, and ecosystems. The term is helpful for reminding us that it is not just the total stock of living things that matters, but the range of different living things. • Protecting the world’s biodiversity is adifficult task: • 30-50 million species • only 1.43 million species have been scientifically described • most undescribed species inhabit the tropical forests • rate of loss of species is not known, but evidence suggeststhat the rate of extinction has increased • perhaps one-quarter of existing species are at risk of extinction in the next twenty to thirty years

30. Table 2.3. Status of Threatened Species Species Extinct Endangered Vulnerable Rare Indeterminate Total Amphibians 2 9 9 20 10 50 Birds 113 111 67 122 624 1,037 Fish 23 81 135 83 21 343 Invertebrates 98 221 234 188 614 1,355 Mammals 83 172 141 37 64 497 Plants 384 3,324 3,022 6,749 5,598 19,078 Reptiles 21 37 39 41 32 170 Loss of Biodiversity

31. Loss of Biodiversity • Causes of biodiversity loss: • population growth, • ill-defined land and resource rights, • market, planning, and government failures • If the above factors explain habitat loss, • their reversal or containment will assist the conservation process, but • in order to avoid to alienate people, it is required community involvement in protected areas

32. The Mediterranean Basin • Why the Mediterranean Sea is subject of environmentalconcern? • land-locked • surrounded by countries with various combinations of • rapid population growth, • industrialization, • development, • massive changes in land use • Two kinds of problems (Box 3.1): • common problems, i.e. they are shared by two or more countries • problems occuring separately in several countries

33. The Mediterranean Basin Both types of problems are reciprocal externalities that require bilateral or collectiveaction • Examples: • heavily polluted rivers • declining fisheries (because of pollution as well as over-fishing) • reduced wetland areas (because of land reclaimation, urbanization) • loss of forests and natural habitats • water deficiencies and water quality problems • soil depletion (overgrazing, overcultivation, salinization, water-logging) • solid waste poorly managed

34. The Mediterranean Basin • Causes: • populationgrowth: by 2025the 1985 population of 350 million persons could have increased by 200 million • economic policy:energy and irrigation are subsidized • institutional failure:tenurial arrangements,weak controls over development, poor political awareness of environmental issues • Actions: • containpopulation pressure on natural resources • reduce tenurial conflicts • getting resource pricesright (i.e. reflect social costs) • strengthen institutions

35. Water Resources in the Middle East Why the water resources are so important for the Middle East? No other region of the world embraces such a large area, with so many people striving so hard for economic growth on the basis of so little water • The Mashrek lies in a transition zone. The dominant hydrological characteristic is the combination of: • aridity and • uncertainty • Whereas regions of higher rainfall sometimes suffer droughts and regions of lower rainfall sometimes experience floods, this region has to cope with both

36. Water Resources in the Middle East

37. Water Resources in the Middle East

38. Water Resources in the Middle East • Three water crises at the same time: • quantity: demand for fresh water in the region exceeds the naturally occurring, renewable supply • quality: much of the region’s limited water is being polluted from growing volumes of human, industrial, and agricultural wastes • equity: the same water is desired simultaneously by different sectors in some society or wherever it flows across (or under) an international border

39. Water Resources in the Middle East • Actions: • quantity: much more attention should be paid to the low-capital-decentralized options than to the high-capital-centralized ones. To a large extent, the former are not only technically proven but typically more cost effective, given the marginal costs of new conventional water supply • quality: intervene to fix the major causes of pollution, i.e. overpumping of aquifers, runoff from agriculture, discharge of human and industrial wastewater, and loss of habitat • equity: develop internalas well as international institutions to manage conflicts

40. Land Degradation and Desertification • What is land degradation? • soil erosion • waterlogging • salinization • land use change What is desertification? land degradation in arid, semi-arid and dry sub-humid areas resulting from various factors, including climatic variations and human activities

41. Land Degradation and Desertification • Why is land degradation a problem? • during the 1980s, the amount of per capita arable land declined by 1.9% per annum • that is, every year, around 70,000 km2 of farmland are abandoned because the soils are too worn out and degraded for crop production; another 200,000 km2 suffer from reduced productivity • about 1.4 billion hectares of arable land have been taken out of agricultural production because of urban sprawl between 1980 and the turn of the century • overall land degradation of various sorts is estimated to be causing an annual loss of 12 million tons of grain output: almost half of all the gains in grain output each year

42. Land Degradation and Desertification • Why is desertification a problem? • one-third of the earth’s land is arid or semi-arid • some 600 million people live there • more than 20% of the earth - home to 80 million people - is directly threatened by desertification • some 100 countries are affected.

43.   Land Degradation and Desertification • Causesof land degradation/desertification: • populationgrowth: populations are increasing as fast in arid lands as elsewhere • overcultivation, • overgrazing, • deforestation, • poor irrigation Traditional rainfed cropping systems break down under pressure from growing populations and the increased planting of cash crops people takes too much from the soil and puts too little back

44. The Human-Environment Relationship THE ENVIRONMENT AIR POLLUTION ENERGY Firms (Production) AIR SOLID WASTE Inputs Outputs THE ECONOMY WASTE HEAT Households (Consumption) WATER WATER POLLUTION AMENITIES RAW MATERIALS

45. Functions of the Environment • Source of raw materials: • depletable • renewable • Sink for waste: • biodegradable/short-lived/non-toxic • toxic/persistent • General life support: • water cycle • carbon cycle • ozone layer

46. The First Two Laws of Thermodynamics Closed vs. open systems: exchange ofenergyand matter Earth as a closed system • First law of termodynamics: energy and matter cannot be created or destroyed • the mass of materials flowing into the economic system has to either accumulate in the economic system or return to the environment as waste • excessive wastes can depreciate the asset: limited absorptive capacity • Second law of termodynamics:entropy increases • no conversion from one form of energy to another is completely efficient and that the consumption of energy is an irreversible process • over the very long run, the growth process will be limited by the availability of solar energy and our ability to put it to work

47. A Classification of Natural Resources • What is a resource? • utility vs. altruism • natural vs. man-made • renewable vs. non-renewable (or exhaustible): • - growth and reproduction • - carrying capacity (max stock) • - rate of extraction • conditionally vs. uncoditionally renewable

48. A Classification of Natural Resources Natural resources Renewable Non-renewable • oil • coal • minerals Unconditionally renewable Conditionally renewable Non-biological flow resources Non-biological cycling resources Simple biological resources Complex resources • solar energy • tidal energy • wind energy • water • nitrate • CO2 • O2 • mammals • fish • crops • soil • ecosystems

49. Special Features of Agricultural Resources • What are, if any, the special featuresof agriculturalresources? • inter-temporal or long-run nature • optimal time path of use • uncertainty • close linkagesbetween the physical system and biological system • complexity of involved resources • renewable + exhaustible • quality differentiated • spatial nature of resources

50. Ideas of Development 1950s-60s: economic growth 1960s-70s: growth with redistribution 1970s-80s: basic needs 1980s-90s: sustainable development • Sustainablityis concerned with thes ‘3 Es’: • economicdimension: efficiency • ecologicaldimension:ecosystem functioning and environment maintenance • equity and ethicaldimension:distributional consequences of policy alternatives