Economic Prosperity vs. Environmental Stewardship

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Feb 022012

By Amadou M. Cissé, EMBA 12, Robert H. Smith School of Business

A few days ago, on my way home I was listening to NPR and I heard about yet another chemical spill in a river somewhere in China.  After researching the internet this morning, I ran across an article from Bloomberg News informing me that seven people had been detained in connection with the toxic metal (cadmium) spill in a tributary of the Pearl River in the Guangxi province.  The spill threatens the livelihood of 1.5 million people in the city of Liujiang.  As China continues to enjoy its economic prosperity – being the second largest economy in the world – how can it also become a leader in environmental stewardship?

Courtesy of Associated Press.

China has an estimated population of 1.3 billion people according to the latest report from the CIA. A spill impacting 1.5 million people or 0.1% of the Chinese population would have been impacting almost the entire population of the state of Idaho!  Such a spill would be considered a major crisis in the US, especially when one understands the dangers associated with cadmium like kidney failure and cancer.  Cadmium is an extremely toxic metal commonly found in industrial workplaces, particularly where any ore is being processed or smelted.

Further research on my part revealed that the Guangxi province is one of China’s key production centers for nonferrous metals.  The province has become heavily industrialized and has benefited from a prosperous economy with a reported GDP of 588.6 billion Yuan ($93.3 billion) in 2007. The Guangxi province possesses an extremely rich fauna and flora located in an ideal setting from an environmental perspective.

One could argue that the province’s businesses have a responsibility to be sensitive to the abundant water and natural resources.  That argument could be reinforced by saying that all natural resources are finite and without careful exploitation, there will not be anything left for the next generation – in a nutshell the definition of sustainability.   Others could argue that Chinese businesses are competing in a global economy and should only be concerned about generating profits for their shareholders.  After all, in the words of Milton Friedman “What does it mean to say that “business” has responsibilities?  Only people can have responsibilities”.  Milton further argued that the Government has the responsibility to impose taxes and determine expenditures for such “social” purposes as controlling pollution.

The latest cadmium spill in China is one of many chemical spills that threatened Chinese cities’ drinking water in the past decade according to Bloomberg News.  As someone with an environmental background, I know how water resources are extremely valuable to any country not only because they supply drinking water but also for their many other benefits such as recreational activities.  For the longest, in several industrial countries including China, it was not infrequent to see businesses spilling their “guts” into nearby streams as a mean to get rid of waste generated by their activities.

To become an environmental steward, the Chinese government must implement provisions aimed at optimizing its economic prosperity as a catalyst for environmental protection.  It is the Government responsibility to care for its constituents and invest in environmental protection.  It is good that industries create jobs and have positive impacts to the economy but it is not right if the environment suffers and takes a backseat. I think it’s time for China to reconsider the long-term impacts of its short-term economic prosperity on not only the environment but everything it contains and most importantly people.  After all it’s called the People’s Republic of China!

Amadou Cisse (EMBA ’12) is a CSVC Blogger and member of Smith’s Executive MBA Program.