When business crosses international borders to influence nations with poorer, still developing economies, one problem that arises is that the developing nation has little to offer, but what they do have, primarily because their economy is new, and typically pre-industrial, is a clean environment, which means they may be willing to sell their environmental benefits to gain economic ones.
Poverty and Pollution
From: Moral Issues in Business 8th ed. Shaw & Barry (pp. 565-566)
It is called Brazil's "valley of death," and it may be the most polluted place on Earth. It lies about an hour's drive south of Sao Paulo, where the land suddenly drops 2,000 feet to a coastal plane. More than 100,000 people live in the valley, along with a variety of industrial plants that discharge thousands of tons of pollutants into the air every day. A reporter for National Geographic recalls that within an hour of his arrival in the valley, his chest began aching as the polluted air inflamed his bronchial tubes and restricted his breathing.
The air in the valley is loaded with toxins–among them benzene, a known carcinogen. One in ten of the area's factory workers has a low white blood cell count, a possible precursor to leukemia. Infant mortality is 10 percent higher here than in the region as a whole. Out of 40,000 urban residents in the valley municipality of Cubatao, nearly 13,000 cases of respiratory disease were reported in a recent year.
Few of the local inhabitants complain, however. For them, the fumes smell of jobs. They also distrust bids to buy their property by local industry, which wants to expand, as well as government efforts to relocate them to free home sites on a landfill. One young mother says, "Yes, the children are often ill and sometimes can barely breathe. We want to live in another place, but we cannot afford to."
A university professor of public health, Dr. Oswaldo Campos, views the dirty air in Cubatao simply as the result of economic priorities. "Some say it is the price of progress," Campos comments, "but is it? Look who pays the price–the poor."
Maybe the poor do pay the price of pollution but there are those who believe that they should have more of it. One of them is Lawrence Summers, chief economist of the World Bank and subsequently Secretary of the U.S. Treasury. He has argued that the bank should encourage the migration of dirty, polluting industries to the poorer, less developed countries. Why? First, Summers reasons, the costs of health-impairing pollution depend on the earnings forgone from the increased injury and death. So polluting should be done in the countries with the lowest costs–that is, with the lowest wages. "The economic logic behind dumping a load of toxic waste in the lowest-wage country," he writes, "is impeccable."
Second, because pollution costs rise disproportionately as pollution increases, it makes sense to shift pollution from already dirty places such as Los Angeles to clean ones like the relatively under populated countries in Africa, whose air Summers describes as "vastly under-polluted." Third, people value a clean environment more as their incomes rise. If other things are equal, costs fall if pollution moves from affluent places to less affluent places.
Critics charge that Summers views the world through "the distorting prism of market economics" and that his ideas are "a recipe for ruin." Not only do the critics want "greener" development in the Third World, but also they are outraged by Summers's assumption that the value of a life–or of increases or decreases in life expectancy–can be measured in terms of per capita income. This premise implies that an American's life is worth that of a hundred Kenyans and that society should value an extra year of life for middle-level manager more than it values an extra year for a blue collar, production-line worker.
Some economists, however, believe that Summers's ideas are basically on the right track. They emphasize that environmental policy always involves trade-offs and that therefore we should seek a balance between costs and benefits. As a matter of fact, the greatest cause of misery in the Third World is poverty. If environmental controls slow growth, then fewer people will be lifted out of poverty by economic development. For this reason, they argue, the richer countries should not impose their standards of environmental protection on poorer nations.
But even if economic growth is the cure for poverty, other economists now believe that sound environmental policy is necessary for durable growth, or at least that growth and environmental protection may not be incompatible. First, environmental damage can undermine economic productivity. Second, poverty itself is an important cause of environmental damage because people living at subsistence levels are unable to invest in environmental protection. Finally, if economic growth and development are defined broadly enough then enhanced environmental quality is part and parcel of the improvement in welfare that development must bring. For example, 1 billion people in developing countries lack access to clean water while 1.7 billion suffer from inadequate sanitation. Economic development for them means improving their environment. Still, rich and poor countries have different environmental concerns: Environmentalists in affluent nations worry about protecting endangered species, preserving biological diversity, saving the ozone, and preventing climate change, whereas their counterparts in poorer countries are more concerned with dirty air, dirty water, soil erosion and deforestation.