Economic pressure on the environment

The above-mentioned driving forces put pressure on the environment because the macroeconomic driving forces do not include estimations on the use of natural resources and sustainable development is not the underlying philosophy. This is especially true in times of macroeconomic instability (see Gandhi 1996, Munasinghe & Cruz 1995), and due to the type of economic growth which may threaten sustainable development. The main pressure on the environment (environmental degradation or resource depletion) is caused by market and policy failures at the sectoral and industry level and cannot be efficiently controlled by macroeconomic policies (Gandhi 1996).

The nature of economic growth can be analysed according to economic sectors. Three indicators of environmental pressure are discussed here, namely sectoral composition, sectoral rate of growth and a change in sectoral production methods and techniques. For the purpose of this report, primary, secondary and tertiary activities are distinguished. Both primary and secondary sectors tend to have a higher direct impact on the environment than the tertiary sector. The impact of mining and manufacturing on, for example, water consumption and pollution, are higher than those of trade and financial services.

Sectoral composition: 

Figure 6.7 Sectoral composition of the South African Economy

Figure 6.7 illustrates the nature of the South African economy, categorised in primary, secondary and tertiary sectors, since 1970. During this period the contribution of the secondary sector remained constant at approximately 34% of all economic activities, with the contribution of the tertiary sector averaging 50% in the period 1970-1998, but growing substantially from 45% in 1970 to an estimated 53% in 1998. The contribution of the primary sector averaged 17% for the period 1970-1998 with contributions since 1981 all lower than the average. Based on these trends in economic activities, manufacture-related pollution and waste is likely to increase at a steady rate, while the impacts of agriculture and mining in the long term are likely to decrease in relative terms.

Sectoral rates of growth: 

Absolute contributions to economic activity in the different sectors are important indicators, but do not shed light on the direction of change in economic activity. The average year-on-year growth rates per sector for the periods 1970-1998, 1980-1998, 1990-1998 and 1994-1998 are illustrated in Table 6.1 below. Important observations are that both the agriculture, forestry and fishing and the electricity, gas and water sectors show a constant average year-on-year growth of about 3% since 1970. Mining and quarrying activities have contracted on average since 1970, mainly due to lower international prices (e.g. for gold) and increasing input costs (such as labour and machinery). Since 1994, secondary sector manufacture and construction activities have shown increased year-on-year growth. This supports the conclusion that manufacturing-related pollution and waste is likely to increase.

Average year-on-year estimates are unreliable when huge variation exists in the sectoral contribution to GDP. In Table 6.1 below the standard deviations (for the time period 1970-1998) show that the primary sector agriculture, forestry and fishing industries have gone through phases of both huge expansion and contraction. If these trends are sustained, the impact of agriculture, forestry and fisheries on the environment will be variable, while the secondary sector electricity, gas and water, manufacturing and construction industries are likely to have steadily increasing impacts on the environment (e.g. waste generation, resource use and pollution will probably increase), unless plans to avoid this are put in place.

Much of the productivity at the secondary level depends on imports, which adds to the vulnerability of the economy (especially if the value of the imports exceeds that of the exports) (see Figure 6.4 and Figure 6.9). Although the secondary sector has grown substantially since 1994, South Africa is increasingly reliant on the tertiary (service) sector for growth. Some tertiary industries have shown 3% growth during the period 1994-1998. These secondary and tertiary sectors need relatively higher skills levels than the primary sector which aggravates the unemployment problem (as fewer people possess these skills at present)(see Figure 6.3 and Figure 6.10).

Sectoral changes in production methods and techniques: 

There is no concluding evidence whether the small increase in economic activity and change in sectoral activities has been accompanied by a change in production methods and techniques which are more sustainable. Most changes are voluntary, many times under pressure from the export market, although recommendations on industrial policy reform are documented in South African literature (Betlehem & Goldplatt 1997). South African environmental reporting is increasing, but lags behind developed countries (De Villiers 1998).

Figure 6.8 South Africa's energy intensity

A general characteristic of the total South African economy is its very high energy usage, better only than some Eastern European states, ex-Soviet states and China (World Bank 1998:146). In Figure 6.8 South Africa's high energy intensity is illustrated. On the primary Y-axis is the amount of commercial energy consumed in kilojoules for each dollar of GDP, and on the secondary Y-axis South Africa's relative score to other countries evaluated (a score of 10 is the worst possible) (WEF, various issues). South Africa's energy mix is limited predominantly to coal-burning which causes air pollution and greenhouse-gas emissions.

>     Economic Environment: State

There is also information about the Economic Environment in the following reports:
Metropolitan reports:
	Cape Metropolitan Council (1998 edition)		Durban Pilot Study
	Greater Johannesburg Metropolitan Council (1999 edition)		Greater Pretoria Metropolitan Council (1999 edition)