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Population Growth and the Environment: A Neoclassical View

Population Growth and the Environment: A Neoclassical View. Peter Georgakas Rachel Ochako. Neoclassical Economics. •1. People have rational preferences based on supply and demand and access to relevant information.

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Population Growth and the Environment: A Neoclassical View

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  1. Population Growth and the Environment: A Neoclassical View Peter Georgakas Rachel Ochako

  2. Neoclassical Economics •1. People have rational preferences based on supply and demand and access to relevant information. • 2. Freedom of choice allows Markets to establish and maintain an equilibrium through self correcting measures. • 3. Individuals set out to maximize utility, while firms maximize profits.

  3. The Vicious Circle • Children contribute to their families by collecting natural resources. •As natural resources become scarce there is an incentive to have more children • Resources are exploited at a higher rate

  4. Data shows that 10 year olds devote 38% of their time to collection activities, while 25 year olds devote only 17% of their time to collection activities.

  5. Positive feedback loop • Direct correlation between population density and forest cover.

  6. Scarcity Increases Fertility • “Households in clusters with greater problems with wood supply or households who live in clusters that are further away from a wood source have a higher probability of having had a birth in the past five years, results consistent with a vicious circle hypothesis.” • Deon Filmer

  7. Policy and Market Successes and Failures in Responding to Increasing Resource Scarcity

  8. Investment and Technology • A sustainable environment supports a sustainable standard of living. Real investment is needed to assure this. “Technological change further delinks population growth and the environment by improving resource recovery, efficiency and expanse substitution possibilities.” - Theodore Panayotou

  9. Subsidies • As of 1996, fresh water subsidies in Bangladesh, Nepal, and Thailand were so steep that the total cost of supplying water was at least 1,000% of the total revenue that was received by governments. • Overall, 80% of water use in developing countries is dedicated to irrigation. • The lack of investment that cheap water affords farmers contributes to environmental degradation, as arable land is exposed to salinization, alkalization, and water logging (Panayotou, 1996). (http://www.macalester.edu/environmentalstudies/students/projects/citizenscience2007/geneticallymodifiedcrops/images/irrigation.jpg)

  10. Conclusions • Vicious circle perpetuates degradation • Policy changes, defined property rights, and access to finance and technology will support environmental preservation regardless of population growth • Results depend on an Institutional response

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