Structural Change, Economic Growth and Environmental Dynamics with Heterogeneous Agents

Abstract

In many developing countries the asset distribution is highly concentrated and the economic agents differ not only by income, but also by their vulnerability to environmental depletion. The poor, especially in rural areas, tend to be more dependent on natural resources and more vulnerable to ecosystem degradation. Three quarters of the poor live in rural areas andmore than half of the rural poor depend on breeding and agricultural activities: cultivation of staple food is the main source of calories, income and job for the rural poor (IFAD 2001). Moreover, it is commonly recognized that the rural poor in developing countries significantly rely on the common pool resources of the community they live in Dasgupta (2001), while according to World Resources Institute (2005) estimates, around 1 billion of the world poor rely in some way on forests (indigenous people wholly dependent on forests, smallholders who grow farm trees or manage remnant forests for subsistence and income). A meta–analysis of 54 case studies in developing countries found that the poor tend to be more dependent on forest environmental income than better–off households (Vedeld et al. 2004). Natural assets and common or free access resources provide the poor with other additional services: regulating production services such as flood, drought and erosion mitigation, soil renewal, soil fertility or the provision of food, fuelwood and energy and fresh water. Microeconomic studies confirm the relevance of the dependence of the rural population on the community or free access resources (Beck and Nesmith 2001;Cavendish 2000; Falconer 1990; Fisher 2004; Jodha 1986; Narain et al. 2005).On the other hand, the rich have a greater ability to substitute private goods for environmental goods. They are thus able to protect themselves from pollution and to face the depletion of natural capital (United Nations Environment Programme 2004).