Role of economic policies in protecting the environment: the experience of Pakistan.
Faruqee, Rashid
Economic policies that ensure efficient allocation of resources is
a necessary, but not a sufficient condition for creating appropriate
environmental incentives. Environment-specific policies are also needed
to correct market failures leading to environment problems. Two types of
policies can be used to deal with environmental problems--command and
control policies and incentive- or market-based policies. Command and
control policies involve government mandating of environmental quality
standards on emissions, technology type, or input use. Incentive- or
market-based policies use prices to try to affect pollution and resource
use. Despite the advantages of market-based approaches, Pakistan, like
many other countries, mostly followed control policies. But these
policies have often failed to achieve results because regulating
institutions lack the financial and technical resources to implement
these policies effectively.
Pakistan's brown environmental problems include industrial
waste water pollution, domestic waste water pollution, motor vehicle
emissions, urban and industrial air pollution, and marine and coastal
zone pollution. Economic policy failures are contributing significantly
to many of these problems.
Green environmental problems affect irrigated agriculture, rainfed
agriculture, forests, and rangelands. In irrigated agriculture, economic
policies, such as subsidies on irrigation water, have provided
incentives for farmers to over use water in their production practices,
thereby exacerbating the problem of waterlogging and salinity.
Deforestation and rangeland degradation have resulted, in part, due to
lack of property rights in communal forests and lack of incentive for
local communities to participate in forest management decisions.
I. ECONOMIC POLICIES AND THE ENVIRONMENT
Like most developing countries, Pakistan faces serious
environmental problems. Rapid population growth (averaged about 3
percent a year since the early 1970s) and impressive GDP growth (of
about 6 percent a year) have put enormous pressure on the country's
natural resource base and have significantly increased levels of
pollution. Rapid expansion in industrial production and urbanisation
have led to increased levels of waste water pollution, solid waste, and
vehicle emissions that have resulted in serious health problems in many
areas of the country.
Soil erosion and salinity have caused crop yields to decline in
some areas on what were previously some of the most productive soils in
Pakistan. Forests are being depleted, especially in the Northern areas,
as land is cleared for livestock fodder and fuelwood. Rangelands are
increasingly becoming degraded, some irreversibly, and the marine
environment has been affected by industrial pollutants and increasing
levels of salinity as a result of upstream irrigation. A recent study
Brandon (1905) attempts to value environmental costs in Pakistan and
puts the estimate of environmental damage at $1 billion to 2.1 billion
per year, or 2.6 to 5.0 percent of GDP in 1992 values.
In response to environmental concerns, the government of Pakistan prepared its National Conservation Strategy (NCS) in March 1992. The NCS
has been useful, especially in raising awareness of environmental
problems among government institutions. Following the release of the
report several institutional improvements were made, among them the
establishment of an NCS implementation unit in the Environment and Urban
Affairs Division (EUAD) and the creation of an Environmental Section,
mandated to integrate environmental concerns in economic development
planning, in the Planning Commission. The Sustainable Development Policy
Institute (SDPI) was set up on the basis of NCS recommendations to
provide economic and policy analysis for sustainable economic
development, and most of the provinces have created environmental cells
in their Planning and Development (P&D) Departments in order to
screen investment projects for their effects on the environment.
Following early successes in implementing the NCS, however,
progress now appears to be faltering because of several major factors.
First, not enough attention has been given to government policies that
provide incentives for individuals to pollute the environment and
exploit natural resources in an unsustainable manner. Second,
institutions set up for managing the environment, such as the EPAs,
appeal to be weak and incapable of implementing an appropriate
environmental strategy or coordinating the actions of donors to help
protect the environment. Third, the goals set by the NCS may have been
overambitious given technical, economic, and institutional constraints
Pakistan faces. Fourth, the role of the private and nongovernmental
(NGO) sectors has not been defined. Finally, many attributed slow
progress to a lack of political commitment to sustainable environmental
improvement.
Broadly speaking, there are two ways of protecting (improving) the
environment--policies and regulations. Policies can be general
(economy-wide) with impacts on the environment, or specific, directed
policies to aimed at environmental protection. This paper assesses how
economic policies (and in some cases the absence of economic policies)
have affected the environment in Pakistan. This should help in assessing
what policies or areas warrant special attention to improve
environmental protection.
The paper focuses on both brown and green issues, examining
problems affecting water pollution (domestic and human waste water,
industrial waste water discharge); air pollution (vehicle emissions,
urban air pollution, industrial emissions); and marine and coastal
zones; irrigated and rainfed agriculture; forests; and rangeland.
Economic and Demographic Causes of Environmental Problems
Environmental problems are caused by a variety of economic and
demographic factors, including market failures, policy failures,
poverty, and population growth, all of which have been important in
Pakistan.
Policy and Market Failures
Environmental problems are often caused or exacerbated by
inappropriate policies that provide incentives for practices detrimental
to the country's natural resource base. In Pakistan, for example,
subsidies on some agricultural inputs have caused damage to the
environment. Especially damaging has been the provision of irrigation
water at prices substantially below the cost of delivery, a policy that
has increased waterlogging, led to the loss of many mangrove forests in
the coastal areas, and diminished biodiversity (NCS). The former policy
of subsidising agricultural chemicals led to excessive use of
pesticides. The policy of providing energy (such as electricity and
diesel) at below-market price provides incentives to individuals to
overuse the natural resource base.
Environmental problems often arise because decisions about natural
resource use and pollution are made without taking into account the full
costs of environmental damage to society at large. Market mechanisms
sometimes fail to allocate natural resources efficiently or to reflect
the social value of the environment. Many of the green environmental
problems in Pakistan reflect market failures associated with open access
or common property resources.
Markets also fail when there is a market for some but not other
uses for a resource. Deforestation in some areas of Pakistan, for
example, has occurred because the nonmarket benefits of soil
conservation have frequently been ignored.
Poverty and Population Growth
Poverty and population growth have contributed to the degradation
of the environment in Pakistan, where they have caused soil degradation,
deforestation, rangeland degradation, marine and coastal zone damage,
and many forms of urban and industrial pollution.
Poverty and environmental degradation are closely connected because
poor farmers face very high production and financial risks, often the
result of misguided policy interventions in factor and product markets
or insecure land tenure.
Of course, the cause and effect relationship between poverty and
the environment works in both directions. A poor and fragile environment
can be a major cause of poverty. Agricultural productivity on severely
eroded or waterlogged soils is generally low; as forests become
depleted, labour productivity declines as more time is spent collecting
fuelwood. In addition, environmentally induced health problems, such as
intestinal diseases from unsafe drinking water, disproportionally reduce
the working capacity and productivity of poor labourers. Health
expenditures increase as a result of environmentally induced diseases,
and the costs of cleaning up and preserving environmentally damaged
areas can be substantial.
Population growth also contributes to environmental degradation.
Construction of housing and infrastructure to support a growing
population has had a significant effect on the environment, and
migration to urban areas has increased urban pollution. Moreover, as the
population increases, greater demands are placed on the productive
agricultural land to meet food needs.
To prevent environmental degradation, appropriate policies and
institutions must be put in place so that the true costs (both private
and social) of economic activities are borne by decision-makers. Such
policies and institutions include those that correct market failures,
help define property rights, and provide for strong and consistent
enforcement of regulations. Institutions must be flexible, because
improvements in technology, changes in tastes, and new environmental
investments mean that the relationship between development and economic
growth and natural resources is constantly changing.
Economy-wide Policies and the Environment
Table 1 describes some of the economic and environmental effects of
both past and present economic policies in Pakistan. The table looks at
the present and past policies without making any judgment on their
appropriateness. Some of these policies have been distortionary, and
have adversely affected both overall economic growth and the
environment.
Despite terms of trade that have heavily favoured industry,
Pakistani agricultural production has increased as a result of an
increase in both crop yields and area under cultivation. But some of the
policies that spurred this growth have been damaging to the environment,
either because they were not economically appropriate (the pricing of
water, for example), or not accompanied with corrective policies for
environmental protection. Irrigation of the Indus Basin, for example,
has increased salinity and sodicity of the soil, and destroyed many of
the riverine forests and associated flora and fauna species. The system
has also led to the loss of many mangrove forests in the coastal areas
and to an associated decline in biodiversity and the fishing economy.
Agricultural run-off from fields to which chemicals have been applied
incorrectly or inappropriately has raised the levels of toxics in the
waterways. Had appropriate policies been adopted, agricultural growth
could have been achieved with less damage to the environment.
Policies favouring industrialisation can have adverse effects on
the environment unless measures are taken to protect the environment.
Freer international trade tends to increase investment in new
technologies, which embody cleaner processes to meet higher
environmental standards in countries to which Pakistan exports. This has
not been significant so far, but is likely to become important in the
future with trade liberalisation and more vigorous implementation of the
GATT's Uruguay Round agreements on sanitary and phytosanitary
standards. (1) Exchange rate policies can affect the environment through
the agricultural sector. Devaluation, for example, increases the prices
of imported goods, and causes substitution away from imported products.
Making imports more expensive, however, could reduce access to the
cleaner foreign technologies by making them more costly.
Policies aimed at reducing fiscal deficit balance can affect the
environment through many direct and indirect channels. Spending cuts
could also have both positive and negative effects on the environment.
In Pakistan, the removal of some subsidies on energy provided financial
incentives to increase the efficiency of energy use, and is generally
beneficial to the environment. By contrast, cuts in spending on safety
net programmes for the poor will likely harm the environment, because
consumption may be supplemented by increased exploitation of natural
resources, including fish, rangeland, and forests.
Private sector development and policies aimed at privatising
government-owned industries may also affect the environment. During the
early 1970s, many industries were nationalised in Pakistan.
Nationalisation was a disaster for the environment because it led to
industrial inefficiency, including the overuse of polluting technology,
and provided few incentives to conserve. Reversal of this policy through
privatisation with strictly enforced standards for environmental
protection should prove beneficial to the environment.
Redistribution of income and wealth has an effect on the
environment. By giving ownership to farmers, land reform helps protect
the environment because it enables the cost of land use to be fully
borne by decision-makers and eliminates the externality that leads to
overexploitation. Because the laws in Pakistan were very lax and easy to
circumvent, past land reforms did not bring about the desired change in
land tenure and did not have any effect on environmental protection.
Incentive Policies and Institutions for Improving the Environment
in Pakistan
As noted, non-distortionary economic policies that stimulate
economic growth by improving the allocation of resources generally
create appropriate incentives for the protection of the environment.
Such policies are referred to as "win-win" policies in that
economic and environmental objectives are jointly achieved with the use
of the same policy instruments. Policies for sustained development thus
can build on the positive links between development and the environment.
Economic Policies that Create Incentives for Improving the
Environment
The scope for policy reforms that promote income growth, poverty
alleviation, and environmental improvement is very large in Pakistan.
Since the 1980s and particularly in recent years, Pakistan has carried
out significant structural reform of the economy. By providing economic
agents with incentives to manage the natural resource base in ways that
are more sustainable, market-orientated policies have generally had
positive effects on the environment. These win-win
policies--particularly the deregulation of prices, the privatisation of
State-owned enterprises, and trade reform--should be supported and
strengthened.
The structural adjustment programme eliminated many agricultural
price subsidies. The subsidy on agricultural chemicals was removed, for
example, and the subsidy on fertilisers is now very small. As a result,
the markets for chemicals and fertilisers have become more efficient,
private sector involvement in the production and distribution of these
agricultural inputs has increased.
Opportunities for other win-win price policies remain unexploited.
Irrigation water charges do not cover the operation and maintenance of
providing service, and farmers thus receive large subsidies on water.
The cheap water has provided incentives for farmers to over irrigate,
leading to water wastage and severe soil degradation as a result of the
leaching of nutrients from the soil. The pricing of energy is another
area in which win-win opportunities are being missed. Electricity prices
charged for residential users remain below the long-run marginal cost,
and agricultural users pay a flat tariff instead of being charged on the
basis of use. Subsidies also remain in the gas sector, with residential
users and some industrial users paying significantly less than
production costs [World Bank (1995)].
Privatisation is also a win-win policy because it can help reduce
fiscal deficits--especially if proceeds from privatisation are used to
reduce the government debt--and it leads to more efficient use of inputs
and to the introduction of new technologies that are generally cleaner
than the old ones. Private firms must be required to comply with
pollution control laws and regulations; the extent to which
privatisation benefits the environment thus depends on the
government's monitoring and enforcement capacity. Although these
capabilities are weak in Pakistan, private firms can nevertheless be
encouraged to employ environment-friendly production practices through
the use of market-based incentives, such as the proposed pollution tax,
or through other forms of control, such as pressure from NGOs.
Rationalising the trade regime and liberalising external payments
increases economy efficiency, speeds up economic growth, and reduces
poverty. It is also likely to provide incentives for better natural
resource management. These reforms have encouraged production of
products in which Pakistan has a comparative advantage, such as cotton
yarns and threads, textiles, and leather products. In some cases
additional policies are required to ensure that growth in these sectors
does not cause additional pollution.
Focusing only on win-win policies will not ensure sustainable
resource use. An economy in which resources are allocated efficiently is
a necessary not a sufficient condition for creating appropriate
environmental incentives. Environment-specific policies will be needed
to ensure sustainable economic development.
Targeted Policies Directed at Improving the Environment
Two types of targeted policy can be used--command and control, and
incentive- or market-based policies. Within these two categories,
policies can be either direct or indirect. Command and control policies
involve government mandating of environmental quality standards on
emissions, technology type, or input use. Incentive-based policies use
prices to try to affect pollution and resource use.
Market-based approaches to regulations that mandate the behaviour
of decision-makers are preferable to regulatory approaches, because
policies that use economic incentives are often less costly. Taxing
industrial emissions, for example, provides an incentive for firms to
invest in cleaner technologies and gives firms with lower pollution
abatement costs an advantage over firms with higher pollution control
costs. Regulations leave these decisions to the regulators, who are
rarely informed about relative costs and benefits in industry. Moreover,
market-based policies that price environmental damage affect all
polluters, in contrast to regulations, which affect only those firms
that comply. Market-based policies send the right long-term signals to
resource users, and provide polluters with an incentive to use
technologies that are most cost effective at reducing environmental
damage. Regulations that mandate standards give polluters no incentive
to go beyond the regulated standard. Regulations also require monitoring
and enforcement, and governments must be prepared to prosecute
violators. In many developing countries, including Pakistan, the
necessary monitoring and enforcement capability is weak.
II. MAJOR BROWN PROBLEMS AND THEIR CAUSES
Pakistan's brown environmental are serious, but there is no
precise estimates of their seriousness, particularly in comparison to
green problems. Brandon (1995) estimates that health impacts of water
pollution is the most serious (accounts for nearly half of the total
environmental damages). According to him, health impacts of air
pollution accounts for nearly one-fifth of environmental damages. This
'section shows that many of these problems are caused by failures
of policies.
Industrial Waste Water Pollution
The level of industrial pollutants emitted is growing at a very
rapid pace Indiscriminate discharge of industrial waste water is causing
serious environmental problems, among them contamination of groundwater,
including water drawn for drinking; contamination of sea water,
affecting aquatic life and drinking water; and Contamination of rivers,
particularly in areas with low levels of mixing, such as harbours and
estuaries. Unless policies are changed, environmental degradation as a
result of industrial waste water is likely to accelerate as the
manufacturing sector--already the single largest user of commercial
energy in Pakistan--continues to grow.
Much of the technology used by industry in Pakistan was acquired at
a time when energy prices were artificially low and environmental
impacts were not considered. Pollution from this technology is therefore
higher than it is in many industrial countries. Industries with high
levels of water contamination in Pakistan include textiles, leather,
paper and board, sugar, fertiliser, and cement, which together account
for 80 percent of total water consumed.
No comprehensive current data exist on either total industrial
pollution loads or pollution intensities in Pakistan. Levels of six
types of industrial pollutants--toxics, heavy metals, BOD pollutants,
and suspended solid water pollutants, particulates, sulfur dioxide air
pollutants--increased between six- and ten fold between 1963 and 1988,
during which time GDP grew by a factor of three. This rate of growth of
pollution output was above the rate of growth in India, where pollution
grew at about the same rate as GDP.
Economy-wide policy distortions have contributed significantly to
the problems of industrial waste water. A subsidy on energy use keeps
prices below economic levels, undermining incentives for energy
conservation [World Bank (1995)]. Pakistan is gradually moving toward a
more rational system of energy pricing, which has had a positive effect
on energy efficiency. Other resources, however, including water, remain
underpriced, leading to inefficient use and wastage. Because access to
groundwater is free and water is made available to industries at a low
price, industries have very little incentive to conserve water. As a
result, water usage levels are ten times higher in some industries in
Pakistan than they are in industrial countries.
Targeted policies aimed at addressing industrial waste water have
focused on the NEQS. To date, however, these have not been enforced. A
new system, based on the "polluter pays" principle used in
some industrial countries, is being discussed by the government and
NGOs. Under the policy effluent charges would be imposed based on
pollutant loads and the quantity of water wasted. Other potentially
effective targeted policies, such as economic incentives for industries
to acquire environment-friendly technology, have not been introduced.
Domestic Waste Water Pollution
Waste water in Pakistan is often dumped into open drains, streams
or ponds, shallow pits, or septic tanks connected to open drains (many
leading out directly to agricultural land); less often it is dumped into
sewers. Household refuse is also dumped into streams and drains, which
over time have become overloaded. Direct disposal of municipal waste
water into streams not only reduces groundwater quality, but also
disturbs the aquatic ecosystems, depletes aquatic resources, and affects
agricultural uses of the surface water. Another problem is the practice
of municipal waste water for farm use prior to treatment. Besides
serious health dangers when consumed, soils irrigated by untreated
municipal waste water become enriched in salts and quickly become
unproductive for cultivation.
Only 80 percent of the urban and 45 percent of the rural population
is estimated to have access to clean water in Pakistan, and migration to
the cities is putting pressure on inadequate urban water and sanitation
facilities. Pollution has led to the spread of water-related infections:
more than 40 percent of the hospital beds in Pakistan are occupied by
patients with water-related diseases, such as cholera, typhoid,
hepatitis, diarrhoea, dysentery, yellow fever, and malaria, and about 60
percent of infant mortality is associated with water-related infectious
and parasitic diseases.
Problems of domestic water disposal tend to stem from distortions
due to economy-wide policies, failure of targeted environmental
policies, and institutional failures. Uneconomic water pricing
exacerbates the problem in urban areas, where a flat rate is charged or
water is provided free of charge, a policy that both encourages the
wasteful use of water and eliminates incentives for suppliers of water
services to upgrade their water supply, treatment, and disposal
facilities. In rural areas, waste water is used as a cheap,
nutrient-rich source of supplemental irrigation, so that the need to
invest in treatment facilities is not recognised. Targeted policies to
control domestic waste water have not developed.
Motor Vehicle Emissions
Motor vehicle emissions account for about 90 percent of total
emissions of hydrocarbons (smog), aldehydes, and carbon monoxide.
Economic factors that have led to increased vehicle emissions
include the growth in population and disposable income, the mass
production of affordable vehicles, the deterioration of alternate modes
of transportation, and the need to travel longer travel distances as a
result of urban sprawl have led to the increase in vehicle emissions.
Although petrol prices are high, encouraging fuel efficiency, car owners
are for the most part unable to respond to the incentive to conserve gas
because of the lack of alternatives: maintenance and tune-up facilities
and public transportation are inadequate, and cleaner or less expensive
fuels have only recently been available in Pakistan. A subsidy on diesel
fuel provides incentives to switch consumption to diesel, which is more
polluting than many alternative energy sources.
Targeted policies have been introduced in Pakistan, but are
ineffective because of institutional failures. For instance,
restrictions are placed on vehicle emissions under the 1965 Motor
Vehicle Ordinance and 1969 Motor Vehicles Act. However, even the
rudimentary compliance with these laws is not enforced in any meaningful
way. Regulations go unenforced because of difficulties monitoring
compliance, because of lack of resources, and because of corruption. A
new enforcement strategy must therefore propose institutional reform of
the legal, administrative, and police departments.
The absence of emissions regulations, the lack of enforcement of
motor vehicle fitness regulations, and owners' lack of capital to
purchase replacements mean that old vehicles stay on the roads longer.
The results is that the average vehicle in Pakistan emits 20 times more
hydrocarbons, 25 times more carbon monoxide, and 3.6 times more nitrous oxides than the average vehicle in the United States.
A start has been made in providing better vehicle maintenance
facilities to the driving public through the GEF-funded fuel efficiency
improvement programme, which will set up modern gasoline and diesel
engine diagnostic and tune-up centres in major urban centres in
Pakistan. The project seeks to demonstrate the economic viability of
such technology in the hope that such centres will be set up throughout
the country. Immediate attention also needs to be paid to expanding and
improving the public transportation system, currently patronised by only
the lowest income groups; improving intercity railways; and enforcing
regulations on excessive emissions from vehicles in all category groups.
Urban and Industrial Air Pollution
Industry indiscriminately releases carcinogens (such as asbestos
and soot), radioactive substances arising from nuclear waste and Other
manufacturing, and particulate matter and noxious fumes (such as carbon
monoxide, sulfur dioxide, and hydrogen sulfide) into the air, and air
quality is declining. A 1985 survey found that only 3 percent of
industrial plants in Pakistan treated their wastes according to commonly
accepted international standards.
Air pollution primarily affects urban areas, where the density of
industry and vehicles prevents pollutants from being dispersed. Urban
air pollution consists of particulate, sulfur dioxide, carbon monoxide,
nitrogen dioxide, ozone, hydrocarbons, and heavy metals (such as lead).
Economy-wide policy failures are directly related to air pollution.
Air typically becomes polluted because the social costs of emissions are
not fully taken into account by decision-makers motivated by private
profit, and because state enterprises, which may not be profit
maximising, fail to internalise the environment. As was the case for
industrial and urban waste water problems, such market failure suggests
a need for government intervention through targeted environmental
policies.
Retail prices to households for nontradable energy products, such
as electricity and natural gas, remain below the economic cost of
supply.
Several incentive-based approaches that have been used effectively
in other countries--including emissions taxes, tradable pollution
permits, and economic incentives for industries to acquire
environment-friendly technology--have not been tried in Pakistan.
Instead, the government has relied on regulatory approaches, which can
be effective only if they are adequately monitored and enforced.
Marine and Coastal Zone Pollution
The coastal environment has changed over time, partly as a result
of the massive take-off from the Indus River for irrigation and
extensive pollution, particularly around the Karachi area. Most striking
is the reduction in the mangrove forests, which has adversely affected
fish and shellfish nurseries. Construction of barrages has reduced the
size of fish catches and reduced the sediment load reaching the ocean,
causing coastal erosion.
For the most part, marine and coastal zone pollution in Pakistan is
limited to Karachi, a city of 8 million people that accounts for about
45 percent of the country's industry. All of Karachi's
industrial waste, effluents, and domestic sewage, and all of the
agricultural run-off from the hinterland and the Indus River find their
way, untreated, into the sea.
Oil pollution is also a problem: of the 4 million tons of oil
imported in 1986, 20,000 tons are believed to have leaked into coastal
waters.
Many marine and coastal zone problems can be associated with the
absence or inappropriateness of policy. Waste water from industrial and
domestic sources and agricultural run-off eventually end up in the river
systems and ultimately in the sea. As a result, the economic policy
failures that have led to industrial and domestic waste water have also
caused coastal zone problems. No incentive- or market-based policies
specifically address problems of marine and coastal zone pollution; only
regulatory approaches have been used, and enforcement has been weak.
III. MAJOR GREEN PROBLEMS AND THEIR CAUSES
Pakistan contains at least six major natural resource systems:
irrigated agriculture; rainfed, or barani agriculture; forests;
rangeland; fisheries; and systems focused on preserving biodiversity
(wildlife). Each system has different resource management and
conservation problems. (2) The area affected and the estimated
production loss for each major problem are shown in Tables 2 and 3.
Irrigated Agriculture
Eighty percent of Pakistan's cultivated area, or 17 million
hectares, is irrigated, and irrigated agricultural accounts for more
than 90 percent of agricultural output and 22 percent of national GDP.
Pakistan has the largest contiguous canal irrigation system in the
world, with over 1.6 million kilometers of canals, branches,
distributaries, field channels, and watercourses. Forty percent of the
total water supply is lost in the canals and watercourses before
reaching the farm gate. Total availability of irrigation water at the
farm gate is estimated at 105 million acre feet, of which 60 percent is
supplied by canals, 35 percent by the more than 300,000 private
tubewells, and the remaining 5 percent by public tubewells [Mohtadullah,
Rehman, and Munir (1992)]. Most of the system is unlined, however, and
since the 1970s water from private tubewells has accounted for a growing
share of total water supplies. In many regions of the central Punjab as
much as 70 percent of irrigation is supplied by tubewells, particularly
in the rabi season.
In the 1950s and 1960s, waterlogging and salinity posed major
hazards for irrigated agriculture. In most areas, the threat of
waterlogging has receded since the 1970s, when the Salinity Control and
Reclamation Project (SCARP) tubewells were installed and drainage was
improved. The problem of salinity has become more acute in recent years,
however, as a result of increased tapping of brackish groundwater for
irrigation, and salinity poses the greatest danger to Pakistan's
most important natural resource.
Waterlogging, Salinity, and Ground-water Management
Salinity is partly the result of naturally occurring geological
processes and depends on the soil material, landform, relief, climate,
and land use. In Pakistan, salinity has almost certainly increased as a
result of the canal irrigation system as water containing dissolved
salts from the lower parts of the soil profile seep from the canal
system, and evaporate from the surface of adjoining soils. WAPDA has
estimated that 2.12 million hectares of land are waterlogged, and Sandhu
(1993) estimates that an additional 40,000 hectares per year are lost to
waterlogging. These reports are based on outdated information; regular
monitoring of waterlogging and salinity using standardised assessment
criteria is needed so that more accurate estimates can be made.
The most neglected problem is that of tertiary salinity from the
low-quality groundwater provided by tubewells, Surveys have shown that
three-fourths of tubewells provide brackish water that is unfit or only
marginally fit for agriculture. The cost of salinity in terms of reduced
yields is hard to evaluate. Using farm-level data, Siddiq (1994)
estimated that yield losses in wheat as a result of sodic irrigation
water were 9 percent and 20 percent in two different locales in the
central Punjab. Other experts have estimated that crop yields are
reduced by about one-third for crops grown on slightly saline areas and
that yields on moderately affected areas are reduced by about
two-thirds. Crop production of any kind is difficult on highly saline
soils.
Much of the problem of salinity caused by low-quality tubewell
water can be reduced through the use of gypsum, and the government has
tried to popularise gypsum use by farmers through provision of a
sizeable subsidy. A similar programme was very successful in the Indian
Punjab, where the problem of salinity has been drastically reduced
through the use of subsidised gypsum. There are no data on the effects
of the Pakistani programme. Field experience indicates, however, that in
most instances, influential farmers appear to be the main beneficiaries
of the subsidies.
Concerns about groundwater quality have been raised repeatedly over
the past three decades but little effort has been made--by the
provincial or the federal government, or by any of the multilateral aid
agencies that invest heavily in the irrigation sector of the Indus Basin
during the 1960s and 1970s--to monitor the effects of salinity of
groundwater on soil resources and crop productivity. In the absence of a
public agency with an official mandate to monitor the effects of
salinity, provincial irrigation departments should be legally mandated
to do so.
A critical issue in any discussion of salinity and waterlogging is
the effect of water pricing policy on the efficiency and use of water.
The subsidy on canal water has been substantial in recent years,
accounting for more than 50 percent of the subsidy on operation and
maintenance costs; the subsidy is much higher if measured in terms of
the opportunity cost of water or against the cost of tubewell water. The
underpricing of water and the basing of charges on the area irrigated in
a season rather than on the quantity of water applied eliminates
incentives to use water efficiently and has aggravated waterlogging and
salinity [Ahmad and Kutcher (1992)]. The structure of water pricing
provides no incentives for using canal water efficiently, and
discourages investments in water conservation, such as drip or sprinkler
irrigation systems [Noman (1994)]. All of these problems are linked to
the lack of property rights on canal water. Although some canal water is
unofficially exchanged and traded, rights to canal water are not
officially recognised and there is no well-developed market to allocate
canal water to its most efficient uses.
Use of tubewell water is also distorted by economic policy.
Tubewell drilling and electricity are subsidised, and electricity prices
for tubewells are based on the area irrigated in a season regardless of
the volume used. Although tubewell water is widely traded at a price
several times higher than that of canal water, there are no restrictions
on the drilling of tubewells. In areas of limited groundwater, this
means that there is no way of regulating or influencing through property
rights the overexploitation of groundwater. One area of the country
where this problem is particularly severe is in Balochistan.
On the output side, prices of major crops continue to be distorted
through 'trade policy and price supports. Domestic sugar prices,
for example, have regularly been set above import prices, encouraging
the domestic production of sugar, a crop with high water requirements.
Factor price distortions that artificially encourage capital intensive
techniques lead to the adoption of production methods that do not
reflect factor endowments [Noman (1994)]. Subsidies or targeted credit
for tractors and threshers have displaced labour, for example. The
resulting environmental stress can be alleviated by providing more rural
employment by removing the policy induced distortions in favour of
highly capital intensive methods. Employment creation may also be the
most effective strategy for reducing pressure on fragile soils in the
mountain areas of northern Pakistan.
Resolution of the environmental problems facing Pakistan's
water resources requires the implementation of fundamental changes in
water pricing and in institutional structures to improve the efficiency
of allocating water and maintenance. Radical new institutional
structures have been proposed, including the devolution of water
management to farmers organisations, and the establishment of public
utilities to operate and price water further up the system [Ahmad and
Faruqee (1995)].
Other Soil Productivity Problems
The mining of soil nutrients associated with a decline in organic
matter and the extraction of other nutrients at a rate greater than
their replacement through additions of inorganic and organic sources of
nutrients threaten the sustainability of irrigated areas in Pakistan. In
much of the irrigated area, farmers plant a single rotation, such as
rice-wheat, without introducing a rotation crop or using organic
manures. Indeed, there is evidence that cropping patterns have become
less diverse as the area of fodder crops and pulses has fallen.
Declining organic matter and declining yields for the same input level
have been found in on-farm trials of the Soil Fertility Institute in the
Punjab. Intensive monocropped agriculture may also be causing other as
yet unrecognised soil problems.
With the removal of fertiliser subsidies, the need to promote
organic sources of nutrients through farmyard and green manures, to
diversify rotations to include legumes, and to employ other
environment-friendly practices, such as conservation tillage, has grown.
The Pakistan Agricultural Research Council has only very recently
initiated a bio-organic approach to agriculture that emphasises organic
sources of nutrients, including green manures, farmyard manure,
composting, and microbiological approaches. Although these technologies
are being extended, little research has been done on back up, especially
on the fine tuning of these technologies needed to take account of the
socioeconomic situations of small farmers. More research, especially
participatory research with farmers, must be undertaken to develop
appropriate methods for integrated nutrient management.
Pollution from Agricultural Chemicals
The indiscriminate use .of agricultural chemicals, such as
fertilisers and pesticides has contaminated ground- and surface water.
Agricultural chemical use in Pakistan's irrigated agriculture
has expanded rapidly over the past twenty years. The most serious
agricultural chemical problem stem from the rapid increase in pesticide
use, from less than 1,000 tons in 1980 to more than 20,000 tons in 1995.
The widespread use of often dangerous pesticides on the cotton crop
is associated with several potential health hazards, including
contamination of workers who apply it (three quarters of producers use a
back-pack sprayer and no protective clothing), harvesters (all of whom
are women), soil and groundwater used. for drinking, and consumers of
agricultural products.
The exclusive reliance on pesticides to reduce pest losses is
unsustainable as pest populations change and some pests develop
resistance to commonly used pesticides. Resistance to pesticides has
caused the cotton crisis of the past two years, in which losses from
curl-leaf virus have sharply reduced the cotton harvest and even
threatened supplies to the domestic textile industry. Short-run success
in increasing cotton production over the past decade has come at the
price of long-run sustainability.
Integrated pest management (IPM) is widely advocated as a means of
reducing pesticide use and developing more sustainable production
systems through the employment of a range of practices to combat pest
populations. Despite the magnitude of the environmental and health
problems associated with high levels of pesticide use on some crops,
Pakistan has been a latecomer to the practice of IPM, and has been
reactive rather than proactive. IPM is a knowledge-intensive practice
that requires good extension service and is facilitated by literate
farmers. Both are deficient in Pakistan and unless major emphasis is
placed on promoting IPM it will be decades before pesticide use is
reduced significantly.
Rainfed (Barani) Agriculture
About 20 percent, or 4.3 million hectares, of the total cultivated
area in Pakistan is rainfed (barani). Rainfed agriculture is
particularly important in northern Punjab and NWFP. Many of the natural
resource issues affecting irrigated areas, particularly the use of
agrochemicals and the decline in soil productivity, also affect rainfed
areas, although usually to a lesser degree.
The major problem in rainfed areas is soil erosion, which has
Worsened over the years as population pressure, poverty, and stagnant
yields have forced more people onto marginal areas to meet food, fodder,
and fuelwood needs. Water erosion is the major cause of soil erosion in
rainfed areas. About 11 million hectares of land are slightly or
severely affected by water erosion problem in Pakistan, particularly in
NWFP, where one-third of rainfed area is classified as seriously
affected by water erosion.
Removal of vegetative cover for forage and fuel; loosening of
previously stabilised loess surfaces in an effort to bring more land
under cultivation; repeated shallow mechanised tillage, encouraged by
cheap credit for tractor purchases, that has created a hard pan beneath
the top soil restricting moister infiltration and inducing rainfall
runoff; inappropriate terracing and ineffective field embankments
allowing mud slides and torrential flows; and lack of crop cover as a
result of bare following, removal of organic matter, and rodent damage
aggravate the problem of rainfall run-off [Mian and Mirza (1993)].
Water erosion has serious environmental consequences in both the
short and long term, include a continued decrease in the depth,
fertility, and extent of productive soils; a decrease in agricultural
production; continued deterioration of rangelands and forests reserves;
increased rates of sedimentation in water reservoirs, and channels,
affecting their maintenance cost and life span; and adverse effects on
the transportation infrastructure (roads, railways, bridges).
Soil erosion by wind is predominant in the sandy and areas of
Pakistan, mainly in the Thal and Cholistan Deserts in the Punjab, the
Thar Desert in the Sindh, and the Kharan Desert in Balochistan, and
depends on the nature of the soil, the wind velocity, the soil moisture,
and the land relief. Dry fallow fields, saline soil surfaces, and loose
dust in village and town streets supply large amounts of material that
is transported to distant places by winds. Like water erosion, wind
erosion occurs naturally but has been exacerbated by development
activities.
Policies have provided incentives for farmers to cultivate more
land to intensify their production practices, thereby exacerbating the
rate of soil damage and degradation. Much of the emphasis on controlling
soil erosion has been through engineering solutions in the form of
contours, bunds, and check dams, usually implemented through programmes
of the Ministry of Agriculture. Less emphasis has been placed on
biological solutions involving cropping patterns to increase soil cover,
conservation tillage, and use of vegetative contours and barriers. The
National Agricultural Research Council is now testing such approaches in
a pilot programme. The appropriate merging of engineering and biological
solutions will require substantial participatory research and strong
linkages between research and development. Community-based approaches
are also needed.
Forests
Forests occupy only about 5 percent of the land area in Pakistan,
and only one-third of the forests are productive in terms of timber
extraction. Forests nevertheless plays an essential role in the
country's economy because of their importance as sources of
fuelwood and grazing land. Almost a third of the nation's energy
needs are met by fuelwood, and forests are used for grazing a third of
the country's livestock. Catchment forests prolong the lives of the
Tarbela and Mangla reservoirs, which are vital for generation of
hydroelectric power and regulating water supply to the largest
irrigation system in the world.
Over 4.2 million hectares of natural forests, of which 1.9 million
hectares is coniferous forest are confined mainly to the northern hilly
areas of Pakistan. Scrub forests, riverine forests, and mangrove forests
are found in the Punjab and the Sindh. Planted forests include irrigated
plantations, riverine forests, linear plantations along roads and
canals, and farm trees (trees raised on agricultural farms). Farm
forestry represents the largest source of wood, contributing more than
50 percent of total annual growth, 80 percent of timber, and 90 percent
of fuelwood harvested in Pakistan.
Deforestation leads to water erosion, which causes soil losses,
siltation of reservoirs, and inefficiency in the irrigation system. This
problem is most severe in the northern valleys, where migratory herdsmen
and residents of the area have caused substantial destruction.
Establishing policies that do not distort the value of alternative
uses for ,forest areas is also important. Artificially maintaining high
agricultural output prices and low input prices, for example, increases
the attractiveness of agricultural production and encourages the
conversion of forests into farm land. Institutions are also required to
increase awareness of sustainable development of forest resources.
Forestry extension needs to be restructured and forestry products
marketing boards need to be established.
Government policies have provided disincentives for afforestation.
The sapling subsidy, for example, which was designed to create
incentives to plant trees, crowded out provision of saplings by the
private sector, limiting the overall supply of saplings available to
producers. Because of this problem, a recent report recommended that the
subsidy be eliminated [Faruqee (1995)].
Deforestation is also the result of poor forest management. Most
natural forests are classified as state forests and the protection,
timber extraction, and reforestation of these forests is vested in the
Forest Departments. Revenues generated from timber sales are credited to
the Treasury, however, and the departments responsible for forest
management receive operational funds through annual budget
appropriations that cover only a fraction of their requirements. As a
result, needed replanting and maintenance are not carried out, resulting
in deforestation and deterioration of the existing forests. Local
communities have traditional rights in state forests, which increases
pressure on forest resources as the population grows. Deforestation also
takes place indirectly when regeneration efforts fail because of
excessive grazing and inefficient supervision.
The role of local communities in managing forest resources should
be expanded. Traditionally local communities have not been consulted in
forest. management decisions and forest revenues have not been shared
with local residents. Projects in NWFP have successfully demonstrated
that communities can effectively protect forests and manage communal
lands, however.
Rangeland
Most of Pakistan--30 million hectares, or 86 percent of the total
area--is covered by rangeland, 80 percent of which is believed to be
degraded. Much of the rangeland is threatened by overstocking,
overgrazing, and overharvesting of the natural vegetation; and many of
the ranges in Pakistan are populated by more animals (mostly sheep and
goats) and people than they can support. Rangeland is damaged by
deterioration and degradation. Range deterioration is caused mainly by
climatic events, such as droughts. Losses are temporary and the
productivity of the rangeland is renewed when more favourable climatic
conditions return. Range degradation occurs when land becomes less
productive because of mismanagement during drought years. Measures such
as reducing stocking and frequencies until regrowth of palatable species
reaches acceptable levels are required to remedy the condition; the
return to more favourable climatic considerations is insufficient to
restore the range
In some parts of Pakistan, rangeland has become so badly degraded
that the vegetative cover has become inedible or has disappeared
altogether. Soil damage is a problem on such lands and degradation is so
extensive that significant economic investment is required to restore
productivity. Rangeland degradation is extensive in Balochistan, where
two-thirds of all rangeland is classified as having low productivity and
most of the damage is believed to be irreversible damage leading to
desertification.
Most of the rangeland in Pakistan is either privately or tribally
owned, or has open access; about 2 percent of rangeland is publicly
owned. Population pressure, changing socials structures, and
commercialisation of livestock enterprises have caused traditional
tribal systems for controlling grazing to break down, leading to
overgrazing and severe overstocking.
Failure to reduce the livestock population may be related to
government policies that ban the export of meat and live animals in
order to maintain the domestic price below international levels to
subsidise domestic consumption. This has created incentives to overstock
in defiance of communal pressures not to overgraze. Improvement of
livestock productivity through improved veterinary services and
extension should accompany any efforts to reduce livestock numbers.
Research the technical, social, and institutional aspects of range
management will be an important part of developing sustainable solutions
to rangeland degradation.
IV. CONCLUSIONS
Economic policies that help eliminate market distortions generally
stimulate growth and improve the environment. Many of Pakistan's
environmental problems can be associated with economy-wide policies that
have had indirect and unintended effects on the environment. Although
some progress has been made at identifying the major environmental
problems and their causes, and institutions have been established to
tackle at least parts of the problems identified, recently progress has
faltered. Environmental institutions have failed to fully monitor and
regulate natural resource use and pollution adequately. According to
government officials and local experts, progress has slowed largely
because of the incentive structures created by existing policies and
institutions. Economy-wide policies have discouraged conservation and
pollution prevention, while the regulatory structure has failed because
of inadequate enforcement and monitoring capability.
Through its structural adjustment programme, Pakistan has made some
beginning in introducing win-win policies, including privatisation,
trade reforms, and market liberalisation, and these policies should be
continued and strengthened. Such policies are not sufficient to ensure
sustainable resource use, however, and additional. policies targeted at
specific environmental problems are also needed. Environment-friendly
policies, such as the tax on industrial pollution, need to be adopted to
ensure that the improved economic incentives do not conflict with the
need to use natural resources in ways that are sustainable. In short,
government in the future should not rely exclusively on regulation, and
increasingly adopt market-based approaches, which can be more effective.
Comments
This is an important topical study which explores the
inter-relationships between various economic policy instruments and
economic growth and environmental degradation. Such studies can be quite
helpful in devising better policies for sustainable long-run growth of
the economy provided they clearly bring out the trade-offs between
growth and environments. Unfortunately, the analysis presented in the
study is at times vague and thus lessens the utility of the study
considerably.
The basic thesis here is that market-friendly policies would
improve the environment. This is notwithstanding the fact that it is the
market failure which gives rise to the environmental problems. Whenever
there is a difference between social and economic profitability, market
prices result in sub-optimal solutions because the externalities are not
internalised.
A number of measures suggested in the study for environmental
protection may result in higher levels of poverty, which feeds into
environmental degradation. The structural adjustment programmes at least
in the transitional period result into higher levels of poverty, which
is the main cause of environmental degradation. Devaluation which is
generally recommended in all such programmes, has, in the author's
view, improved the environment by changing the use of chemical
fertilisers. One is at a loss to know if the author is suggesting that a
lower use of fertiliser (and that too through devaluation) is necessary
and sufficient for better environment. The study appreciates the
increase in the prices of pesticides and insecticides but fails to
analyse if the withdrawal of subsidy has helped the environment.
Moreover, the impact of increase in the prices of agricultural inputs on
poverty, and resultantly environmental degradation, has not been
considered either.
It is mentioned that energy use is subsidised in Pakistan and that
undermines the incentives for energy conservation. This is contrary to
the fact because except for the electricity and gas (and that too for
very poor consumers), energy is not subsidised. Removal of subsidy to
the poor will increase poverty and thus aggravate the problem of
environment even further. Increase in the price of gas will shift the
consumption towards coal or firewood, accentuating the environment
problems.
Low water pricing may result in waterlogging and salinity through
excessive use of water. However, an improvement in the distribution
system, rather than just an increase in the prices, will have the
desirable impact. The study also points out the areas affected and the
annual loss due to soil degradation, deforestation, rangeland
degradation, etc. It would have been desirable if, alongwith the losses,
the cost of avoiding the loss was also mentioned. This would underscore
the effectiveness of the resources employed in such activities.
The paper includes an interesting discussion on international trade
and the Uruguay Round and suggests that international trade would
promote environment-friendly technologies. But why such a result may be
expected is not very clear from the analysis.
Privatisation has also been suggested as a way to promote
environment-friendly techniques. One wonders how this policy would help
in improvements in environment; while the government may be able to
force the public sector industries to use environment-friendly
techniques, the private sector may have to be regulated or persuaded to
use such techniques.
The main contribution made by the author has been to put the policy
areas and instruments in the context of their environmental impact.
However, the policy matrix does not indicate clearly the direction in
which the environment would move.
Similarly it would have been much better to come up with those
measures where both growth and environment are complementary.
The author mentions that most of the technologies used in Pakistani
industries are those which were acquired when energy prices were
artificially low. This is probably not correct. The industries mentioned
in the study such as textiles, fertiliser, sugar, and cement have
received massive dozes of investment in recent years. Probably what
needs to be seen is whether the new investment incorporates
environment-friendly techniques or not. No doubt, there exist
environment-friendly techniques but whether the producers have any
incentives to switch over to new techniques needs to be examined. In
Pakistan, even the multinationals do not have any treatment plants.
The author points out that over the 1963-1988 period the level of
pollution increased between 6-10-fold even though recent data are not
available. How these estimates were obtained and what data were required
to update the estimates has not been discussed. Interestingly, the
author talks about the average emissions in Pakistan as compared to the
United States but fails to provide data on other developing countries.
All in all, the paper provides interesting data and information but
more work needs to be done if such an analysis has to form the basis for
any policy formulation.
A. R. Kemal
Planning and Development Division, Government of Pakistan,
Islamabad.
Author's Note: This paper is based on a World Bank gray-cover
report, "Pakistan: Economic Policies, Institutions, and the
Environment", December 15, 1996. The World Bank report was prepared
by Rashid Faruqee and Jonathan Colemam in consultation with Pakistani
policy-makers and experts. Background papers for the World Bank report
were contributed by Derek Byerlee, and Pakistani consultants, Laiq Ali,
Vaqar Zakaria, and Akmal Siddiq.
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(1) Environmentalists olden argue that trade liberalisation can
lead to the displacement of domestic industries, as polluting industries
move across international borders to regions in which environmental
regulations are less stringent. Environmentalists also claim that more
open market access and international trade may force countries to reduce
their production costs by lowering environmental standards. These
arguments arc not tenable because gains from liberalisation arc
generally significantly higher than the associated environmental costs,
and environmental protection costs are minor determinants of comparative
advantage.
(2) In order to focus on the other major systems, fisheries and
wildlife have been excluded from this study.
Rashid Faruqee is Principal Economist at the Agriculture and
Natural Resource Division of the World Bank, Washington, D. C.
Table 1
Past and Present Economy-wide Policies and
Their Effects on the Environment in Pakistan
Outcome
Policy Area Policy Instruments
Agricultural Support prices
policies Input subsidies
Public expenditures on agricultural
infrastructure
Industrial Controls on industrial imports and
policies exports of rave materials
Trade and Removal of quantitative restrictions
exchange rate Lowering of tariffs
policies Exchange rate devaluation
Fiscal balance Broadened tax base
Reduction in agricultural input subsidies
Reduction in energy subsidies
Reduction in viral development
elimination of some poverty safety nets
Private sector Sale of public enterprises
development Promotion of private sector promotion
Redistribution Land reform
of income Labour protection laws
and wealth Social and safety net programmes
Outcome
Policy Area Economic
Agricultural Increased cultivable area
policies Increased crop yields
Increased irrigation water use
Increased fertiliser and chemical use
Industrial Increased industrial output
policies increased energy use
Trade and Higher returns to efficient sectors
exchange rate (cotton. for example)
policies Changes in agricultural output pattern
Change in energy cost
Fiscal balance Increased rate of economic activity
Decreased agricultural input use
Increased energy conservation
Decreased research and extension
Increased poverty levels
Private sector Increased industrial production and
development efficiency
Redistribution Changes in income and consumption
of income patterns
and wealth
Outcome
Policy Area Enivonmental (a)
Agricultural Change in soil quality
policies Change in agricultural run-off
Change in rate of deforestation
Industrial Increased industrial emission
policies Increased industrial waste water pollution
Trade and Change in use patterns of agricultural inputs
exchange rate Change in land use patterns
policies Change in rate of deforestation
Fiscal balance More efficient resource use
Lower air and water pollution levels
Decreased soil degradation and agricultural
run-off
Private sector Change in industrial pollution
development
Redistribution Change in pattern of land use
of income
and wealth
Source: Based on Noman (1988). Shafik and Bandyopadhyay
(1992), Munasinghe (1993) and World Bank (1994)
(a) Some of these outcome assume that no corrective
measures were taken.
Table 2
Estimated Annual Losses Resulting from
Natural Resource Degradation, 1988
Percentage of Area Annual Loss
Problem Affected (Millions of Dollars)
Soil Degradation -- 350
Salinity and Sodicity 16 213
Waterlogging 9 79
Erosion 9 44
Nutrient Depletion 12 9
Unclassified -- 7
Deforestation 10 30
Rangeland Degradation -- 125
Total -- 515
Table 3
Extent of Soil Degradation by Province, 1988
(Thousands of Hectares)
Punjab Sindh NWFP
Total Area Surveyed 20,625 9,222 9,139
Water Erosion 1,904 59 4,282
Wind Erosion 3,804 639 36
Salinity and Sodicity 2,667 2,110 48
Waterlogging 696 625 92
Nutrient Degradation 1,580 246 296
Flooding 915 763 276
Ponding 691 -- 245
Northern
Balochistan Areas Pakistan
Total Area Surveyed 19,141 3,685 61,812
Water Erosion 2,635 2,282 11,172
Wind Erosion 280 -- 4,760
Salinity and Sodicity 502 -- 5,328
Waterlogging 142 -- 1,554
Nutrient Degradation 96 -- 2,218
Flooding 598 5 2,557
Ponding -- -- 936
Source: Mian and Mirza (1993).
--Not available.