www.elsevier.com/locate/envsci

Environmental Science & Policy 8 (2005) 392–398

Economic growth or environmental protection?

The false dilemma of the Latin-American countries

Raul R. Cordero a,b,*, Pedro Roth a, Luis Da Silva a

a Universidad Tecnica Federico Santa Maria, Ave. Espana 1680, Casilla 110-V, Valparaıso, Chileb Escuela Superior Politecnica del Litoral, Km. 30.5 Vıa Perimetral, Guayaquil, Ecuador

Abstract

The sustainable development concept recognizes that economic growth and environmental protection are inextricably linked but not

necessarily opposed. This question remains unclear in the Latin-American developing countries, where societies have been inducted to think

that economic growth is associated with pollutant emission growth and depletable resource consumption. By using a databased graphical

model, we show the fundamental shortcoming of this idea; we conclude that the adoption of environmentally adapted technologies is not

opposed to economic growth. Moreover, we argue that in order to meet both economic growth and environmental protection it is necessary to

diminish the rate between pollutant emission and economical growth unit and the rate between resource consumption and economical growth

unit. However, we observe that, in the developing Latin-American countries, the promotion of policies in order to limit pollutant emissions

and resource consumptions requires enforceable rules. Finally, for these countries, the situation of the environmental debate is presented and

the perspectives and threats of the regulation making process are analyzed.

# 2005 Elsevier Ltd. All rights reserved.

Keywords: Sustainable development; Renewable technologies; Developing countries; CO2

1. Introduction

In developing countries, especially those that are

undergoing rapid economic growth, their success in crossing

over from an agricultural society to an industrial one has led

to ecological scarcities, such as the natural resource shortage

and the pollution problem. In order to face these problems,

the concept of sustainable development has been adopted

and almost all of the Latin-American developing countries

have promulgated environmental ‘‘framework’’ laws. These

laws define both sustainable development and efficiency, as

objectives of the society opening the door to use

environmental economic tools in making regulations.

Sustainable development concept recognizes that eco-

nomic growth and environmental protection are inextricably

linked but they are not necessarily opposed. This question

remains unclear in Latin-America. In the broad environ-

mental debate spectrum, there are two polarized variations.

On the one hand, there are those who project a drastic

* Corresponding author. Tel.: +56 32 654501; fax: +56 32 797656.

E-mail address: raul.cordero@usm.cl (R.R. Cordero).

1462-9011/$ – see front matter # 2005 Elsevier Ltd. All rights reserved.

doi:10.1016/j.envsci.2005.04.005

economic growth slowdown if the societies do not forbid the

emission of stock pollutants. On the other hand are those

who think that the environmental regulations can inhibit the

needed economic growth. Both parties think that economic

growth is associated with emission growth and depletable

resource consumption. This idea has polarized and reduced

the environmental debate such that the Latin-American

societies have been inducted to think they have to choose

between economic growth and environmental protection. By

using a simple graphical model based on available emission

data of a particular pollutant in some Latin-American

countries, we show the fundamental shortcomings of this

idea. We conclude that environmental care and economic

growth are not incompatibles but to meet them is not easy;

the adoption of policies in order to limit pollutant emissions

and resource consumptions requires incentives and enforce-

able rules that promote the use of renewable technologies.

Moreover, we draw up the present situation of the

environmental debate in Latin-America and we analyze

its perspectives and threats; the uncertainty in the benefits,

the scarcity in financial resources to pay the costs of an

appropriate level of technology, the weak public opinion

R.R. Cordero et al. / Environmental Science & Policy 8 (2005) 392–398 393

pressure, the actions of powerful sectors linked to industrial

activities and the absence of international rules in the global

economic market, can be dangerous for the regulatory

process and inhibit assuring adequate margins of pollutant

emission and of resource consumption in the Latin-

American developing countries.

2. The environmental problem

The interaction between the society and the environment

is a complex web of positive and negative feedback flows.

Environment, economy and society are interconnected

(Giddings et al., 2000). In a simple model for the

relationship between the natural and the social systems

we have on the one side, the flow of natural resources to the

system, and on the other side, the flow of waste products

back to the environment.

The damage done by the load of waste products upon the

environment depends on its ability of regeneration and its

assimilation capacity. Pollutants for which the environment

has little or no absorptive capacity are called stock

pollutants. This kind of waste accumulates over time and

creates interdependency between the present and the future,

since the damage imposed on the future depends on the

current actions. The depletable resources and the stock

pollutants are different sides of the intergenerational equity

problem: by using up depletable resources, it is possible for

current generations to create a burden for future generations

thereby diminishing the remaining endowment; stock

pollutants also create intergeneration problems because

their damages will persist after the benefits received from

incurring in these damages have been forgotten.

3. Sustainable development

The concept of sustainable development is the basis to

overcome the environmental challenges that stock pollutants

represent. The World Commission on Environment and

Development (WCED) report Our Common Future (1987)

defined sustainable development as ‘‘development that

meets the needs of the present without compromising the

ability of future generations to meet their own needs’’. The

report contains the concept of poor people ‘‘needs’’; and the

idea of limitations imposed by the state of the technology

and the social organization. The WCED report was the first

in underlining the strong linkage between poverty allevia-

tion, environmental improvement, and social equitability

through sustainable economic growth (Mebratu, 1998).

After the WCED report, the concept of sustainable

development started to reach the whole world. From 1989 to

1992, there were four International Preparatory Committees

(PrepComs) for the United Nations (UN) Conference on

Environment and Development, which is known as the ‘‘Rio

Conference’’. Parallel to the PrepComs, each UN member

country generated a national report covering its national

environmental situation and drawing up an action plan to

promote sustainable development in its own national context.

The sustainable development concept has been proposed

as the development strategy for developing countries and as

the redevelopment strategy for developed countries (Alker

and McDonald, 2003). Although the WCED definition of

sustainable development could be considered vague and

ambiguous, it was a ‘‘good political strategy’’ (Daly, 1996)

and it has been highly instrumental. Since the WCED report,

thousands of initiatives have been taken at different levels in

order to face the different aspects of the environmental

challenges. These initiatives have resulted in a wide variety

of interpretations of the concept, all of them pretending to

assure a sustainable society. But what have the Latin-

American developing countries been doing in order to go

beyond generalities and to put the concept into practice?

4. Facing the problem

In the Latin-American developing countries, especially

those that are undergoing rapid economic growth, their

success in crossing over from an agricultural society to an

industrial one has led to ecological scarcities, such as the

natural resource shortage and the pollution problem. In these

countries, the contemporary environmental concern is linked

to their recent industrial pollution problem. Other potential

problems, as for example the social impacts on the

communities that rapid industrial growth is producing,

remain ignored (Newbold, 2003).

Nevertheless, since the ‘‘Rio Conference’’, almost all of

Latin American countries have reached enough consensuses

to adopt laws to face their respective environmental

challenges. These kinds of laws are known as ‘‘framework

laws’’ and they often have been criticized by their vagueness

in dealing with some specific issues. Usually, these

framework laws reflect the existing rationality—scientific

optimist approach. It argues that societies can face the

resource constraints and the pollution problems by using the

right policies. Some of these laws define both sustainable

development and efficiency as the objectives of the society

(Environmental Framework Law of the State of Chile). This

last subject has proven to be a source of controversial public

debate because it opens the door to the use of neoclassical

environmental economic tools in making regulations.

5. Economical link

The solution package proposed by the environmental

economists includes turning the environment into a

commodity. This is because if the environment cannot be

used or damaged ‘‘free of charge’’, and if it has a proper

value in economic decision-making terms, it will not be

over-used or over-polluted. The idea behind this approach is

R.R. Cordero et al. / Environmental Science & Policy 8 (2005) 392–398394

that the efficient allocation of the depletable resource use or

the stock pollutant emission is not generally zero. Therefore,

with an efficient structure of property rights, the market

would provide an automatic response in the case of natural

resource scarcity. However, the government intervention is

necessary to solve the problems in the market that may arise

as a consequence of the externalities that some industrial

activities produce by their pollutant emissions. In this last

case, the market would not provide an automatic response

because a firm attending to unilaterally control its emissions

will get a competitive disadvantage.

Government intervention implies making regulations on

the emission of pollutants and on the natural resources

consumption but not necessarily their prohibition, because it

is compulsory for the state to care for the impact that the

regulations would have on the economy. Therefore, the

efficiency criterion for a society can be interpreted as the

search for the efficient allocation of the pollution emission

level (Jacobs, 1994) and the resources consumption rate.

This allocation should maximize the present value of the net

benefit received from the industrial activities minus the cost

of damage caused by the presence of the stock pollutants

(Pearce and Turner, 1990) and the over-use of the natural

resources. Economic tools, such as the benefit–cost analysis,

are being advocated for comparing the desirable and

undesirable impact of the proposed regulations.

Benefits are typically defined in terms of their value, for

example, to reduce mortality and morbidity risks. The costs

must be measured in the same terms: the losses implied by

the increased prices that result from the costs of meeting a

regulatory objective. Available data often allow reliable

estimation of major regulations impacts; therefore, the

benefit–cost analysis is useful to compare the favorable and

unfavorable effects of regulations. For example even with

the most conservative assumptions about willingness to pay

(WTP) to reduce mortality and morbidity risks and

substitution elasticities among energy sources and between

energy and other inputs, it has been shown that policy

makers in Chile, a Latin-American developing country,

could safely aim to reduce carbon dioxide (CO2) emissions

by 10% from their baseline 2010 level without any welfare

loss (Dessus and O’Connor, 2003). In this case, there are

enough reliable data and the benefit–cost test can help to the

regulation makers to select specific levels of emissions.

However, the environmental authority should not proceed

only through strict benefit–cost tests because often the

benefits of regulations are less certain than the costs. Factors

other than aggregate economic benefits and costs, such as

equity within and across generations and distributional

consequences, are also important in some decisions (Arrow

et al., 1996).

When a country decides to choose specific levels of

pollution, its goal must be to meet sustainable development

and efficiency. In making decision under uncertainty, to

provide adequate margins of safety has to be the

predominant criterion. When the regulation makers decide

to restrict the production of some effluents they have two

possibilities to do this: to impose the maximum rate of flow at

which each firm may discharge pollutants; or to fix only an

average emission reduction. In the first case, the system is

called one of ‘‘command and control’’ (Malueg, 1987); the

emissions are prescribed on a source-by-source basis. In the

second case, the objective is to meet the predetermined

pollution level at a minimum cost for the society by taxing

environmental damage, by subsidizing environmental

improvement, or by creating markets for environmental

goods by issuing permits that can be tradeable between firms

or consumers (Mebratu, 1998); these are the so called ‘‘cost-

effective’’ systems. Because damage costs are externalities

but control costs are not, what is the cheapest for the firm is not

the cheapest for the society as a whole (Tietenberg, 2000).

6. The dilemma

Worldwide economic growth is essential to improve the

livelihood of the poor and to satisfy human needs.

Environmental protection is necessary to guarantee the

quality of life in the present and in the future. Although the

sustainable development concept recognizes that economic

growth and environmental protection are not necessarily

opposed, this question remains unclear in the developing

world. In the broad spectrum of environmental debate there

are two polarized variations. On the one side, there are those

who predict a drastic slowdown and even the economic

collapse if the societies do not change their capitalist

development model based on the economic growth and if

they do not forbid the emission of stock pollutants and the

consumption of natural resources (Rajeswar, 2001). On the

other side, there are some business leaders who think that, at

least in the developing countries, the environmental

regulations tend to inhibit economic growth and thus, it is

better to wait. Following the road taken by some of the high-

performing East Asian economies, which experienced rapid

industrialization, the latter party thinks that it is better to

delay the environmental expenditures until later in the

development process.

Seeking to support their positions in this political debate,

both sides often show quantitative relationships between

some either pollutant emission or resource consumption, and

economic growth. A typical example of this kind of

relationship is shown in the Fig. 1. It illustrates in the same

graph the data that appear in Tables 1 and 2. Table 1 presents

the evolution of the carbon dioxide emissions (CO2) per

person and the gross domestic product (GDP) per person in

Chile, for some years in the 1987–2001 period. Table 2

presents the CO2 emissions per person and the gross

domestic product (GDP) per person, in 2001, for some

Latin-American developing countries. In both tables the

emissions are expressed in kg of CO2 per person. The data

were derived by dividing the total carbon dioxide emission

of each country by its total population. The total carbon

R.R. Cordero et al. / Environmental Science & Policy 8 (2005) 392–398 395

Fig. 1. Carbon dioxide emissions (CO2) per person, gross domestic product

(GDP) per person in Chile from 1987 to 1998; carbon dioxide emissions

(CO2) per person, gross domestic product (GDP) per person in 1998 in some

Latin-American developing countries. Data from Tables 1 and 2 were used.

Table 2

Carbon dioxide emissions (CO2) per person and the gross domestic product

(GDP) per person, in 2001, for some of the Latin-American developing

countries

Country CO2 (kg/person) GDP (US$/person)

Argentina 3790 11015

Paraguay 875 3586

Brazil 1806 6760

Chile 4059 13595

Colombia 1663 7445

El Salvador 1004 2899

Guatemala 895 4085

Honduras 832 2157

Nicaragua 713 2093

Panama 2102 7450

Peru 1123 4479

Source as explained in the text.

dioxide emission of each country was obtained from the

United Nations Framework Convention on Climate Change

(UNFCCC) ‘‘Climate Change Information Sheet 30, Data on

Greenhouse Gas Emissions and Sources’’, from the Carbon

Dioxide Information Analysis Center (CDIAC) and from

World Data Center for Atmospheric Trace Gases of the

Department of Energy of United States. The total population

of a country comprises all persons present in a country (de

facto population) at the time of its census. In both tables, the

GDP is expressed in US$ per person. For purposes of

international comparisons, the GDP data were derived by

using the Shares of Aggregate GDP based on Purchasing

Power Parity (PPP) valuation of country’s GDP. These data

form the basis for the country weights used to generate the

World Economic Outlook (WEO) country group composites

for the domestic economy. In the WEO, the data were

expressed as percent of world total. WEO weights have been

created from primary sources and they are used solely for

purposes of generating the country group composites. Gross

domestic product in US dollars per person for each country

was obtained multiplying the PPP of a country by the total

gross domestic product world total generated by WEO, and

dividing the outcome by the total population.

Table 1

Carbon dioxide emissions (CO2) per person and the gross domestic product

(GDP) per person in Chile in the 1987–2001 period

Year CO2 (kg/person) GDP (US$/person)

1987 1832 5468

1988 2141 5967

1991 2521 7832

1992 2591 8835

1993 2596 9546

1997 2947 10137

1998 3115 11279

1999 3501 12162

2000 3975 13121

2001 4059 13595

Source as explained in the text.

The apparent linear relationship shown in Fig. 1 has been

used by both sides of the ideological spectrum within the

environmental debate, in order to demonstrate their

particular views. For some of them, it proves that the

environmental protection and the capitalist development

model based on the GDP growth are incompatible, because

this relationship shows that economic growth is associated

with an emission growth. Consequently, it is necessary to

forbid immediately the emissions of stock pollutants and to

change our development model. For others, the relationship

proves that the environmental regulations can inhibit the

economic growth because environmental protection implies

limitations on the emission of pollutants, and again,

economic growth is associated with emissions growth.

Thus, they argue that is not a good idea to face the stock

pollutant issue while development has not been reached.

7. Analysis

Despite the range of positions within the debate, there is

scientific consensus on that damage inflicted by some human

activities on environment renders those activities unsustain-

able. The challenge has been faced by imposing constraints

on the stock pollutant emissions. It implies zero growth in

the physical parameters of the human economy, biodegrad-

able material excepted (Upham, 2000). If this is not done,

the sustainability criterion is transgressed. In the same way,

the criterion is violated if the need of economic growth is

ignored.

The fundamental shortcoming of the idea that ‘‘economic

growth is associated with emission growth’’ is that, just as a

neo-Malthusian theory (after Thomas Robert Malthus,

1766–1834 and his theory of limits) the polarized opinions

within the debate are keeping fixed the rate between

pollutants emission unit and economic growth unit. These

opinions are based on the apparent relationship shown in the

Fig. 1. We argue that even if we accept this relationship as

factual, it is possible to prove that economic growth does not

R.R. Cordero et al. / Environmental Science & Policy 8 (2005) 392–398396

necessarily imply emissions growth. In order to do this,

assume that the relationship between the pollutant emission

level W and the gross domestic product (GDP) in Fig. 1 can

be described by

W ¼ pGDP; (1)

where p is the rate between pollutants emission unit and

economical growth unit. If this equation characterizes the

evolution of a country during its developing process, it

should indicate the expected path of a country undergoing

the economical growth. Now, Eq. (1) can be also written as:

p ¼ W=GDP (2)

p can be considered as an inefficiency coefficient; a low

value of p would hold for an efficient society. Observe

Fig. 2a and b; they show Eq. (2) plotted on the coordinate

system p–W, for two different GDP values: A and B. Points

on the straight lines correspond to all the possible situations

of a country in a development stage defined by the GDP

values. Imagine a developing country at some point on line

A. This line was plotted using a GDP value that is clearly

lower than that used to plot line B. Therefore, the developing

country would like to reach some point on the line B. In

order to do this, there are two extreme possibilities. As

shown in Fig. 2, it can be done keeping the inefficiency

coefficient value constant at p0 (Fig. 2a), or alternately, the

developing country can reach the stage of higher develop-

ment keeping the pollutant emission level value constant at

W0 (Fig. 2b). The path in Fig. 2a represents an evolution

without imposing any limitation on pollutant emission level

W. This is basically the expected path for developing coun-

tries; as shown in Fig. 1, in this case the economy and the

pollutant emissions grow simultaneously. The path plotted

in Fig. 2b shows that economic growth is possible even if

there are constraints on the generation of waste and the

emission level W0 is kept constant. Of course, this implies

that in order to meet economic growth and environmental

protection the coefficient value p should diminish, and

therefore, the society must improve its efficiency. A society

can be more efficient by using improved technologies to

increase the output per unit of input, maximizing added

value while minimizing resource and energy use (Barrett

et al., 2001) and producing less pollution. This transforma-

tion of a traditional industry, often environmentally una-

Fig. 2. Two possible paths for the evolution of a developin

dapted, to a modern industry, implies necessarily

technological innovations (Huber, 2000) and of course

investments.

Both paths shown in Fig. 2 are possible. The experiences

of different high-performing East Asian economies are

illustrative. Those East Asian countries that postponed

environmental investments not only have had to shoulder

sizeable cumulative damage costs, but also must now

contemplate high levels of environmental investment for the

future. By contrast, other East Asian countries that invested

early in environmental improvements experienced virtually

no trade-off in slower growth (O’Connor, 1996).

8. Perspectives

The evidence in Fig. 1 does not show any diminution of

the inefficiency coefficient value p. At least in the carbon

dioxide emissions case, independent of their development

level, the countries are not doing the innovations and

investments to improve their abatement technology.

Nevertheless, note that development societies have p

values even higher than the poor economies. It is possible to

understand this phenomenon by the characteristics of this

particular pollutant. Carbon dioxide (CO2) is a colorless,

odorless and non-poisonous gas formed by combustion of

hydrocarbons and by the respiration of living organisms.

Although it is considered a greenhouse gas, its effect is not

obvious in the short run or near to its source. It is called a

global pollutant because its damage is related more to its

concentration in the atmosphere. Since the atmosphere can

be damaged free of charge, countries do not have incentives

to face the problem because doing it unilaterally implies a

competitive disadvantage. Therefore, the answer must be

multilateral. The Kyoto Protocol is the tool designed to

overcome the problem of the greenhouse gases. In the

developing countries, even the problem of the local

pollutants remains without being faced. Although as shown

in Fig. 2b environmental care and economic growth are not

incompatible, to meet them is not free because the adoption

of policies in order to limit the pollutant emissions demands

technological innovations and investments.

On the other hand, societies in developing countries are

not completely aware of the environmental problems

g country between two different development stages.

R.R. Cordero et al. / Environmental Science & Policy 8 (2005) 392–398 397

produced by their industrialization process. The absence of

public opinion pressure, the actions of powerful sectors

linked to industrial activities and the scarcity of financial

resources to accede to technological innovations, form a

dangerous combination. Although the use of the economic

analysis can help to reach efficient regulation levels, in a

competitive global market, this is a difficult effort for the

Latin-American developing countries. In these countries, the

decision-makers will decide to adopt a new technology only

if the perceived reduction in costs associated with the

pollution control exceeds the costs of adopting the

technology. This is a very unusual situation since benefits

of environmental regulations are less certain that costs.

Further, in the Latin-American developing countries,

environmental conflicts are still being resolved mainly in the

political arena (Bredariol and Magrini, 2003). The political

answers to the environmental challenges have been

restricted to the promulgations of the framework laws. This

is insufficient. Latin-American countries must go beyond the

generalities of their laws and try putting the concept of

sustainable development into practice. That means to define

environmental goals by establishing specific pollution

levels, to select and to adopt gears to achieve the defined

environmental goals, and to reform the regulation-making

process to guarantee enforceable rules.

In a context of weak public opinion, the countries tend to

act in the global market as private firms, which do not have to

take care for the health of their workers. If a country

unilaterally decides to undertake a higher responsibility, it

could get a competitive disadvantage in comparison to

others without the same environmental conscience. There-

fore, although the economic integration process in the Latin-

American world is going forward, this integration does not

include any environmental policy dimension and sadly, there

are not perspectives that it can happen in the short run.

In the current international economic system, it is

difficult to adopt development strategies that lead to truly

sustainable development (Carvalho, 2001). The abatement

investments just can be promoted by a regulation or the

threat of regulation (Lundgren, 2003). Under these condi-

tions, only external actions would put incentives to the

progressive adoption of improved pollution abatement

technology in developing countries. That means that in

order to provide adequate margins of safety for the

population in the Latin-American developing countries,

multilateral initiatives should be adopted. Bilateral coopera-

tion can aid to promote sustainable development (Glasber-

gen and Miranda, 2000), but only a multilateral agreement

with enforceable regulations will allow facing successfully

the current environmental challenges.

9. Conclusions

In order to show that economic growth does not

necessarily imply neither pollutant emission growth nor

depletable resource consumption, we used a simple

graphical model inferred by the available data of the carbon

dioxide emissions (CO2) per person and the gross domestic

product (GDP) per person in some Latin-American

countries. By analyzing the model, we concluded that

environmental care and economic growth are not incompa-

tibles. However, we also recognized that to meet them

implies to diminish the rate between pollutant emission and

economical growth unit and the rate between resource

consumption and economical growth unit. That means to be

more efficient. This is not easy because the adoption of

policies in order to limit pollutant emissions and resource

consumptions requires incentives and enforceable rules.

These rules should promote the use of, for example,

renewable technologies. The financial resources scarcity to

pay for the costs of this appropriate level of technology, the

uncertainty in the benefits, the weak public opinion pressure

and the actions of powerful sectors linked to industrial

activities would inhibit providing adequate margins of

pollutant emission and of resource consumption in the Latin-

American developing countries. The absence of interna-

tional environmental rules in the global economic market

can be also dangerous since even if a developing country is

undergoing a local pollutant problem or a resources scarcity,

its regulation-makers may decide not attend to unilaterally

control the problem, thus avoiding to get a competitive

disadvantage. Therefore, the adoption of multilateral

initiatives is claimed to provide incentives that allow the

developing country authorities to face the environmental

problems.

Acknowledgements

We thank Dr. Ignacio Lira, from Pontificia Universidad

Catolica de Chile, for helpful suggestions to the final draft of

this paper. We wish to thank to the ‘‘Direccion de

Investigacion y Postgrado’’, Technical University Federico

Santa Maria for its financial support for this investigation

through project no. 11.02.24 and CYTED for its support

through the project VII. Codigo CYTED 3125. R.R. Cordero

thanks support of Vlaamse Interuniversitaire Raad (VLIR-

ESPOL).

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Raul R. Cordero was born in 1972 in Ecuador, South America. He studied

engineering at the Escuela Superior Politecnica del Litoral in Ecuador, the

Universidad Tecnica Federico Santa Maria in Chile and the Pontificia

Universidad Catolica de Chile in Santiago. He became a professor at the

Universidad Tecnica Federico Santa Maria in 1996. He works on designing

environmental policies.

Pedro Roth was born in 1942 in Chile, South America. He studied

engineering at the Universidad Tecnica Federico Santa Maria in Chile

and the University of Hannover in Germany. He became a professor of

mechanical engineering at the Universidad Tecnica Federico Santa Maria in

1975. He works on the renewable energy area.

Luis Da Silva was born in 1938 in Chile, South America. He studied

physics at the Universidad de Chile and the Pontificia Universidad Catolica

de Chile, both in Santiago. He became a professor of physics at the

Universidad Tecnica Federico Santa Maria in 1971. He works studying

the on-ground impacts of the ultraviolet radiation.