Environment and Development Economic Approach

Question: Discuss about the Environment and Development for Economic Approach. Answer: Introduction: Singapore is one of the fastest growing countries for more than a decade. The reason behind this growth in Gross Domestic Product is rapid growth in the industrial and service sector. The industrial sector produces twenty five percent of the countrys total income. The output percentage of the agricultural sector in the countrys Gross Domestic Product is insignificant. The high output percentage of the industrial sector is associated with high negative externality which affects the countrys environment. The environmental laws and regulations of the country are targeted against the negative externalities which affects the environment and economy as well. The essay will critically discuss the relevant economic theories that underlie the environmental issues in Singapore. The economic theories incorporated here are demand and supply theory, externalities of production, and government policies which comes from the National Environment Agency and other authorities. Proper examples which will focus on the issues that the country has been facing and the policies which has adopted by the government will be stated here. Possible changes which will make the policies better will also be discussed in this essay. The economy of Singapore started to grow since 1965. The government of the country took various measures in order to make the countrys economy dependant on the service and industrial sectors. The reason behind such decision was the countrys size. Agricultural sector will require more land which is not present in Singapore (Susskind and Ali 2014). The industrial sector got the boost from domestic and foreign investors. Demand and supply: The rapid investments increased the supply potential of the country. Following the Says law it was assumed that the supply will create its own demand. This helped the country in expanding its output. The situation can be depicted in the figure below: As shown in the figure above, the overall output of the country was at Q1. After the government of Singapore took initiation for expanding the domestic and foreign investments flooded in. It shifted the supply curve outwards of the country. As a result, the output level shifted to Q2. The price level in the market also got reduced from P1 to P2. This helped the countrys producers in facing higher demand. But the fall in price did not incorporate the social cost which resulted in market failure (Kannan, Govindan and Rajendran 2015). The government of Singapore at that time were more focused on the high growth rate of the economy. This diverted the focus from the negative externalities of the high production. The technologies used at first were not environment friendly as it is now. This trait increased the negative externalities and its effects on the economy. Similar problems were faced by other countries like China in different time periods. The degradation of the countrys environment forced the government to create new laws and regulations to improve the environment and reduce the degree of market failure in the economy. With more improvement in the technologies caused by high involvement of the research and development wings of different organizations, the regulations imposed by the government were followed. Externalities: There are two types of externalities of any economic decisions namely negative externalities and positive externalities. The positive externalities increase the social welfare of a country by adding values to the products. On the other hand, the negative externalities hamper an economy and the agents in the economy. The society as a whole gets benefits during occurrence of positive externalities. According to Lin (2014), the negative externalities reduce the well being of the citizens of a country. In the case of Singapore, the positive externalities included job creation and improvement of the standard of living of the people of Singapore. The per capita income rose rapidly during the transition period of Singapore. It added value to the well being of the people of Singapore. The factories which were a vital part of the countrys boom were a huge contributor of emission of green house gases like carbon monoxide (Rosenbaum 2013). It affected the environment of the country. The rapid growth also increased the purchasing power of the common people. According to Frumkin (2016), people started consuming products more, which emits green house gases. Example of these products is cars, diesel generators, and others. These were incorporated in negative externalities. To understand the negative externalities the following diagram is given: As shown in the figure above, the marginal private cost and marginal private benefit are used to determine how much to produce and how much will charge as price. The figure shows that P1 is the price which the private producers are ready to implement. The corresponding output is Q1. But in reality, the negative externalities to the environment are not incorporated in this price level. The inclusion of the cost to the environment would have made the price P2 and the quantity Q2. The social welfare which is not incorporated in the pricing strategy is marked in red in the figure. It represents the impacts on the environment of Singapore due the production processes adopted by the organizations. The situation represents a prisoners dilemma among the producers regarding protect the private profit and social profit. it shows the uncertainty regarding prioritizing between the environment and profit. Government: According to Tortajada, Joshi and Biswas (2013), in order to address the negative externalities and the market failure regarding it, which affects the environment and economy of the country inversely the government of Singapore has taken various steps. These steps include creation of government bodies which has the purpose of making rules and regulations. These regulations were targeted to make the production processes efficient and environment friendly. According to Quah and Roth (2012), the National Environment Agency is one of those initiatives taken in to account by the government of the country. This public organization was founded in the year 2002. The parent agency of the National Environment Agency is the Ministry of the Environment and Water Resources of Singapore. The purpose of this organization is to develop environmental initiatives in different sectors to protect the countrys resources from getting polluted. According to Ratti and Claudel (2014), it has three operationa l divisions: Environmental public health, Environmental protection, and Meteorological service Singapore. The ground surveillance and measurements to benefit the public health standard are observed and done by the Environmental public health division. This division is responsible for hygiene and the overall cleanliness of the country. It makes sure that the pollution from the factories is not affecting the citizens of Singapore. The Environmental protection division is responsible for protecting the environment of the country by pollution reductive policies and programmes. According to Mler (2013), it monitors all the organizations and their factories. The waste generated by the factories is monitored by the division as well. The Environmental protection division also implements various programmes which can affect the waste generation process to reduce. The division is also responsible for waste-to-energy projects that are currently running in the country. According to Tietenberg and Lewis (2016), the Meteorological service Singapore monitors the weather and environmental changes in the country. It benefits the socio-economic activities that help the country to grow. The countrys defence system is also aligned with this division. Any changes in the countrys weather due to the negative externalities of the factories make the organizations answerable to the Meteorological service Singapore. Policy measurements following the Cost benefit and market failure: The National Environment Agency has taken numerous measures to protect the environment of the country. In the year 2006, the government of Singapore announced accession to the Kyoto Protocol. According to Seltenrich (2016), the purpose of this is to encourage reduction of carbon emission and increasing energy efficiency for the betterment of the country. The policy measures by the institution also incorporate the ten percent energy challenge started in the year 2008. According to Dixon et al. (2013), this policy encouraged the households to reduce energy consumption by ten percent. The institution also proved that energy efficient electronic goods help the households and the offices in saving lifecycle costs. The waste generation increased from 1,300 tonnes a day in 1970 to 7000 tonnes a day in the year 2006. The institution started a waste management system which accelerated the recycling rate from forty percent in the year 2000 to fifty-six percent in 2008. These policy measures have increased the life span of landfills like Semakau from 25 30 to 35 40 years. The property rights in the country were such designed that the private owners of property focus significantly on the environmental issues (Lam and Notteboom 2014). The policy measures by the country which came through National Environment Agency after 2002 clearly sated the degree to which the country protects the private properties were different according to a rating system provided by the authorities. These policy measures were targeted to reduce the amount of waste that is generated by the factories and the households. It was proved by the National Environment Agency that these measures have yielded positive results. According to the Boj, Mler and Unemo (2013), the rate of pollution in the country has fallen since the early years of this decade. The reduction in the rate of waste and pollution generation also helped the biodiversity in the country. The survey team of the institution has found that near about eight hundred species of plants and animals in the five natural habitats of Semakau. Conclusion: The environmental protection in Singapore has been handled by the government strictly which gave positive results. The National Environment Agency was found by the government under the Ministry of Environment and Water Resources in the year 2002. The purpose of this institution is to help the country to reduce the negative externalities from the production processes that are running in the country. Since the independence, Singapore focused on production maximization. The prices that were charged initially did not cover the social welfare cost that was caused by the pollution generated by the production technologies. It caused market failure in Singapore. Since the introduction of the National Environment Agency the pollution production rate has been reduced over time. The three divisions of the institution addressed the environmental issues of Singapore through three categories of the environmental platform. The surveys done by the government, show that the policy measures brought po sitive results. There are some fields to work on still. 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