Impact of the Environment on Economic Development


Impactof the Environment on Economic Development

Theenvironment is the physical and biological factors that affect theliving and nonliving things around a region or a country as aneconomic unit. According to Greiner (2008), the environment includesall the natural factors that exist and surround an economic unit suchas a country and impacts on the natural and economic processes. Theenvironment is an important factor in the economic development of acountry because of the central role it plays. The environmentprovides the necessary factors of production as well as the relevantplatforms for markets and economic processes (Greiner, 2008). Byexploring the importance of the environment in the economicdevelopment of a country, this paper will discuss the main areaswhere the environment is important. To put this critical role intoperspective, this paper will explore Kenya as a case study andexamine how the environment has been an important factor in thecountry`s economy.

Kenyais the case study country for this paper and will put intoperspective the important role of the environment in the economicdevelopment of a country. The reason for choosing Kenya is because itis a strategically placed developing volunteering in Africa and aneconomy that is heavily dependent on the environment. The country isan agricultural country that had a large percentage of itsagricultural output determined by the environmental processes (CIA,2015). In addition, the country`s economy is greatly boosted bytourism, an economic sector that is heavily dependent on theenvironment (Gatimu, 2007). In addition, Kenya is a country that astangible results of the consequences of environmental degradation,thus giving a perfect example of the impact of the environment on thedevelopment of a country.

Impactof the Environment on Economic Development

Theenvironment provides land as the economic factor of production. Thedevelopment of a country is determined by the availability of land asa factor that holds all other factors of production. According toKragh(2007), land is an importantfactor of production because it provides the location, source of rawmaterial and natural inputs to any economic process. In the Kenyancase, land is the basic factor of production that determines theextent of agricultural output the country produces (Greiner, 2008).The land mass of Kenya is 581,367&nbspkm2most of which is arable land (CIA, 2015). Without the arable land,the country would not be a capacity to produce agricultural output.

Landdetermines the productivity of the factors of production in aneconomic process or economic activities that lead to the output of acountry. The more productive the land is in a region, the better theeconomic status of that region or a voluntary (Lopez&amp Toman, 2006). Therefore,the productivity of land becomes the main determinant in the economicdevelopment of a voluntary or a region. In the Kenyan case, thecountry has different regions developed at different levels as aresult of their agricultural output. While the economic status ofthese regions is also impacted by other factors other thanagriculture, agricultural output is the most dominant in the countrythat is highly dependent on agriculture. The most privileged regionshave fertile soils that are highly productive and well endowed withrainfall and agricultural climate (Greiner, 2008).

InKenya, the areas around the Mt. Kenya and along the rift valley isknown as the economic baskets of the country. This is because theyserve as the food baskets that feed the entire country and alsoproduce agricultural outputs for exports. The agricultural output forthe two regions accounts for majority of the total agriculturalproduction in the country. For other regions, they are not asproductive as these two regions because of the lack of theenvironmental factors like rain and climate that directly determinesthe productivity of land. In addition, the economic variation betweenthe two agricultural regions and the rest of the country shows theimportance of proper environmental factors in the economicdevelopment (Kragh,2007).

Theenvironment determines the productivity of land as a factor ofproduction and as the main source of economic output of a country.Through the natural processes such as rain and climate, theenvironment determines the extent of output that land as well as therest of the economic factors produces (Greiner, 2008). This isbecause the environmental processes affect the ability of landthrough rain to produce the desired economic output. In the Kenyancase, most of the agriculture is dependent on rain as the countrydoesn`t embrace fully the modern artificial irrigation mechanisms.Even though there are regions under irrigation, the climate of acountry highly determines the productivity of land, whether underirrigation or under rain fed agriculture.

Theenvironment is important in the provision of raw materials for theindustries in an economy. The environment plays a role of providingthe resources that are needed to drive the economy of a country byharboring the natural factors that are used in the productionprocesses. For economies dependent on the industries, the environmentplays the role of feeding factories with raw materials for processinginto finished goods. According to Lopezand Toman (2006),industrial developments in the developed countries were powered bythe natural resources in these countries and the importation of theraw materials from countries with development economies. The level ofindustrial development of a country is directly determined by thetype, quantity, quality and sustainability of the raw materials inthe economy.

Inthe Kenyan case, the industrial growth is not well developed becauseof the lack of the natural resources to develop these areas.According to CIA (2015), only 17.4% of the country’s GDP areattributable to industrial output. At the same time, these industrialactivities are concentrated in the three major urban centersNairobi, Mombasa and Kisumu. To illustrate the dependence on theenvironment, these industries are largely based on agriculturalprocessing as their main manufacturing activities. However, theindustries also have their production based on the production ofother products other than industrial production. According to CIA(2015), oil refining, soap industry, aluminum, steel and plastics arethe other industries that exist in the country other than theagricultural powered manufacturing.

Theenvironment provides the sources of energy that powers the economicdevelopment in a country. Through the provision of the basisplatforms that produce energy, the environment serves as the factorthat determines the extent that an economy will develop through theuse of the naturally occurring factors. According to CIA (2015), thedevelopment of an economy is powered by the energy that a country isable to produce so as to power the industrial processes. Therefore,countries that have sufficient supply of energy and fuel will havetheir economies develop faster than those who do not accesssufficient supply of energy. For instance, the countries that produceoil have their economies grow faster because of the provision of theenergy at affordable cost.

Inaddition, countries that produce more energy are able to earn fromexporting such energy to the international or regional markets. As aresult, the GDP of these economies is high and their level ofeconomic investment is higher compared to countries that do notproduce and export energy. For instance, the oil producing countrieslike Saudi Arabia and Nigeria have their economies boosted in growthby the income gained through the production and sale of the petroleumproducts. According to Greiner (2008), apart from the gains in theincome earned by the oil producing countries, their economies developfaster because of the low cost of the manufacturing industries in thecountry.

ForKenya, the country uses the environmental factors and naturalresources to produce energy for industrial and domestic use. Thecountry produces hydroelectric power and geothermal power to powerher economy in both the industrial sector and for domestic purposes.The country uses her large rivers to generate hydroelectric energythrough a series of dams in projects that have seen the countryproduce energy enough to export. According to the CIA (2015), thecountry produced 7.33billion kWh in 2010, some of which was used locally an while, somewere exploredCIA (2015) reports that Kenya consumed 6.15billion kWh and exported 31 million kWh.However, the country still imported some electricity totaling to 31million kWh.All in all, the country is ranked 85thin the world in terms of producing electricity.

Thecountry does not produce any oil or petroleum products. This isbecause the economic endowment by the environment was not discovereduntil lately. In the recent past, Kenya has discovered oil in theregions of the north eastern parts. The economic development of Kenyalooks bright if the exploitation of the petroleum discovered in thecountry will be done effectively. According to Lopezand Toman (2006),the production of enough energy boost the economic prospects of acountry by reducing the cost of manufacturing and running the economyas well as the income from exports. For Kenya, the future economicdevelopment will be dominated by the incomes that may accrue from thesale of petroleum.

Theenvironment provides the backbone of the tourism industry in acountry. The serene tourism locations and the wildlife are all partof the environment. The beaches and the water masses that form thebasis of tourism in a country are all included in the definition ofthe environment. According toGatimu (2007), thelevel of output of tourism in a country is a direct impact on thenature of the environment that a nation has. The better theenvironmental conservation, the better the economic output of thetourism industry. The environment provides the aesthetic nature ofthe surroundings that leads to the attraction of people to alocation. As a result of the attractiveness and aesthetic benefits ofthe location, more people are drawn to the features and develop aneconomic value through tourism.

InKenya, tourism is the second highest earner of foreign exchange afteragricultural exports. Kenya is a country that is dependent on tourismfor the development of the local economy and the development of itsinfrastructure. According to Gatimu(2007), Kenyahas over the years seen its economic growth and development increasewith the increase in the number of tourists that visit the country onan annual basis. Through tourism, the country has earned income thatinvests in other sectors of the economy. This is done through directinvestment back into tourism or developing areas that are not endowedwith tourism advantages.

Apartfrom the positive impact of the environment on the economicdevelopment, the environment affects the economies negatively. Thedisturbance of the environmental balance leads to a direct impact tothe economic outcomes of a country. According to Lopezand Toman (2006),economic outputs of a country that is affected by environmentalimbalances that affect the natural set up of the natural resources.One of the main causes of the environmental imbalances is naturaloccurrences that involve disasters that negatively affect theeconomic factors. Such eventualities cause damages to the sectors ofthe economy, such as the agriculture and tourism. Apart from directlyaffecting the land as a basic factor of production, environmentaldisasters affect the running of the industrial sector and the servicesector through breakdown service infrastructure.

Environmentaldisasters have affected the economic development of Kenya in herhistory. As an agricultural nation, Kenya, heavily relies on thesufficiency of rain and the climatic balance between rainy and sunnyseasons. However, instances of storms and destructive rains haveimpacted on the agricultural output of the country. The heavy rainsexperienced in some of the regions in the country affect her economicoutput, especially the two main food baskets in the country the Mt.Kenya and rift valley. As a result, the food production reduced andexports of the country reduced, thereby reducing the economic outputof the country (Kragh,2007).The same levels of rainfall reduced the incomes from tourism as thenumber of tourists reduced greatly during the times that the nationwas rocked by heavy destructive rainfall.

Inaddition, famines and lack of rainfall affects the country’seconomic development. The agricultural output of theagriculture-based economy reduces and the raw materials of themanufacturing industries. As a result, the economic development ofthe country is limited to the extent of the productivity of the landthat is directly affected by the climatic conditions. According tothe World Food Program, WFP (2015), an estimated 1.3 million of theKenyan population requires food assistance on regular bases.According to the WFP, a UN agency, the majority of these populationsare in the arid and semi-arid areas that frequently experiencefamines (WFP, 2015). This shows the negative impact of theenvironmental processes such as the famines that are caused by thearidity of some regions in the country.

Reverseimpact Environmental Impact

Whilethe environment has a direct impact on the economic development,increased advancement of the latter has direct effects on the former.As human beings are pursuing economic development they exploit theenvironment and lead to environmental imbalances (Lopez&amp Toman, 2006).The environmental imbalances, in turn, have a direct impact on theeconomic development. As a result, all the gains from the environmentin the form of economic development are reversed as they are spent inthe correction of the negative effects of the environmentalimbalances (Lopez&amp Toman, 2006).One of the reasons for the climatic conditions is human activitiesthat have affected global economies, and not just in Kenya alone. Thedevelopment of increased industrialization has led the moderneconomies has led to the negative effects.

Climatechange is responsible for the reduced agricultural production of theworld ensures that people are fed. Agriculture has been the mainsource of food of the Kenyan population, just like in any other placein the world. The most significant factor is that agriculture inKenya is a practice that relies of seasons and climatic conditions(Stern, 2007). This means that any effect on the climatic conditionswill affect food production of the world`s agricultural areas. Thechanges in the climate and weather conditions lead to reducedagricultural and overall economic production, especially in theagricultural economies like Kenya. This leads to an increased demandfor food in Kenya and the region, which results in increasedexpenditure by these economies, thereby affecting the world foodsupply (Stern, 2007).

Asa result of reduced agricultural output leads the level of rawmaterials reduces, for industrialization and production of secondaryproducts. This is in turn affects the economies like Kenya that arebased on food processing and manufacturing industries as well asgeneral manufacturing economies. In addition, reduced agriculturalinput affects the effectiveness of the population to productivelywork due to low working potential as they do not feed well (Kragh,2007). It is the reduction infood production that leads to increased expenditure in the healthindustry as the affected country struggles to heal diseases caused bypoor nutrition or the consumption of highly processed foods.

Theimbalances in the environment are significantly marked by globalwarming, which leads to climate change. The effects lead todisastrous effects on the world economy. Because of global warming,Kenya and other countries in the world have experienced famines on aregular basis. As a result, the agricultural produce is affected andthe essential water sources are depleted, among other extremegeophysical changes (Lopez&amp Toman, 2006). The changesmay lead to irreversible changes in the ecosystem which may evenadversely affect the livelihood of people who are labor providers inthe agricultural and manufacturing industries.

Dueto the impact of the environment on the economic development,countries are increasingly adopting to policies that are aimed atmaintaining the environment. According to Stern (2007), theinclination of the world policy on economic growth and development isgradually going towards the adoption of environmentally friendlymeans of production. In Kenya, the country is pursuing policies toencourage forest cover and increase arability of land through the useof irrigation. In addition, the governments and the environmentalagencies are adopting technologies and methods that will protect theenvironment by encouraging environmentally friendly production ofenergy such as solar and energy (Lopez&amp Toman, 2006). Thisindicates the future of the economy will be better aimed at higherdevelopment without necessarily affecting the environment.


Theenvironment has direct and indirect impact on the economicdevelopment of a country and the world at large. The environmentprovides land as the basic factor of production, whose productivityimpacts on the economic development. The environment has a directimpact on economies like Kenya that directly depend on theagriculture and tourism as the main contributors to their economicdevelopment. In addition, the environment provides the raw materialsfor other industries, which contribute to economic development.However, the development of economies without maintaining the rightenvironmental balance leads to reverse effect where the environmentalimpacts negatively on economic development. Therefore, countriesshould use preserve the environment so as to optimally benefit fromthe natural factors to develop economically.


CIA,World Fact Book, Kenya. Retrieved From,&lt 3, 2015

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Greiner,A. (2008).TheGlobal Environment, Natural Resources, and Economic Growth.Oxford: Oxford University Press

Lopez,R., &amp Toman, M.A. (2006). Economicdevelopment and environmental sustainability: new policy options.Oxford:Oxford University Press

Kragh,S.K. (2007). TheRole of Agriculture in Economic Development: The Lessons of History.Copenhagen: Copenhagen Business School Press DK

Stern,N. (2007). The Economics of ClimateChange: The Stern Review. TheNational Archives, UK: Cambridge University Press

WorldFood Program, WFP. Kenya.Retrieved From, &lt 3, 2015