How Globalization Affects the Environment

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  • 0:02 Background on Globalization
  • 2:08 Global Mining & the…
  • 3:17 Effects of Global…
  • 4:15 Global Pollution & …
  • 5:07 Lesson Summary
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Lesson Transcript
Instructor: Beth Loy

Dr. Loy has a Ph.D. in Resource Economics; master's degrees in economics, human resources, and safety; and has taught masters and doctorate level courses in statistics, research methods, economics, and management.

In this lesson, we see how globalization affects the environment. We also look at how regulation and ethical issues impact an organization. Using examples of the mineral, timber, and energy industries, we discuss both short and long-term effects.

Background on Globalization

If you choose to buy organic or local food, you are already familiar with how the environment is affected by globalization. How we choose our food is just one way we make choices related to the environment. Many of us want to know what hormones and pesticides are in our food. We also may wonder why certain foods, like fish, are scarce. Well, it could be that countries with fewer regulations are infringing on and polluting fishing habitats. Having shared waterways means that businesses and countries must share in the responsibility to care for them. Let's look at some of the global issues that impact the environment.

Globalization is a relatively new phenomenon in the business world. Progress in technology, transportation, and communication give most businesses the chance to operate internationally. Given how fast decisions must be made when working across time zones and continents, globalization presents unique problems in how it affects the environment. After all, when we work together globally we share the same environment.

When working internationally, economies are intertwined, which means natural resources are shared. Timber, minerals, water, fish, oil, and natural gas are just a few examples. So is globalization bad for the environment? Well, it depends. When a market goes global, greater production is usually demanded to increase supply. This means that foreign companies move in quickly to meet that supply.

Some companies may feel an ethical responsibility to leave an area unharmed after their work is done, but others may just want to do what the regulations say and move on. Having trade agreements and work permits, increased environmental regulations, incentives for hiring local, and requirements to involve the community may help.

These protections, however, can hinder economic growth in the short-term. Industries that have to deal with environmental regulations are slowed in their progress. Having to work through regulations like permits and inspections takes both time and money. Let's look at some examples of the effects of globalization on the environment.

Global Mining & the Environment

If gold is found for the first time in a small town in Peru, everyone sees dollar signs. Your company specializes in mining gold and will work to recover a large part of it. You're based in the United States, but you have a highly-skilled labor force and the most technologically advanced machines to make sure any small amount of gold doesn't go untapped. But, you have no connection to the area, which means you have no incentive to leave it in good condition. Unless you feel a moral obligation to do so, or regulations force you to, your company will swoop in, make a profit, and leave.

In the short-term this is great for the local economy. Not only will citizens get payments for the gold, they will spend it locally. We see increased sales at hotels, grocery stores, eateries, and convenience stores. This gives the local economy a boost, right? Sure, but in the long run we see wear and tear on the infrastructure, problems with water supply, and complications of contaminated and unstable soil. Problems with sinkholes is a common example. In many instances, once the gold is gone and the companies move on, there is little left to the area.

Effects of Global Deforestation

Deforestation to make room for growth in both development and agriculture has become an issue for countries that have a large amount of timber. Forest land is an essential part of our ecosystem. Rain forests contribute ingredients for medication, provide clean air, and protect endangered species.

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