GLOBAL ENVIRONMENTAL ISSUES AND LOCAL CONSUMPTION
Most of the developing countries have export-oriented economies, leaving aside local
consumption. This fact has a negative impact due to transport emissions and natural resource
depletion from international trade.
These actions also affect local consumption and income due to the fact that most Mexicans
have low incomes, and 40 percent are considered poor. This fact has been more acute in recent
years: the number of people with low income has increase and it is expected to increase even
more in the next years), affecting welfare components such as nutrition and health.
This paper analyzes the relationship between economic policies, international trade patterns,
local markets and the welfare of people in the light of the impact on global environmental
According to the Mexican Ministry of Agriculture, Mexico is ranked 13 on the list
of GHG emitting countries, and contributes to 1.6% of total global emissions. It
is estimated that in 2006, agriculture was the second largest source of GHG emissions
worldwide, with those of 131.56 Mt CO2, which contributed to almost 18% of the country's total
emissions. On the other hand, transport, with 20% of total of the emissions, ranked first.
This paper is focused on the following issue: as other developing countries,
the economic policies in Mexico are oriented towards exporting markets, and not promoting
sustainable development, affecting the welfare of the population as well as the stock of natural
environmental resources, which are transferred to developed countries, via international trade
A bibliographic analysis yield the following facts: One of future problems in Mexico will be the
depletion of water reserves, which are concentrated (70% of the total) in the south region of the
country, while most of agricultural and industrial activity is concentrated in the north, close to the
US market. Economic policies based on exports includes certain crops demanding large amount
of water, as well as the use of bad agricultural policies that induce soil erosion. Mexico will face
dire consequences, such as a reduction of its agricultural potential and scarce water reserves in
the long run. Agricultural and industrial productions consume enormous amounts of water.
Mexico being a country that lacks water, the agricultural sector also consumes enormous
amounts of water and that water is exported virtually, and not counted in the cost of finished
In 1986 Mexico signed the GATT agreement, and in 1992 the NAFTA. With these documents,
Mexico started a transformation of its government structure, based in which is known as the the
Washington Consensus. Its main provisions are the reductions on the size of the government
structure, and on the entrance of Foreign Direct Investment, the deregulation of economic
activities, the restructuring of the financial and tax systems, and the opening of the economy to
international trade. Of these, only three have been achieve to a limited sense. 90% of the
financial system is in hands of foreign banks, the entrance of FDI is being promoted by the
government and the opening of the economy is based in cheap imports of consumer goods, and
on exports to the United States, which receives 80% of the total exports and it’s the origin of
60% of total FDI.
All these measures are combined with weak economic and social policies: A combination of lack
of national investment capital with high population growth resulted in high rates of urban
unemployment, therefore for the government, a solution for this has been found in foreign direct
investment. This model also required of the construction of transport infrastructure, which
involves burning more fossil fuels. While inEurope, most of the freight is moved by railroad, in
Mexico is moved by trucks.
This international trade pattern also affects the health and welfare of poor people in developing
countries, all because of some products which are not cultivated on the region must be
imported and this means the products have high prices, leaving aside local consumption, and
compromising income devoted to basic expenditure, such as food and health care. Both
nutrition and health care are of bad quality and do not cover most of the population. This bias is
due to these higher prices paid in the foreign markets for agricultural goods, as a share of the
low income received by most of the population.
In this sense, in developing countries such as Mexico, trade policies focus on increasing the
producers' income, leaving aside everything else, among which environmental damage
(erosion, soil and air pollution being examples of such damage).
Most of high value added agricultural production is exported. In terms of opportunity cost for
local population, the increase in the inflow of foreign exchange, do not reflect the drain of
resources in terms of virtual water and air pollution due to transport
Mexico, and most of developing nations, have been transformed in the last two decades by the
elements of the so-called Washington Consensus. It is clears that these measures provide a
relief for government elites, but its consequences are deteriorating the welfare of the gross of
the population, which is reflected in a larger number of low income and poorer people.
Production for Export markets is preferred to agricultural and industrial production for domestic
markets. Along with the welfare impact, the cost and impact of natural resource depletion as
well as air pollution due to transportation is part of the contribution of economic local policies to the
global environmental problems.