The environmental (un)sustainability of the base-of-the-pyramid (BoP) philosophy: A governance perspective

This chapter analyzes the major environmental effects of economic activities (extraction of natural resources and pollution), tailored to the idiosyncracies of the base-of-the-pyramid (BoP) context (development problems, size and economic geography). It discusses potential instruments to govern the environmental challenges that ensue from BoP-driven development, split into market-driven mechanisms (market clearing, corporate innovation and corporate social responsibility) and non-market options (government regulation, industry self-regulation and civic action). Small-scale, decentralised activities involve three aspects with environmental consequences: scale (dis)economies; shared use of economic resources; and local orientation. Government intervention can be an effective remedy to market failure in the environmental arena. Widespread application of the BoP business model is likely to lead to an absolute deterioration of the natural environment. Disruptive innovations are considered cornerstones of effective BoP development. A collective-action problem germane to the BoP context is that the struggle for survival induces many actors to prioritise environmental protection less highly than actions that serve their direct material needs.