Developing Countries Care More about Environment

Thesis: Developing countries are more environmentally conscience than the developed world.

While this might come off as a bit backwards because surely the developed world with much more disposable income have the ability and the desire to be more environmentally friendly than their developing country neighbors, but I am going to prove this argument is wrong.

David Cheesewright, chief executive of Wal-Mart’s international business recently sat down and discussed this topic with the Wall Street Journal and said, “Surprisingly, it’s the developing markets that tend to be more passionate about green products. They do it from a very different dimension.” As can be witnessed by the graph below, areas that have a majority of developing countries are willing to pay extra money for products and services committed to making a positive social and environmental impact.

Green Energy Graph

This is exactly the opposite of the intuitive argument that the developed countries have a much higher disposable income and therefore should be more willing to sacrifice a bit more of this for a product that is environmentally safe. However as Mr. Cheesewright later went on to explain, “In developed markets, you tend to find it’s a much more aspirational purchasing decision. Whereas, in developing markets, it’s much more pragmatic. It’s about the realities of life. If you have to carry your water from a pump a mile away from your home, you love products like shampoos that don’t require water, or detergents that are very efficient. That’s why I think they’re more prepared to look for those sort of products.” People in developing countries do not have the luxuries us developed countries have, and so sometimes environmentally safe products just make more sense.

 

Opponents of this will argue that developed countries are reducing the amount of coal generated electricity they have, while developing countries are relying on this cheap electricity for much of their populations, and they would be right. However, these countries do not have the economic capabilities in place yet to utilize these much more expensive forms of renewable power. While we want/need to make some changes to help reduce the impact humans are having on the earth’s environment, we also want to help people in developing countries rise out of poverty and to an adequate standard of living. This may mean that these developing countries use more harmful sources of power for longer, hopefully the price of renewable energy keeps declining so that it will become more of an economically viable option for these developing countries to implement. As the WSJ reported, “The price reduction of renewables has been nothing short of dramatic, 80% in the last five years. The wholesale price into bid markets for these technologies comes close to zero. I think the coal companies are going to have to pay attention to these technology trends.” This reduction in price, as well as more initatives from developed countries and international organizations should help these developing countries implement more and more renewable energy sources into their power grids. The citizens of these countries will certainly appreciate it more!

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