Economic development, poverty alleviation and biodiversity conservation

3 July 2013
ITC News

Examining the link between international trade and sustainable development to create greener economies and improve livelihoods

In 1987, sustainable development was defined by the World Commission on Environment and Development (Brundtland Commission) as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’. It was only in 1992, though, at the United Nations Conference on Environment and Development in Rio de Janeiro, that this was introduced as a shared, global vision for development. Twenty years on, at last year’s Rio+20 Conference, the global community reaffirmed its commitment to this vision, and its outcome in a document entitled The Future We Want.

Sustainable development is above all about human development for the current generation and for future generations, through a process of economic transformation based on the sustainable use of the natural environment. Central to sustainable development are three interlocking dimensions – economic, social and environmental – that should be promoted in a balanced manner.

International trade and sustainable development are intrinsically linked. International trade acts as a bridge between production and consumption at the local, national, regional and global levels. The manner in which international trade is conducted can foster a process of economic transformation – through production, consumption and trade – that is socially inclusive and equitable, environmentally friendly and economically sustainable. In fact, UNCTAD figures show that international trade is already responsible for a large portion of countries’ economic income: in developed countries this accounts for about one-fifth of income and one-third of developing countries’ income.

The role of international trade in development has been recognized by the United Nations Conference on Trade and Development (UNCTAD) since its creation in 1964, and was reaffirmed most recently at UNCTAD XIII (held in 2012), where member states adopted the Doha Mandate, which emphasizes that economic transformation spearheaded by globalization should be focused on delivering development that is people-centred, inclusive and sustainable. The potential contribution of international trade to sustainable development is also highlighted in several multilateral environmental agreements and human rights conventions.

Current and future challenges

The past two decades have witnessed radical changes in social, economic and environmental areas. The world economy has expanded by around 170%, the Earth’s population has grown from approximately 5 billion to 7 billion people, and gross domestic product (GDP) per capita has doubled – from US$ 4,500 to more than US$ 9,000. All this has led to increased consumption by enterprises and people, placing additional strain on the environment.

Climate change is a major threat that is set to further exacerbate existing problems, such as desertification and biodiversity loss. Human activities have increased the concentrations of greenhouse gases, which are already changing the climate. Leading research institutions, such as the Intergovernmental Panel on Climate Change, predict that global temperature could rise by between 2°C and 6°C by 2100. Climate change will have a significant impact on the environment, the economy and society. Increasing natural resource scarcity – water, biodiversity, tropical forests, fish, croplands, and many metals and minerals – necessitates a focus on their sustainable use. The release of harmful and persistent pollutants from mining, manufacturing, sewage, energy, transport and agriculture remains a problem for ecosystems and human health.

More than 1 billion people still live in extreme poverty. Access to basic services such as energy, water, housing, transportation, communications, healthcare and education must be improved, in view of these remaining social challenges:

  • Over 800 million people worldwide do not have access to safe drinking water;
  • Over 2.6 billion people lack access to basic sanitation;
  • About 70 million children of school age do not attend school;
  • Only 23% of the population of least developed countries has access to electricity;
  • Only an estimated 31% of people in developing countries had access to the Internet in 2011.

The 2008 global financial and economic crisis revealed the extent of economic vulnerability that countries are exposed to in an increasingly interdependent global economy. Eighty million jobs were lost worldwide because of the crisis. Commodity prices – oil, food and metals – became highly volatile. Poor economic conditions have increased the risk of social unrest while rising public debt in developed countries has undermined economic recovery. Meanwhile, official development assistance stands at 0.31% of the combined national income of developed countries, far short of the United Nations target of 0.7%; only five donor countries have reached or exceeded the target. International trade flows, which had been growing consistently since 2000, contracted by more than 11% in volume terms in 2009 as a result of the slowdown in the global economy. World trade has since recovered, but concerns remain regarding the sustainability of the recovery, in particular due to continuing economic difficulties in the euro zone.

Looking ahead, the world’s population is forecast to climb from its current 7 billion to more than 9 billion in 2050. Nearly 8 billion people will live in countries that are today developing countries. Economic growth is therefore necessary to reach higher levels of world output and as such meet the needs of the growing population. In effect, world GDP will have to expand to three times its current levels by 2050, with well over half generated in developing countries.

However, simply scaling up current production methods to support continued economic growth is not an option. Doing so would significantly deplete natural resources, deteriorate natural ecosystems and accelerate climate change. The fossil-fuel and natural-resource intensity of economic growth must be substantially reduced in order to maintain the viability of natural and environmental systems. Thus, a major challenge in relation to trade is to create greener, more sustainable markets that can raise incomes and employment and enhance the quality and availability of social and infrastructure services while reorienting economic activities to reduce the depletion of natural resources and to increase reliance on renewable and less carbon-intensive sources of energy.

Sustainable development is a sine qua non. Still, it is not automatic and it needs to be nurtured, encouraged and regulated. UNCTAD’s BioTrade Initiative (see right) is a vivid example of initiatives that can be deployed to assist developing countries in achieving mutually reinforcing trade and sustainable development objectives. Trade can clearly play a role in this transformation as, increasingly, global markets are greening and are favouring production and consumption methods based on environmental sustainability and social inclusion.