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Poverty and environmental degradation

The relation between poverty levels and environmental degradation has been widely debated inside academic circles. The theoretical linkage between poverty and environmental degradation has for some time been shroud in ambiguity. Environment degradation and poverty are closely interrelated and inseparable, particularly in developing countries. Awareness and concern about environmental degradation have grown around the world over the last few decades; these concerns are shared by people of different nations, cultures, religions and social classes. In recent years economic researchers have become increasingly aware of the important implications that the state of the environment has for the success of development effort. .(Michael P Todaro, Stephen C Smith, Economic Development)
it has been asserted that the interaction between poverty and environmental degradation can lead to a self perpetuating process in which ,as a result of ignorance or economic necessity, communities may in advertently destroy or exhaust the resources on which they depend for survival.(Michael P Todaro, Stephen C Smith, Economic Development)
According to Michael P Todaro and Stephen C Smith, environmental degradation can have severe consequences on the poor in developing countries. They further conclude that since the solution to environmental problems involve enhancing the productivity of resources and improving living conditions among the poor, achieving environmentally sustainable growth is synonymous with achieving economic growth.
Poverty is considered a great influence on environmental degradation. In many regions of the developing countries, regional overgrazing has resulted in destruction of grazing lands, forest and soil. In addition air and water have been degraded . It has been hypothesized that as people become poorer, they destroy the resources faster . By so doing tend to overuse the natural resources because they don’t have any means of survival except through the natural resources. They therefore tend to depend more on natural resources. An increase in poverty gives rise to an equal increase in environmental degradation thereby necessitating the need to improve the quality of living.
Ghana is located on the west coast of Africa bordering the Gulf of Guinea with a 539-kilometer stretch of coastline. The capital, Accra, is situated along the coast. The country shares borders with Togo to the east, Cote d’Ivoire on the west and Burkina Faso to the north. Ghana covers a total area of 238,537 square km (92,100 square miles).
Ghana is well endowed with natural resources – gold, timber, and cocoa – the major sources of foreign exchange, and recently discovered oil in commercial quantities. The domestic economy continues to revolve around subsistence agriculture, which accounts for 34.7 percent of GDP and employs 56 percent of the work force, mainly smallholders. The country has a total of 170 metropolitan, municipal and district assemblies within its ten administrative regions and has approximately 22 million people. Most of the population is concentrated in the southern part of the country, with highest densities occurring in urban and cocoa-producing areas.(USAID) .
Ghana is rapidly urbanizing. Despite this, most of Ghana’s poor live in rural areas without basic services such as health care and clean water. Small-scale farmers, who are affected most by rural poverty in Ghana, depend on outdated farming tools and lack access to improved seeds and fertilizers to increase crop yields.
Since independence Ghana has had a long fight with poverty. There have been six development plans implemented in Ghana since 1951. They have all generally sought to improve upon the growth of GDP and ensuring an acceptable level of social and political life for the country. The most recent and significant have been the Vision 2020 and The Ghana Poverty Reduction Strategy.( Eugene Eluerkeh,2004)
Environmental degradation is difficult to define. In simple terms environmental degradation can be said to be the deterioration of the environment through depletion of resources such as air, water and soil, the destruction of the ecosystems and the extinction of wildlife. Poverty is the state of having inadequate access to one’s survival needs and basic social amenities which include food, clothing, shelter, education, good health, employment, transport, communication and other basic social services.
Poverty breeds frustration, depression, helplessness, carelessness, insecurity, indiscipline, crime and struggle to meet immediate survival needs at the expense of long-term environmental benefits. This struggle for survival has been the major linkage of the poor to environmental degradation such as deforestation, land degradation of coastal habitats and poor urban sanitation that keep perpetual poverty.
Poverty can be assessed at the individual, household, community, district, regional and national levels in which case a nation’s capability to provide the social needs of its people is used as a measure of its poverty status.
One out of five people on earth still live with $1 a day, and many coordinated effort
and commitment have been targeted to reduce the number of poor people including the socalled
Millennium Development Goals: halving extreme poverty by the year 2015 (World
Bank, DFID, EC, UNDP, 2002).
As part of the conditions to be met for the realization of (HIPC) relief package, Ghana, like its counterpart countries, was to develop a Poverty Reduction Strategy Paper (PRSP) to indicate how monies accrued from joining (HIPC) would be used to alleviate poverty among Ghanaians.
The broad strategies outlined in the document included good governance, macro-economic stability, production, employment, vulnerability and exclusion, and human resource development. Unfortunately, however, the environment, which is the primary ingredient for survival, growth and development was not streamlined in the document.
Environmental degradation is a result of the dynamic inter play of socio-economic, institutional and technological activities. Environmental changes may be driven by many factors including economic growth, population growth, urbanization, intensification of agriculture, rising energy use and transportation.
Poverty still remains a problem at the root of several environmental problems.
Poverty is said to be both cause and effect of environmental degradation. The circular link between poverty and environment is an extremely complex phenomenon. Inequality may foster unsustainability because the poor, who rely on natural resources more than the
rich, deplete natural resources faster as they have no real prospects of gaining access to other types of resources.
Moreover, degraded environment can accelerate the process of impoverishment, again because the poor depend directly on natural assets
Environmental sustainability should thus, be a key priority area in our strategic plans towards poverty alleviation. Within this context therefore, the right linkage between the various specific environmental degradation and poverty must be well established to the appreciation of all stakeholders.
In search of an explanation of the poverty- environmental degradation linkage, many studies have been done in this regard. In terms of urban poverty, it is suggested that there is little evidence of it being a significant contributor to environmental degradation but strong evidence that urban environ-mental hazards are major contributors to urban poverty (David Satterthwaite).
Most of the studies on the poverty-environment linkage have used panel data studies and hence have not been country specific. This study thus aims to explore in detail the poverty-environment linkage with specific reference to the Ghanaian situation. It will thus review the existing literature on the poverty-environment linkage, provide an overview of the poverty and environment profile in Ghana and attempt to provide policy recommendations suitable for the Ghanaian situation.
Statement of Problem
Poverty in Ghana has for a long been considered an economic problem. Hence economic policies that have been developed haved not considered the environment. It is however useful to consider the interplay between the environment and poverty in formulating policies designed to alleviate poverty. Various studies have established that there exists some kind of dynamic interplay between the state of the environment and poverty levels. Hence it is useful to consider the impact of the various economic policies designed to reduce poverty on the environment.
Significance of the study
The study will be of immense significance to the economy of Ghana. It will attempt to explain the poverty-environment linkage in Ghana. The study will review the literature on the poverty and environmental profile of Ghana. It will then explore the impact that policy reforms that have been designed to alleviate poverty have had on the environment.
Objectives of the study
The main objective of the study will be to:
explore the poverty-environmental degradation linkage in Ghana.
Explore the determinants of environmental degradation im Ghana.
Elaborate on steps taken to reduce environmental degradation in Ghana
Evaluate the existing economic policies designed to reduce poverty
Data and Methodology
The study will use macro data on poverty levels and measures on environmental degradation. To achieve the above objectives the study will adopt and modify the model used by Shaista Alam in the study “Globalization, Poverty and Environmental Degradation: Sustainable
Development in Pakistan” .
The model is given as:
lnEGt= ?0 ?1lnPVRTt ?2lnFRTt ?3lnURBNt ?4lnPOPt ?5lnEDUt ?
where the variables are defined as follows:
EGis environmental degradation,FRTis fertilizer consumption (in metric tons), URBN is the rate of urbanization, POP is the population growth, PVRT represents poverty, EDU is the education.

Comparison of the most prominent economic growth theories

The importance of economic growth has been a prominent and interesting topic for economists. Economic growth is a result of greater quantity and better quality of capital, human and natural resources and technological advance that promote productivity.
Eighteenth and nineteenth century classical economists such as Adam Smith (1776), David Ricardo (1817), and Thomas Malthus (1798), were among the first theorize economic growth. In fact, it is mention that Adam Smith’ book “the Wealth of Nations” in 1779 was the suitable starting points for economic growth. He emphasized on the crucial role of technological progress, institutional and social factors beside capital accumulation in the economic growth process of a country.
Malthus identified diminishing returns to agriculture as the most important constraint on growth. Continuing the work of smith and Malthus, Ricardo follow smith in assuming markets would take care of the balance between agriculture and industry, and followed Malthus in assuming diminishing returns in agriculture. From his analysis, Ricardo concluded that in order to maximize growth, there should be free trade, minimal taxation and increased incentive in agriculture and industrial innovations. The rate of growth according to Ricardo could be raised by reinvesting the surplus of agriculture and manufacturing and these surpluses in turn could be raised through free trade or raising the efficiency of workers.(Abuhasan 1996)
The classical theory of economic growth has become virtually obsolete as it has been found that growth does not depend on the surplus of the productive sector over the unproductive one. This is duo to the fact that there is higher growth in capital than in population and this made the reliance on profits of investable surplus less important. (Barro and Sala-i-Martin 2004)
The concepts, that classical economists used, are extremely appeared in modern theories of growth. These concepts contains the role of diminishing returns and its relation to the accumulation of physical and human capital, the interplay between per capita income and the growth rate of population, the effects of technological progress in the forms of increased specialization of labor and discoveries of new goods and methods of production and the role of monopoly power as an incentive for technological advance.(Barro and Sala-i-Martin 2004)
Frank Ramsey (1928), Allyn Young (1928), Frank Knight (1944) and Joseph Schumpeter (1934) extended the work of these classical economists .The starting point of modern growth theory was the article of Ramsey (1928). He used inter-temporal separable utility function in household optimization for modeling economic growth. Today this function is widely used as Cobb-Douglas production function.
Harrod (1939) and Domar (1946) tried to analyze economic growth based on Keynesian model. They argued that capitalist system is unstable. They stressed the importance of capital accumulation in g and that the primary source of stimulus is the government. They used production function by with little substitutability among the inputs to prove their claim. Although, this idea attracted many attention of economist at the time (during and after Great Depression), but this analyze plays little role in today.
The subsequent neoclassical g model was introduced by Solow (1956), Swan (1956) Cass (1965) and Koopmas (1965).
Solow (1956) and Swan (1956) proposed an exogenous growth theory in neoclassical framework, known as Solow-Swan model. They used production function by constant returns to scale with two factors of productions labor and capital. The model characterized by constant returns to scale, diminishing returns to each inputs, positive elasticity of substitution between them and the assumption that market function well (Barro 1991).
Neoclassical growth theory, as developed by Solow (1956) and his followers, has dominated economists’ thinking about long-term or “trend” movements in per capita income for more than three decades. Solow focused attention on the process of capital formation. Aggregate savings, he argued, finance additions to the national capital stock. An economy with an initially low capital-labor ratio will have a high marginal product of capital. Then, if a constant fraction of the income generated by a new piece of equipment is saved, the gross investment in new capital goods may exceed the amount needed to offset depreciation and to equip new members of the workforce. Over time, capital per worker will rise, which (with constant returns to scale and a fixed technology) will generate a decline in the marginal product of capital. But if the marginal product continues to fall, the savings generated by the income accruing to new capital also will fall, and will eventually be only just sufficient to replace worn-out machines and equip new workers. At this point the economy enters a stationary state with an unchanging standard of living.(Grossman and Helpman 1994)
The new-classical model is in agreement with Malthus and Ricardo in that per capita growth will eventually cease when there are no more improvements in technology duo to diminishing returns of capital. It observed that positive rates of per capita growth can persist over a century or more and that these growth rates have no clear tendency to decline.
In overall, the standard neo classical growth model implies that in steady state equilibrium, the level of GDP per capita will be determined by the prevailing technology and exogenous rates of saving, population growth and technical progress. They conclude that different saving rates and population growth rates might affect different countries steady state level of per capita income.
One of the important concepts in the neoclassical g model that derives from the assumption of diminishing returns is the theory of convergence. The lower the starting level of per capita GDP, relative to the long run steady state position, the faster the growth rate. Economies that have less capital per worker tend to have higher rates of return and higher growth rates.
The convergence is conditional because the steady-state levels of capital and output per worker depend, in the Solow-Swan model, on the saving rate, the growth rate of population, and position of the production function characteristics and recently government policies and initial stocks of human capital that might vary across economy.
Strong evidence of convergence was found for the group of developed countries such as the OECD ((Dowrick and Nguyen 1989) ;(Gordon and Kevin 1989; Helliwell and Chung 1995). Cross country analysis of the con hypothesis was also found among developing countries(Barro 1991; Mankiw, Romer et al. 1992).
Other study found strong divergence in income among countries where rich nations grew relatively richer ((Romer 1987; DeLong 1988). The rich countries tend to grow richer duo to the increasing returns to scale in areas such as learning by doing and spillovers from the accumulation of knowledge.(Abuhasan 1996)
The obvious shortcoming of the neoclassical growth models is that it does not, in the end, shed light on economic growth. In the neoclassical model, an economy will always converge towards a steady state rate of growth, due to advances in technology, but technological progress is taken as exogenous. In other words, the long-run rate of growth is determined exogenously, that means it is determined outside of the model.(Mankiw, Phelps et al. 1995; Barro and Sala-i-Martin 2004)
Cass (1965) and Koopmans (1965) received the analysis of consumer optimization that was first used by Ramsey. The Cass- Koopmans version of neoclassical growth model was able to include the saving rate endogenously. The production function featured constant returns to scale and productive factor of labor and capital are paid their marginal product in a competitive framework.
Another shortcoming of the neoclassical growth models is that it was not able to satisfactorily to explain technological change duo to its assumption of a competitive economy. (Barro and Sala-i-Martin 1995)
An important part of technological change is non-rival ideas, without which there would be no increasing return to scale. This finding is in conflict with the competitive assumption that prevents the possibility of research and development in generating non- rival idea. R