Re: Poverty and the Environment

[Harald Fuhr <hfuhr@rz.uni-potsdam.de>]

Fiends and Colleagues,

        taking up Peter Matlon's suggestion .... let me just add a short note on a more specific link -- i.e. the urban poverty - urban environmental situation -- that may also help identify some gaps in research. Given our own specializion, we focused increasingly on institutional and political factors. It's a summary note of a study that we completed some weeks ago.
 
 

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Macroeconomic Policies, Poverty, and the Urban Environment. A Review of the Literature.

Harald Fuhr, Katja Roeken, Marcus Schaper and Alexander Wegener
 

Summary and overview: the links between macroeconomic policies, environment, cities and poverty

The link between poverty and environment is often mentioned in the debates on „sustainable development” and structural adjustment (Lele 1991), but has hardly been explored systematically. The literature dealing with the link usually addresses rural areas and to a much lesser extent urban areas in developing countries. Implicitly or explicitly, most literature refers to a „vicious circle” of environmental degradation and poverty, often concluding that (i) poverty alleviation is likely to reduce environmental degradation in the long-run; and (ii) arresting and reversing environmental decline is likely to help the poor (Leonard 1989). Such policy recommendations are expected to work in urban areas as well.
    Yet, there is also a considerable amount of literature denying such positive cause-effect relationships, arguing that macroeconomic change results in environmental degradation and poverty. Unfortunately, the latter body of literature, both normative and empirical, does not invest much effort in developing a conceptual framework that includes plausible cause-effect models, and acknowledges the complexity – and interrelationships – of the issues.
    In recent years, some literature has dealt with such gaps in research and conceptual development. Most of the literature that demands more sophisticated approaches refers to the debate on rural environmental problems. Yet, most of the gaps identified hold true for the urban sector as well. Reardon and Vosti (1995, 1495ff.), for example, emphasize some of these gaps:

• poverty is usually treated as a single concept, rarely asked is how the type of poverty influences the poverty-environmental link;
• literature usually does not differentiate types of environmental change or it focuses on a particular type only (like soil, water, biodiversity, etc.);
• poverty measurement (and related indicators) are often weak, neglecting issues like preconditions, level, distribution among social groups, and time;
• strength and symmetry of causal links (cause-effect assumptions) are rarely discussed. Most literature assumes an existing link without specifying it. Policy recommendations and practical solutions are thus based on subjective plausibilities, rather than empirical evidence.

Reviewing the literature on economic growth, urban poverty and urban environmental
degradation, these gaps can also be identified. There is hardly any literature
offering a satisfactory conceptual framework that takes into account the
complexity and inter-dependencies of poverty and environment in urban areas.
    This paper summarizes literature addressing structural
adjustment, macroeconomic change, urban poverty, and urban environmental
problems. Literature addressing these issues in a more general, non-regional
manner is discussed in Chapter 2. Since the non-regional literature hardly
combines all of the subjects (macroeconomic change, urban environmental
problems and urban poverty), the following structure was chosen:

• general literature on macroeconomic change and environment;
• literature on macroeconomic change, urbanity and poverty;
• literature on governance, urban areas and environment;
• literature demanding further investigation on the interdependence of issues related to the main topics.

The discussion of the non-regional literature (in Chapter 2) shows that
macroeconomic policies are mostly assumed to be environmentally benign.
Arising environmental problems, accordingly, cannot be attributed to the
policies as such; they are caused by market and policy failures or – in
the short term – by a deterioration of poverty that may evolve in the process.
In addition, it is acknowledged that urban environmental problems increase
during the urbanization which – in turn – is linked to economic growth.
Growing urban poverty is expected to further fuel this situation.
    However, this chapter stresses, all described causal
factors could be prevented by adequate and efficient governmental action.
Initiatives in the areas of poverty alleviation, meeting basic needs, and
environmental protection are considered essential. Consequently, improved
urban governance is likely to help the environment.
Instead of deepening this cross-country overview – it had left out
many of the structural issues, particularly regional differences, regional-historical
preconditions and development prior to recent economic change (with related
cause-effect assumptions) – we decided to cluster the literature regionally.
In Chapter 3 special attention was given to

• different regions, with literature covering the following clusters: Eastern Europe, Africa, Latin America, and Asia. Although there are intra-regional variances, there are some general patterns that distinguish the regions from each other;
• the general situation in regions prior to change, referring not only to the environmental situation, but also to the developmental stage of cities, the degree of labor force integrated in the formal sector, already existing problems with public infrastructure, and the degree of urban poverty;
• the expected impact of macroeconomic change based either on normative assumptions or other model-based assumptions;
• the observed outcome of macroeconomic change based on empirical case studies or statistical material.

Chapter 3 concludes that the links between macroeconomic reforms, urban
poverty and urban environmental degradation are generally weak. The majority
of literature with regional focus explores links between either macroeconomic
reforms and poverty or macroeconomic reforms and environment or poverty
and environment. It is often stressed, however, that there are no simple
links between either one of these ‘two side constellations’. Moreover,
case studies are often based on poor empirical data or data is difficult
to reconstruct. Impacts of macroeconomic reforms on the environment are
assessed differently - depending on the region, and the 'point of departure'
of the country. Counterfactual scenarios are neither taken into consideration
nor discussed.
    Chapter 4 discusses conceptual issues that may help
developing explanatory cause-effect relationships on macroeconomic change,
urban environment, and urban poverty. We have suggested to consider a „city
system”, still sketchy and preliminary, that is based on historical preconditions,
and refers to some constitutive characteristics of cities, such as

• urban manufacturing and services;
• labor markets;
• public infrastructure;
• local government capacity / governance quality;
• education;
• welfare, and
• structure of civil society.

The model may give impetus for further conceptual and empirical work on
cause-effect relationships when the „city system“ is challenged: either
by accelerated macroeconomic change, population growth (urban reproduction
or migration), or other factors. Based on this conceptual contribution,
it seems evident that future analysis needs to more thoroughly review poverty
in urban environments, differentiate more clearly short- and long-term
effects of macroeconomic change, and, consequently, policy recommendations
and practical solutions.
    Chapter 4 also suggests more policy analysis and
political economy approaches to explain urban environmental degradation.
Although there is still a need to understand better how single macroeconomic
policies lead to additional stress on the environment, the fact that they
do is not very surprising. Any deliberate push towards increased production
and economic exchange, particularly private sector driven growth, uses
– almost by definition – more resources (than at a given point in time
before) and, consequently, has effects on the urban and rural environments.
Given the amount of environmental problems in cities of the developing
world – particularly in mega-cities – what, in fact, is more surprising
is why political decision makers don’t react, why actors affected don’t
rebel, why polluters can’t be held accountable, and why urban collective
action is so difficult to achieve. Is modern and post adjustment city politics
just overloaded, has change occurred too fast, have policies become too
complex, are citizens by-passed, or is there something like „successful
government failure”? Understanding why urban governance systems fail –
and how they fail – to react and address properly obvious environmental
degradation, eventually seems important for designing environmental policies
that will work in the future.
    Ironically, in modern history it has always been
the city where political movements started, and where progressive political
and societal choices were formulated. Not so yet in the urban environment
in most developing countries. We wonder, consequently, how effective environmental
alliances and policies will evolve in practice. Fortunately, there is some
action, and local policy makers need – and do – react, as recent Agenda
21 movements indicate. Yet, why is there success in these cities, while
in others there is an environmental standstill ?
    Methodologies are discussed briefly in Chapter 5. 
The body of literature reviewed does not offer a methodology satisfactory
for research. With exception of econometric models, most approaches do
not refer explicitly to the conceptual or methodological approaches used.
Econometric studies, however, depart from quasi „universal“ assumptions
- a bias, that also led to the regional clustering of literature. Chapter
5 also suggests a preliminary model of a „city system” (already presented
in Chapter 4). In order to understand cause-effect relationships it is
key to structure the point of departure in each region (or country). The
most promising approach – developed inter alia by Yin (1981) – is called
„case comparison approach“, whereby a historical analysis has to be done
prior to case study research.

--
Harald Fuhr
International Relations Chair, Economics and Social Science Faculty,
University of Potsdam, P.O. Box 900327; D-14439 Potsdam, Germany
Phone: +49 (331) 977-3417,-3418,-4634 (answ.); Fax: +49 (331) 977-3429