Understanding the Interdependence of People and Nature in Economic Development

Lecture 10: Interdependence of people & nature and the economic implications In the last lecture, we already outlined the pressing issues of the modern time regarding natural world, natural resources and humans relationship with natural world and resources; as we discussed, even though some issues are contentious because of the skepticism about the corollary between the human activities and the consequent natural disasters or climate change; but from a historical point of view, it seems to be comparative clear that ever since the industrialization of the world, consumption of natural resources has increased dramatically; meanwhile, pollution also multiplied; with those obvious facts, however skeptical we might be, the Buddhist idea of interdependence of human and natural world should be given its deserved attention; In this lecture, we shall continue the previous topic in a more practical perspective; that is, from an economic point of view, how should we better understand the connection between economic development and the conservation of nature;

Two stories of an economic model: development and growth or development and stagnation In the 24thchapter of his book (A Little History of Economics, pp.139-144), Niall Kishtainy discusses two outcomes of an economic theory; As Solow and other economists studied, economic development and robust growth can only be possible by means of constant technological innovation and updates; but while at first technological innovations came exogenously, with a more advanced economy, continuous technological innovations and updates came endogenously (such as intensive researches) along the economic growth; so for the rich countries, both economic and technological developments are achieved hand in hand; However, such a theory of development or growth has not borne the the expected outcome in poor and developing countries; so here the divergency is important: while wealthy countries continue to benefit from their economic growth and sustained technological advance, and remained affluent, the poor and developing countries either are struggling to catch up or lagging far behind;

A world of two tales: economists rightly pointed out the importance of technological innovations and sustained economic development and growth; but for those developed countries, because of the economic growth, they are able to keep the technological innovations both exogenously and endogenously; for the poor and developing countries, both technological innovations and economic growth are lagging behind, thus experiencing what may be called a vicious circle less innovation less development less money less research less education less incentives and less development/innovations;

The two contradictory options As we mentioned in the previous slides, because of the two outcomes of the economic development in the world, policymakers and politicians, alongside with economists, are confronted with two contradiction options: For the developed countries, further development is required if they want to maintain their wealthy status and technological edge; and if possible, to make further growth; for the poor and developing countries, eliminating poverty and catching up are just as urgent as the further development in the developed countries; but because of the outdated technologies, the slight development in developing countries came at a higher cost, either wastage of resources or higher pollutions to the environment; Apart from the above option, then the other seemingly urgent option is to find a sustainable development model: economic growth is important but environment is the priority; if you think this sentence is nonsense, you are quite right but that is the reality;

Developed & developing countries: either making progress and advancing from developing countries to developed countries, then continue to make progress, or catching up and then making the necessary advancements; but at the same time, environment protection is also necessary; so which one is first: economy or environment? For developed countries, there are money and technologies to cope with problems; but for the developing countries, it is difficult to balance! Poor & developing countries Developed countries Technological advancement and efficient utility of resources Exploitation or/and wastage of resources Sustainable development, updated technologies and protection of environment Dated technologies, economic consideration and limited resources for environment protection

Long-term returns & short-term profits: as Clair Brown points out, from an economic points of view, two contradictory options are inevitable: development first and then conservation of environment short-term strategy; or protection of environment first and then development of economy long-term and more sustainable development; but again it is difficult to outline a balanced plan, and even more difficult to implement it;

Middle way: here, Buddhist idea of interdependence of humans and our environment is a practical and ideal way of development; for instance, development is important but that does not need to come about at the expense of a compulsive exploitation of natural resources and natural world; as the Buddha said: consumption is necessary but no need to be luxury, nor extravagant; the reason is obvious: environment protection is necessary because it is part of human existence;

Sustainable development: in a middle way approach, sustainable development means twofold consideration; first of all, natural resources need to be utilized with maximum efficiency; secondly, development and its negative effects on environment must be kept at proportionate level; in other words, development is achieved after all the pollutions and damages to the environment being considered and minimized; Sustainable economic development Resource efficiency Alternative renewable resources Robust economics growth Maximum efficiency of utility of resources Minimum negative effects on environment

Buddhist theory of kamma: as we mentioned, the Buddhist theory of kamma can be understood in two ways regarding its economic and environmental implications; first of all, kamma means cause and effect, which suggests that if we treat environment badly without consideration of the possible effects, that it is wrong and dangerous; because if there is an action, there would be consequences; secondly, kamma means past, present and the future; so if we do not take proper action now, the future generation has to pay the price; that is unfair; Human behaviour short-term Cause & effect Past, present & the future The day after tomorrow or near future The future generations Effects on environment Effects on economics Future consequences long-term Kamma

Right livelihood: as you remember, when you answer the question regarding the action of right livelihood, one of the trades which is regarded as unwholesome is the trade in poisons or intoxicants, which may be interpreted as modern day hazardous chemicals that detrimental to human health and natural environment; of course this may be subject to environmental law and regulations; Avoiding unwholesome action Good for humans Promoting wholesome actions Beneficial for environment Right livelihood

Mainstream economists: from some mainstream economists and economic theories, climate change is one of the important facts that would have both short-term economic effects and economic implications in the long run; economist William Nordhaus whose contributions to economics of climate change was recognized, along with another economist Paul Romer, with the Noble Prize in Economics in 2018; with Nordhaus calculation, the use of fossil fuels would benefit economic development, but the cost exceeds its benefits; Fossil fuels Dependent of what are you looking for and where are you looking at!? Costs+ Short- term Benefits Long- term Pros & cons 3-4% range Economic benefits & environmental costs Calculations Conclusion

Vegetarianism & environment: before I was exposed to more scientific research, I always thought vegetarianism was more environment unfriendly; the reason was simple: I thought that if we ate vegetarian food such as vegetables and rice, we need big portion; instead, if one ate meat, a very small portion would be enough; but when I acquired some more information, it said that before poultries and other animals were ready meat, they needed to be fed with grains or vegetables; to raise them, a lot of water was needed too; and along the way, they created a lot of pollution or damages to environment; so in the final calculation, actually vegetarians are far more environment friendly; that may be bad news for some people but it is convincingly and conclusively true! Meat consumers Vegetarians Animals or poultries consume food, water and contribute to pollutions etc. Vegetables, nuts and grains etc. Grown by natural means or with good technologies and less damage to environment Meat products put pressure on environment and ecosystem

Broken window fallacy: do you still remember the broken window fallacy? It tells us that in economics, quite a lot of issues are interweaved with many other related issues; so there are things we can see obviously while there are effects unseen but also are taking place all the time; for instance, as discussed early, the GDP growth may consume a lot of natural resources and fossil fuels, but that may be necessary because such consumption contributes to economic growth; that much is obvious and can be seen; but for those non-renewable resources, that means however much they diminish, they are gone once and for all; in the long run, the cost of pollution might be much higher than the short-term economic benefits; but they cannot be seen obviously, unless we are more vigilant; Seen short-term Consumption of natural resources GDP growth and economic benefits Unseen short and long- terms Exhaustion of resources, in particular the non-renewables Environment pollutions & ecosystem damages

Summary and facts-check In association with the last week s lecture, we have discussed the economic implications of environment damage or protection; As we said, despite skepticism, the environmental cost of economic growth is obvious; it is just a matter of pros and cons; so on the one hand, people want to conserve and protect environment; but sometimes it is difficult to make a choice because economic development is also urgently needed; with a robust economy, poverty cannot be easily eliminated, let alone future and sustainable development; but with a damaged ecosystem, the price is even higher and sometimes the damage is so severe that it is beyond the possibility of repair; So perhaps in Buddhist middle way approach, while our basic necessities are met, and with sufficient degree of comfortable life, pursuits of luxuries by means of compulsive exploitation of natural resources must be put under check and control; Anyway, I think that would be enough for this week; please read the textbook and all the course materials; any questions, let me know!

Exercises/assignments #10 Do the following exercises and submit them via email (chuanqing@bcs.edu.sg) to me by 5:00 pm, on 11th November (Wednesday); as usual, please send the exercises of the two courses (Buddhism and Economics & Introduction to Buddhist Logic) together in one Word doc. file; 1, Read the chart in page 75 of Buddhist Economics by Clair Brown and write down which two items on the chart produce most CO e per kilogram of food? And which two items on the chart produce the least per kilogram of food? 2, According to COP 21 agreement (from the Clair Brown s book), from which year the first 5-year review mechanism will start so that countries can implement and even ramp up their pledges of GHG emission reduction?