Ghana: Balancing economic growth and depletion of resources
- January 28, 2021
- Posted by: SYMON
- Category: Economics
Over the past 30 years, an increase in the price and production of cocoa, gold, and oil helped transform Ghana: real GDP growth quadrupled, extreme poverty dropped by half, and in 2011, Ghana moved to a Lower Middle-Income Country status.
The fundamental question is: How can this impressive development, anchored firmly on natural capital, continue to deliver gains in macroeconomic growth and poverty reduction?
The recent World Bank Ghana Country Environmental Analysis (CEA) responds by providing the scale, scope, and economic effects of environmental degradation on society.
Air, plastics, and water pollution affect health and hygiene; gold mines, unmanaged solid waste, and contaminated sites release hazardous chemicals; land degradation, deforestation, and overfishing heavily impact livelihoods and limit drivers of growth.
According to the CEA, environmental degradation costs $6.3 billion annually or nearly 11% of Ghana’s 2017 GDP. Non-renewable resources such as gold and oil cannot sustain growth as resources deplete while renewable resources like cocoa, timber, and other tree and food crops, depend on good environmental stewardship.
There are clear signs and scientific evidence that the erosion of the natural capital may put at risk growth, livelihoods, and human health.
Air pollution, the number one environmental risk to public health, costs roughly $2 billion per year and causes the premature death of nearly 16,000 people each year. Elderly account for most of the deaths, while more than half of the deaths from pneumonia in children under five is associated with air pollution.
Water Pollution causes significant damage equivalent to 3% of the GDP. This is due to the health effects of inadequate water supply, poor sanitation, and discharge of solid industrial and toxic waste into water systems.
Plastics pollution is rising to crisis proportions. Each day, over 3,000 metric tons of plastic waste is produced with much of it dumped as litter or placed into improvised landfills. This waste clogs open drainage systems and pollutes the ocean.
E-waste, associated with the Agbogbloshie dumpsite, is Accra’s main source of air pollution. Here, burning electronic parts cast carcinogenic compounds into the air while deposited toxic metals enter waterways and oceans. Each year, exposure to lead and mercury-causing diseases and the lost IQ points in children cost $440 million.
Poor land management leads to land degradation, costing over US$500 million a year and to deforestation costing US$400 million a year: five million hectares of forest was lost between 2001 and 2015.
Over the past decade, artisanal gold mining aggravated the degradation as streams and rivers were dug up to find gold. Miners’ exposure to the toxic mercury also costs $240 million in health costs.
Ghana loses about 2.7 million m2 of its shore every year, with 80% of the shoreline actively eroding. Coastal erosion and flooding are particularly serious in Greater Accra where sea level rise increases erosion intensity and raises the chance of flooding by 20%.
This puts at risk communities and UNESCO World Heritage sites such as Cape Coast and Elmina. Overfishing cost $233 million and could lead to the collapse of small pelagic fisheries and the loss of half a million jobs.
Climate change heavily affects climate- sensitive sectors on which Ghana’s growth is based – agriculture, forestry, and energy. It also triggers environmental disasters: in the last 40 years, floods affected four million people and a 2015 flash flood in Accra caused $55 million in damages.
Ghana is responding to the urgent need to protect the natural capital through evidence-based actions and concrete steps to share the impact of growth, especially in terms of food security and human development.
Informed by this analysis, Ghana is prioritizing environmental issues in development planning. But it’s crucial to act now to prevent the impacts of environmental degradation and climate change on vulnerable people in Ghana.
It is also key to understand the importance of well-informed communities and strong institutions in seeking accountability and transparency. Finally, Ghana would benefit from advancing critical policy reforms to allocate resources and benefits to communities.