Assessing the Costs of Environmental Degradation
in the Middle East and North Africa Region
Muawya Ahmed Hussein
Dhofar University, Salalah, Oman
phone: +968 92210708
The Arab region now faces unique development and environment challenges. Despite some improvements over the past decade, future generations in the region will continue to face serious environmental problems unless significant attention is given, and investments are made, to reverse the current state of environmental degradation, particularly with regard to water scarcity, pollution and health problems, and weak environmental institutions and legal frameworks.
Although environmental concerns within the Middle East and North Africa (MENA) region are becoming noticeable, and every MENA country now has an environment ministry or agency, many countries are still depleting their natural resources at rates well above sustainable levels. One indicator of this deterioration is adjusted net savings, which measures the true saving rate in an economy after allowing for depletion of natural resources. Adjusted net savings in MENA for 2001 is estimated at –6 percent of gross national income, compared to –1 percent in Sub-Saharan Africa, 5 percent in Latin America, 12 percent in South Asia, and 23 percent in East Asia and the Pacific.
Despite the difficulties involved in assigning monetary costs to environmental degradation, such estimates can be a powerful means of raising awareness about environmental issues and facilitating progress toward sustainable development. It is far easier for decision-makers to incorporate and prioritize environment when the issues can be cast in clear economic terms. Such assessments are particularly relevant in light of the mainstreaming effort called for by the World Bank Environment Strategy. An initiative in the MENA region, undertaken in collaboration with the Mediterranean Environmental Technical Assistance Program (METAP), is assisting countries in assessing the costs of environmental degradation, with the aim of fostering integration of environmental issues into broader economic development agendas. Similar exercises have been undertaken in other countries with World Bank support. For instance, in Colombia, it is being undertaken as part of a country environmental analysis and is influencing priority setting for a structural adjustment loan. However, the MENA initiative is particularly interesting in being undertaken at a region-wide level.
The objectives of this discussion are to estimate the cost of degradation as a percentage of gross domestic product (GDP) at the national level; to enhance local capacity in environmental economics, in particular in the valuation of environmental degradation; and to provide an input to inter-sectoral environmental priority setting.
Cost of environmental degradation can be understood as a measure of lost welfare of a nation due to environmental degradation.
Such a loss in welfare from environmental degradation includes (but not necessarily limited to):
- loss of healthy life and well-being of the population (e.g.: premature death, pain and suffering from illness, absence of a clean environment, discomfort);
- economic losses (e.g.: reduced soil productivity and reduced value of other natural resources, lower international tourism); and
- loss of environmental opportunities (e.g.: reduced recreational values of lakes, rivers, beaches, forests for the population).
2.05 In this report the cost of environmental degradation is expressed as a percentage of GDP in order to provide a sense of magnitude. It is also often useful to compare the cost of degradation to GDP in order to assess their relative magnitude over time.
2.06 If the cost of degradation as a percentage of GDP is growing over time, it suggests that the welfare loss from environmental degradation is growing faster than GDP, i.e., that economic and human activity is having increasingly negative (environmental) consequences on the nation relative to its economic affluence. If the contrary is the case, it suggests that environmental consequences are being reduced relative to the nation’s economic affluence.
Costs of environmental degradation have been estimated for six categories:
- Indoor and outdoor air pollution
- Lack of access to water supply and sanitation services
- Land degradation
- Coastal zone degradation
- Waste management
- Global environment.
Environmental degradation in each of the six environmental categories studied in this report can be expected to have different impacts on future generations as well as on the poor. Table 3.7 presents a very generalized view of these issues. While the cost of environmental degradation that impacts health may be expected to primarily affect the current generation (if pollution is curbed), the impacts on natural resources can often be irreversible, or have much longer effects, and therefore negatively impact future generations.