Assessing Japan's Environmental Aid Policy

Assessing Japan's Environmental Aid PolicyAuthor(s): David PotterSource: Pacific Affairs, Vol. 67, No. 2 (Summer, 1994), pp. 200-215Published by: Pacific Affairs, University of British ColumbiaStable URL: http://www.jstor.org/stable/2759417 .

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Assessing Japan s Environmental Aid Policy

David Potter

INTRODUCTION E NVIRONMENTAL PROTECTION has become an important issue in international politics in recent years. The 1992 Earth Summit in Rio de

Janeiro highlighted the political importance of environmental issues as well as revealing the differences in perspective on those issues between developed and developing nations, and between the developed nations themselves. Since the late 1980s, Japan has, in public statements, emphasized the importance of environmental protection and its willingness to assist in conservation efforts in the developing world. In particular, it has expressed its willingness to increase foreign aid for environmental protection. In part, this is an attempt by the Japanese government to define for itself a role which will help it meet its international responsibilities, and, in part, it is a response to a new issue in international politics.

In the late 1980s, one scholar pointed out the potential dilemma in Japan's commitment to provide environmental aid. On the one hand, he predicted an increase in Japanese aid activity for conservation efforts. On the other, he noted that the Japanese experience in providing environmental aid was new, dating from the mid-1980s at the earliest, and that the institutional arrangements for a coherent environmental aid program had not been worked out.' This paper examines Japan's aid for environmental protection since the Arche Summit in 1989. It assesses the achieve- ments and problems of this new aid orientation. It argues thatJapan's aid for environmental protection is limited for two basic reasons. First, the lack of institutional adjustments within the aid program has hampered the ability to implement the new policy. Second, the developing countries which receive Japanese aid continue to be ambivalent about the importance of environmental protection. This paper examines each limitation in turn. It concludes with a case study of Japan's aid for environmental protection in Thailand.

I Alan Rix, Japan's Aid Program: A New Global Agenda (Canberra: Australian International Development Assistance Bureau, April 1990), pp. 29-30.

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Japan 's Environmental Aid Policy

JAPAN'S ENVIRONMENTAL AID POLICY

Government pronouncements about environmental protection and Japan's efforts to achieve it have become regular fare at G-7 summits and ministerial overseas trips at least since the Arche Summit in 1989. At that summit, Prime Minister Kaifu announced that the Japanese government would increase its ODA target for environmental support to $300 million from 1989-91.2 Subsequent summit meetings have elicited expressions of Japan's support for environmental protection, although those announcements have been of secondary importance compared to other issues, and concrete proposals for action have been lacking. Despite previous international criticism of Japan's environmental record in the developing world, Japan's image at the Earth Summit in Rio de Janeiro in July 1992 emerged surprisingly intact. At that summit, the Japanese delegation announced the government's plan to increase environmental ODA by $700 million during the five-year period beginning in fiscal 1992, one of the summit's largest pledges.3 Most recently, Prime Minister Miyazawa announced during a trip to Southeast Asia the government's intention to greatly increase and strengthen environmental ODA to the ASEAN countries.4

Pledges to increase the level of aid funding for a region or sector is a common Japanese government response to changes in the international environment. What is more interesting is that funding promises in this case have been matched by institutional changes in the aid bureaucracy itself. The Overseas Economic Cooperation Fund (OECF) in October 1989 published environmental guidelines for its yen loan program designed to improve the monitoring of environmental impact during the cycle of project development and implementation.5 In June 1992 the cabinet approved aid policy guidelines which, among other things, called for aid allocation for projects which combined development with environmental protection.6 The Japan International Cooperation Agency (JICA), which handles grant and technical assistance, has gone farther. In 1989, the agency established an Environmental Affairs Division within its Planning Department, and assigned an officer in charge of environmental affairs to each department. In 1992, it generated internal guidelines for all projects under its jurisdiction.7

2 Ministry of Foreign Affairs, Waga Kuni no Seifu Kaihatsu Enjo (Japan's official development assistance), vol. 1 (1990), p. 44.

3 Japan Now (July, 1992), p. 3. 4 Asahi Shimbun, January 17, 1993, p. 2. 5 OECF, Annual Report (1990), pp. 15-16. 6 Japan Times Weekly International Edition, July 13-19, 1992, p. 3. 7 JICA, Environmental Guidelines for Dam Construction Projects (February 1990), p. 8; telephone

conversation with aJICA official, Washington, D.C., March 24, 1993.JICA had previously produced guidelines for specific sectors.

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Japan has also shown some sensitivity to the environmental concerns of opponents of high-profile projects. Indeed, the ability of environmental NGOs to force changes or cancellations in Japanese ODA projects in recent years is striking. In 1990, for example, it suspended its loan aid for the Sardar Sardovar dam project in India, following protest by local resi- dents and environmentalists.8 It also demurred on the Philippine National Oil Corporation's plans for aid funding for a controversial geo- thermal power project in Mindanao in 1991 because of high-profile opposition by environmental groups.9 In June 1992, the Overseas Economic Cooperation Fund suspended an $80 million loan for construction of the Calaca II coal-fired power plant in Luzon following questions by NGOs about the adequacy of the plant's environmental equipment.'0 Calaca II is a particularly important case of NGO pressure because the project's ori- gins lay in strong pleas from the Aquino government and was therefore a politically important undertaking.

The entrance of NGOs and tribal groups as successful lobbyists against some Japanese ODA projects runs contrary to the conventional wisdom about the kinds of actors who can influence aid decisions. Most studies limit the range of players to the ministries in Tokyo which domi- nate the aid policy process, occasional cabinet members, the prime minister (on politically sensitive decisions), a few interested Dietmen on key LDP Committees and big business.1 There is evidence that recipient governments do have a say in the kinds of aid projects they get, but even here aid decisions are restricted almost completely to government actors.'2 In the case of aid projects which have an impact on indigenous natural environments, however, a new set of players appears to have emerged.

The impact of NGOs is likely to be limited to specific projects. The emergence of NGOs and environmental groups in the Japanese aid debate does not mean they can systematically exercise influence in the aid program as a whole. In each of the cases above, for example, other factors can be discerned in the Japanese government's decisions. In the case of the Mt. Apo project, the donor community as a whole was reluctant to provide funding, and the project's chief proponent, the Philippine National Oil Corporation, had difficulty getting approval from its own

8 'Japan's Foreign Aid Policy: 1990 Update," JEI Report, no. 47A, December 14, 1990, p. 11; Japan Times, December 28, 1990, p. 2.

9 Business World, February 6, 1991, p. 11. W Manila Times, June 19, 1992, p. B1. 11 Alan Rix, Japan's Economic Azd (New York: St. Martin's Press, 1980); Robert M. Orr, Jr., The

Emergence ofJapan's Foreign Aid Power (New York: Columbia University Press, 1990). 12 David Potter, Japan's Foreign Aid to Thailand and the Philippines (Ph.D. diss., University of

California Santa Barbara, 1992), esp. pp. 286-421.

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Japan's Environmental Aid Policy

government. Implementation of Calaca II was behind schedule. The decision to suspend the Sardar Sardovar dam project must be seen in the con- text of environmental protest aimed at the World Bank, whose Narmada Dam complex included the Japanese contribution; as early as 1990 opponents had succeeded in getting the World Bank to reconsider the project.'3 In each case, then, environmental protest probably reinforced other reasons for suspending the projects.

NGOs in recipient countries will find it difficult to strengthen their influence by finding allies in Japan. Work by Stallings (1989) on Japan's involvement in the Latin American debt crisis and Encarnation and Mason (1990) on capital liberalization in Japan suggests that foreign pressure on the Japanese government works best when private sectorJapanese actors serve as intermediaries.'4 Filipino lawyers joined Japanese lawyers in urging the Japanese government to suspend Calaca II funding, and opponents of the Sardar Sardovar dam enlisted the support of opposition party members in the Diet.'5 Yet Barrett and Therivel (1991) have found that interest groups in Japan's domestic environmental policy making have had limited influence due to public apathy and divisions between interest groups. The opposition parties have also been divided and weak,'6 although recent changes in the cabinet resulting from the July, 1993 House of Representatives election mean that they have the ability for the first time to make policy instead of opposing it. Overall, domestic interest groups and the smaller parties appear to provide limited potential for alliances with environmentally minded NGOs.

Finally, the NGOs' role will be limited by the aid bureaucracy's view of their usefulness. The aid bureaucracy has made efforts to expand its interactions with NGOs as a way of circumventing its lack of personnel in the field. In 1989 it established a small grant aid program for NGOs and has increased funding for it since then. Yet funding for NGOs remains miniscule compared to total ODA'7 and given the aid policy makers' priorities, namely emphasis on loan and capital projects, that situation will not change. Furthermore, the expansion in aid to NGOs suggests that the

13 Manila Chronicle, May 17, 1990, p. 5. 14 Barbara Stallings, Reluctant Giant: Japan and the Latin American Debt Crisis. Presented at the

annual meeting of the Association for Asian Studies, Washington, D.C., March 15, 1989; Dennis Encarnation and Mark Mason, "Neither MITI nor America: The Political Economy of Capital Liberalization in Japan," International Organization, vol. 44 (Winter 1990), pp. 25-54.

15 Japan Times Weekly International Edition, April 22-28, 1991, p. 16; Manila Chronicle, May 17, 1990, p. 5.

16 Brendan F. D. Barrett and Riki Therivel, Environmental Policy and Impact Assessment in Japan (London and New York: Routledge, 1991), pp. 8-12.

l7Japan's Official Development Assistance (1991), pp. 31-32, 48, 52; Iwasaki Shunsuke, Main Issues ofJapan's ODA: a View from NGOs, presented at the FirstJapan-ASEAN Forum: "Development and ODA," United Nations University, Tokyo, November 19-20, 1990.

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aid bureaucracy sees them as conduits for increasing amounts of aid.'8 To the extent that NGOs and other organizations are demanding suspension of aid projects, rather than asking for aid money to carry out projects, they will remain on the periphery of aid decision making.

The heightened attention and sensitivity to environmental considerations in the aid program are largely a response to a newly opened policy window.'9 In fact, we may say thatJapan's new attention to environmental considerations in the aid program is due to the opening of two windows simultaneously. In the first place, environmental protection has emerged as an important issue in international relations since the mid-1980s. At the same time, Japan has emerged as the world's largest aid donor. Achievement of the status of largest aid donor has not been matched by the development of a consistent grand design for increasingly large vol- umes of aid. In the early 1990s, Japan has renewed its search for a basic philosophy to guide the provision of its aid. Decisions to strengthen the environmental component of the aid program are part of that attempt to define an aid philosophy.

The two windows overlap. As attention has focused on issues of environmental destruction, the developed nations have in various ways responded to the challenges of environmental preservation and promotion of sustainable development. As part of that, the multilateral and bilateral economic cooperation institutions have begun to provide aid for environmental protection efforts.20 Second, Japan itself has been criticized for its approach to environmental issues abroad. Japanese companies in particular have come under criticism for their resource extraction practices in the developing countries. Aid projects themselves have con- tributed directly or indirectly to environmental destruction in recipient countries.2' Japan's attention to greater environmental protection is a political response to that criticism.

Japan's response to those two windows has affected the kind of approach it has taken to environmental conservation efforts. Japan's government has been concerned that largely conservation policy be seen as a demonstration of its contribution to the international economic and political system. One Environment Agency official, for example, noted

18 A typical example of this orientation can be found in Consul-General's Newsletter, New Orleans, August 19, 1993, p. 2. See also Japan's Official Development Assistance, various years.

19 For a discussion of policy windows, seeJohn W. Kingdon, Agendas, Alternatives and PublicPolicy (New York: Harper Collins, 1984).

20 See Annual Report of the OECD (1991, 1992); World Bank Assistance Policy in the 1990's: An Outline, presented at the Economic Planning Agency Economic Cooperation Symposium, Tokyo, November 19-23, 1990.

21 See Margee Ensign, Doing Good orDoing Well? (New York: Columbia University Press, 1992), pp. 90-91; Sumi Kazuo, ODA: Enjo no Genjitsu [ODA: The reality of aid] (Tokyo: Iwanami Shoten, 1990), p. 160; Susan George, A Fate Worse than Debt (New York: Grove Press, 1988), p. 162.

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that the major motivation for increasing environmental aid was Japan's sensitivity to criticism from the United States and Europe that it has not been contributing to the world at a level commensurate with its economic strength.22 This new policy emphasis is therefore reactive; while Japan has strengthened its environmental aid program, it is following a policy initiative created by others.23

That perception has led the Japanese government to emphasize the quantity of aid for environmental conservation because such a measure is readily visible. As noted above, each major international summit since 1989 has resulted in a government pledge to increase its aid funding for this or that environmental policy. As of this writing, the Ministries of Foreign Affairs and Finance have announced their intention to increase Japan's ODA by 50 percent over the next five years as part of a new aid package announced at the G-7 summit inJuly, 1993. A major component of this ODA will be earmarked for the environment.24

Volume is still the basic unit of measurement in assessing the perfor- mance ofJapan's ODA. Indeed, the aid bureaucracy acknowledges international expectations that it will act as a major source of funds for environmental conservation efforts.25 Well-publicized announcements at summit meetings of new aid pledges meet this criterion, but they create a problem of how to disburse the new money. On the one hand, increased ODA is channeled through implementing agencies which are still under- staffed by international standards. On the other hand, major recipients such as the Philippines and Indonesia since the mid-1980s have had trou- ble absorbing committed aid funding; new aid pledges put pressure on Japan to increase funding to recipients which are already underusing ODA or develop new-avenues for disbursement. Since the latter option is difficult to achieve, the aid bureaucracy has followed its traditional pre- disposition toward capital projects capable of absorbing large amounts of funding. Large-scale commitments such as an $80 million afforestation loan to Mexico and a $761 million loan for water pollution control in Brazil, committed at the Rio Summit in July 1992,26 are examples of such

22 'Japan to Increase Environment Aid," Tropicus, vol. 4 (Winter 1990), p. 3. 23 For a comparison of Japan's environmental aid with that of other DAC donors, see

Organization for Economic Cooperation and Development, Development Cooperation, 1990. In general, Japan's program lacks innovative components found in other aid programs, and the timing of its institutional adjustments suggests that those adjustments have followed trends already begun in the international donor community.

24 Mainichi Daily News, February 21, 1993, p. 7; Japan Times Weekly International Edition, February 15-21, 1993, p. 5.

25 See OECF, Annual Report (1992), p. 7. 26 Ibid., 1992, p. 7. Costs are calculated at Y130/$1US.

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capital loans. In both casesJapan has made "special" loans to these countries for environmental purposes, since neither qualifies for ODA lend- ing.27 The government has considered changing its criteria for exclusively environmental loans in order to make it easier for higher income developing countries to qualify28 and thereby extending the ability to actually disburse environmental aid.

Japan channels a large portion of its aid through multilateral organizations. The latest figures show thatJapan's contributions to multilateral organizations comprise about 27 percent of its total ODA, higher than the DAC average.29 Not surprisingly,Japan has found it convenient to channel environmental aid funds through various multilateral organizations. For example, it supports forest conservation and development efforts through the Tropical Forestry Action Plan, the FAO, UNEP and ITTO. Given the limited number of its aid personnel and the lack of flexibility in the bilateral aid program, Japan finds it useful to rely on multilateral agencies to take the lead in new aid policy areas.30

Japan has therefore also used cofinancing arrangements with the World Bank and the Asian Development Bank in the environmental sector. Recent cofinancing of environmental programs in Indonesia and the Philippines, which combine facilities construction with training,3' are good examples. Cofinancing also allows Japan to expand environmental activities in the loan program where most of its aid financing is allocated.

Japan has also tried to show that it is redirecting its aid to address environmental concerns by redefining projects under the rubric of environmental protection. The OECF's list of current environmental projects in its 1992 annual report, for example, includes development projects for irrigation, water supply improvement, flood control, and waste disposal.32 Such projects previously would have been classified as infrastructure development or irrigation and flood control.

The shift in definition is not as cynical as one might think. It can be seen in part as an outcome of the lack of clarity about what environmental protection entails. While "environmental protection" is currently a popular item in policy circles worldwide, there is no common definition of what the term means. The closest the international community has come to a common definition is the concept of sustainable development, which the United Nations Commission on Environment and

27 Japan Times Weekly International Edition, April 5-11, 1993, p. 17. 28 Ibid., p. 17; Nikkei Weekly, August 9, 1993, p. 14. 29 Ministry of Foreign Affairs, Japan's Official Development Assistance (1992), p. 106. 30 Ibid., pp. 106-7, 143. 31 See OECF, Annual Report (1992), pp. 97-98, 102. 32 Ibid., p. 9.

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Development defines as development that "meets the needs of the pre- sent without compromising the ability of future generations to meet their own needs."33 In practice, sustainable development has been variously defined to cover not only issues of economic growth and resource con- sumption but issues of health care, education and technological development and dispersion.34 In short, it can mean different things to different observers.

The Japanese government has adopted the UNCED definition of sustainable development in its environmental assistance program, with all the ambiguities it carries.35 Because of the vagueness of the term, Japan is free to choose to fund those kinds of environmental protection activities which best meet its overall aid profile. In practice this means forest conservation, energy conservation and development, pollution control, soil and wildlife conservation and enhancement of recipient countries' ability to cope with environmental problems.36 All of these are consistent with past aid efforts, and therefore require less institutional adjustment than might be required by engaging in other kinds of conservation activities. Moreover, with the exception of enhancing recipient capabilities, such activities can also be made to conform to the capital bias ofJapanese aid and to the emphasis on aid to supportJapanese private sector activities in the recipient countries.

The emphasis on capital projects demonstrates another weakness in the Japanese aid program. Japanese ministries assert that they have a wealth of experience in managing environmental pollution and in developing technologies to combat pollution, which experience and technology are potentially of value to developing countries. This approach to environmental aid is congruent with Japan's own experience with environmental degradation: government and business have focussed on developing technologies to control pollution while overlooking conservation efforts designed to forestall it.37 Yet the transfer of knowledge and technology is the weakest link in Japan's aid program. Environmental aid since 1989 has been allocated overwhelmingly for construction of research facilities or infrastructure development, with modest evidence of training or technology transfer per se for environmental conservation.38

33 World Resources Institute, World Resources (1992-93), p. 2. 34 Ibid., pp. 2-3, passim. 35 OECF, Annual Report (1989), p. 22; Japan's Official Development Assistance (1991), pp. 36,

135-39. 36 Ibid., p. 139. 37 Barrett and Therivel, Environmental Policy, pp. 7, 27, passim. For a recent example of this

approach see Japan Times Weekly International Edition, September 6, 1992, p. 18. 38Japan's Official Development Assistance (1992), pp. 143-44. See also OECD (1990), p. 78. JICA

has focussed on short-term seminars on various topics related to environmental problems.

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The concentration of such efforts in Asia is typical of past Japanese practice during the early implementation of new programs, suggesting that the arrangements for knowledge transfer in this field are not yet com- plete. In other words, the basic activities of the aid program have not changed despite policy level pronouncements.

The opening of a policy window does not determine the kinds of solu- tions which will result from the perception of a new problem, nor even whether the problem will be solved.39 The perception of the importance of environmental issues has led toJapanese initiatives which affect the aid program, but the basic nature of the aid program remains. In particular, the aid program remains fragmented, with no central control over administration of the parts of the program. A major limitation to Japan's ability to respond to this issue is that responsibility for environmental protection is diffused throughout the relevant ministries and the aid-implementing agencies. Environmental aid becomes yet another issue area subject to bureaucratic competition.

The separate courses taken by the OECF and JICA in the development of environmental guidelines illustrate the fragmented nature of the aid system. Their separate development of environmental guidelines has an even greater impact on the aid program because the two agencies' work in project development overlaps; JICA does the feasibility surveys not only for grant projects but for loan projects as well. With the independent development of standards, there remains the possibility that different standards will apply at different stages of a project. For example, JICA has developed environmental standards covering its surveys of dam projects. Responsibility for developing and enforcing standards during the implementation phase, however, are left to the implementing agency, either in theJapanese government or in the recipient nation government.40

More important, each ministry has been careful to guard or expand its turf in this new area. For example, the Ministries of Foreign Affairs and International Trade and Industry set up independent environmental research facilities within two weeks of the 1989 Arche Summit, each with a mission reflecting the perspectives and strengths of its parent ministry.41 More recently, MITI has come to champion its new "green aid program," a program some observers see as MITI's attempt to shore up its declining influence in the aid policy process.42 While the Environment Agency's portion of the ODA budget has been increased,43 it has not been given

39 Kingdon, Agendas, pp. 173-88. 40 Environmental Guidelines forDam Construction Projects (February 1990), p. 6. 41 Nihon Keizai Shimbun, July 4, 1989, p. 5; July 15, 1989, p. 2. 42 See Keizai Kyoryoku no Genjo to Mondaiten (Current situation and problems of economic coop-

eration) (Tokyo: 1992); Far Eastern Economic Review (hereinafter FEER), March 12, 1992, p. 39. 43 Rix, Japan's Aid Program, p. 30.

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control over ODA allocated to environmental cooperation. Instead, the agency has created its own internal departments to deal with international environmental conservation efforts.44 Thus, the agency has expanded its policy turf but at the expense of reinforcing the fragmentation found throughout the aid bureaucracy and transferring to aid policy making the interministerial competition found in domestic environmental policy making.45 Recent attempts by the agency to get a basic environmental law passed through the Diet have met with resistance by the Ministries of Finance, Foreign Affairs, and International Trade and Industry, each of which is concerned with the proposed law's impact on its own freedom of operation.46 Since 1989, the various implementing ministries have been left to work out their separate guidelines and approaches to environmental aid. Consequently, there is no unified environmental policy covering all aspects of the aid program.

CONSIDERING RECIPIENTS

The preferences of recipients ofJapan's foreign aid are a consistently overlooked aspect of the foreign aid program.47 In a policy area such as environmental protection, however, those preferences are likely to be cru- cial in assessingJapan's ability to meet its new commitments. Indifference in recipient governments is likely to limit the effectiveness ofJapan's environmental aid. Developing countries do not necessarily perceive the mer- its of environmental protection in the same way that developed nations do since environmental protection is likely to come at the expense of some measure of economic growth in the short term. That is a tradeoff they are at best reluctant to make.48 Responses to an elite questionnaire produced by the Economic Planning Agency and published in 1991 revealed developing nation respondents to be evenly split between those who felt environmental conservation efforts should be carried out and those who felt that such efforts should be carried out "if they don't damage economic growth." Moreover, a significant minority opined that economic growth should be the first priority.49 Developing nations' governments perceive a whole host of economic development problems

44 OECD (1990), pp. 55-56. 45 For a description of the bureaucratic rivalries in the domestic arena see Barrett and Therivel,

Environmental Policy, pp. 12-15, passim. 46 Asahi Shimbun, March 10, 1993, p. 4; Japan Times Weekly International Edition, June 1-7, 1992,

pp. 1, 5; March 15-21, 1993, p. 4. 47 Potter, Japan's Foreign Aid, pp. 2-3. 48 See, for example, FEER, June 4, 1992, pp. 60-61; Philip Hurst, Rainforest Politics (London and

NewJersey: Zed Books, 1990). 49 Economic Planning Agency, Nihon no Kao no Mieru Jijo Seiryoku Shien o Mezashite [Towards

Japanese-style support for self-help efforts] (1991), p. 87.

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requiring solution, of which environmental protection is just one. Japan's environmental aid, like the overall aid program, is based on the principle that recipient governments must request projects for funding before Japan will consider them. The overall priorities of the recipient governments undoubtedly figure in their calculations of what kinds of aid to ask for from donor governments.50 In the case of Japanese aid, the point is clear: a recent Japanese survey of political and economic leaders in Southeast Asia, where Japan allocates roughly one-third of its aid, sug- gested that those leaders feel that Japan's greatest contribution to development in the region should be the promotion of economic and technological development, with environmental protection efforts ranking below them.51 Like it or not, Japan's ability to expand its environmental aid depends on whether recipients think it is valuable to them.

Moreover, even if recipient governments are willing to carry out environmental conservation with aid funding, those governments often lack the institutional resources and skills to translate dispositions into concrete projects. At one recent symposium on economic development and economic cooperation sponsored by the Economic Planning Agency, only two aid recipient countries' representatives identified environmental projects specifically for aid funding. One aid agency report noted that while the Indonesian government is concerned about preserving the country's environment it lacks the institutional capacity to manage its natural resources. The Indonesian environmental advisory agency, Bapadel, does not have the power to legislate over other ministries or to prosecute them. Moreover, its advisory role is limited by the lack of trained staff and training facilities.52 The World Bank noted that Indonesia's response to water pollution has been slow because water resource administration mecha- nisms are not yet well developed.53

Similarly, the role of Thailand's environmental agency until 1992 was limited to technical issues such as data collection. The newly created Office of Environmental Policy and Planning's mission has been expanded, and its powers include the ability to set and enforce pollution standards. It must still cooperate, however, with other ministries which have jurisdiction over environmental regulation and acts in some ways as a cabinet spokesman for other ministries.54 The Japanese aid bureaucracy has found

50 Potter, Japan's Foreign Aid, pp. i-xxiii, passim. 51 Kansai Doyukai Kokusai Mondai Iinkai, "Keizai Kyoryoku wa Nozomu ga Kankyo Hakai wa

Gomen" [They want economic cooperation but not environmental destruction] Kokusai Kaihatsu Janaru (April 1990), p. 95.

52 Australian International Development Assistance Bureau, Australia's Development Cooperation with Indonesia, International Development Issues, no. 23 (October 1991), p. 9.

53 World Bank, World Development Report (1991), p. 156. 54 FEER October 29, 1992, p. 40.

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in the South Pacific that it is difficult for recipient agencies to come up with enough projects for whatever purposes that match its aid profile.55

ENVIRONMENTAL AID IN THAILAND

Thailand provides an example of the possibilities and limitations of the Japanese approach to environmental aid. The Thai government has become more interested in environmental preservation in recent years. The creation of a new Office of Environmental Policy and Planning located within the Office of the Prime Minister is a concrete example of that concern. How much can we expectJapan to contribute to Thai environmental protection efforts? Japanese foreign aid can be expected to help address the problem of environmental protection. Japan began to provide environmental aid to Thailand in the 1980s, and the need for further efforts was addressed in JICA's comprehensive country study covering its aid to Thailand, published in 1989.56 Prime Minister Chuan Leekpai has also requested environmental technology assistance from Japanese business through the Keidanren.57 The kind of environmental aidJapan provides to Thailand illustrates some of the problems with the overall program.

Some aid clearly falls within the commonly held views of environmental protection. A grant for the establishment of an environmental research institute in 1989 and subsequent dispatch of experts or surveys of water pollution in Bangkok's canals58 are good examples of such aid. In fact, the environmental research institute is one of a very few established to date and is cited prominently in aid bureaucracy reports of environmental efforts. Such projects are concentrated in the grant aid program since they involve construction of facilities, surveys and technical cooperation.

In contrast, the loan aid program is devoid of projects directly related to environmental conservation. Japanese loan aid commitments to Thailand since 1989 have been directed exclusively at infrastructure development.59 This is partly due to the bias in the Japanese loan aid program toward such projects, but it is also due to the priorities of the Thai government itself. Thailand's development plans have emphasized infrastructure development throughout, with environmental and other issues taking second place in terms of funding. The latest round of planning

55 FEER October 2, 1986, pp. 26-27. 56 JICA, Country Study for Development Assistance to the Kingdom of Thailand (January 1989),

pp. 25-26, 48-49. 57 Mainichi Daily News, February 21, 1993, p. 7. 58 Mainichi Shinbun, April 8, 1990, p. 3; Kokusai Kyoryoku (June 1990), p. 48; Bangkok Post,

September 10, 1987, p. 2. 59 OECF, Annual Report (1992), pp. 104-06; (1990), pp. 104-6; Japan's Official Development

Assistance (1992), p. 206.

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appears to be no different. As Thailand has moved into the 1990s, the government has been confronted with a host of new problems resulting from rapid economic expansion in the 1980s. Among them is the prob lem of environmental degradation, but another is the lack of adequate infrastructure.60 The Thai government has therefore committed major resources in the new Seventh National Economic and Social Development Plan to alleviate bottlenecks in transportation and commu- nications, which are precisely those sectors funded byJapanese loan aid.61 Environmental protection is allocated smaller funding and left to the technical assistance program for external grant funding.

In the 1990s this means that not only will projects for direct environmental reconstruction or protection be subject to the financial limitations on Japan's grant aid program, but that its graduation into the upper mid- dle income economies, and therefore out of grant eligibility, will further squeeze the availability of such funds. In March 1993 Japan, following the World Bank's lead, announced that beginning in the new fiscal year it would suspend new grant aid funding to Thailand.62 In future, therefore, Thailand is unlikely to qualify for further Japanese environmental aid as currently administered.

In practice, it is hard to separate infrastructure development from environmental protection, especially in Bangkok. Air pollution control is linked to traffic patterns and decentralization of industry away from the Bangkok metropolitan area, and water pollution control is in part depen- dent on the development of new sewage drainage and treatment facilities. Japan has provided loan aid for projects addressing all of these, including loans for road construction in Bangkok and port development in the eastern seaboard. The environmental impact of these projects, however, is likely to be indirect at best because the loan projects themselves cover only construction and equipment supply.63 In these cases, Japan's aid looks like business as usual.

In the grant aid program, aid for some "environmental" projects does not necessarily contribute to environmental protection. Reforestation has been promoted in Thailand and other countries as a remedy for rainforest degradation, a policy which has been supported by the international donor community.64 As noted above, it is an important component of Japan's environmental aid program. Aid for reforestation, however, has

60 David Robinson, Yangho Byeon, Ranjit-Teja, and Wanda Tseng, et. al., Thailand: Adjusting to Success (Washington, D.C.: International Monetary Fund, 1991), pp. 11-12; FEER November 29, 1990, pp. 52-53.

61 Ibid., p. 11; Keizai Kyoryoku no Genjo to Mondaiten, p. 146. 62 Asahi Shimbun, April 1, 1993, p. 12. 63 OECF, Annual Report (1992), pp. 104-6; (1990), pp. 104-6. 64 Larry Lohmann, "Commercial Tree Plantations in Thailand: Deforestation by Any Other

Name," Ecologist (January/February 1990), pp. 13-14.

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been criticized by environmentalists as destructive to native fauna and the lifestyles of local inhabitants in the areas in which such projects take place.

Japan's aid for reforestation in northern Thailand falls into the latter category. In 1981 JICA established a eucalyptus plantation in the northeast to promote field research and training. It has also funded surveys for National Reserve Forest management plans and undertaken a technical training program in logging and log transport.65 In 1989, the Thai government sought Japanese assistance for reforestation of the northeast over the next five years using eucalyptus as part of the program.66

Environmentalists decry such programs for several reasons. First, eucalyptus plantation development, promoted in response to worldwide demand for wood chips, has encroached on native forests. Second, plantations squeeze local inhabitants in two ways. On the one hand, when multinational and Thai companies establish large-scale private opera- tions, local inhabitants are pushed off forestland they had formerly used. On the other, forest forage previously exploited by their domesticated ani- mals has disappeared where eucalyptus has been planted. The result has been further destruction of rainforest under the guise of afforestation of "marginal" lands and the displacement of local populations.67 From this perspective, the Thai government's support of eucalyptus cultivation by corporations and international donors has resulted in a less than optimal solution to the problem of deforestation in the north and northeast.

The actions of the Thai government andJapan's aid agencies become more understandable if we examine the Thai government's environmental policies. Throughout the 1980s the Thai government pursued natural resource policies that were not necessarily congruent and were often incompatible. Examination of the Fifth and Sixth Five-Year Plans shows that Thai planners consistently subsumed environmental protection policy under the broader concern of natural resource use. Consequently, there was a constant tension between exploitation of natural resources for economic development and the protection of natural resources for environmental preservation.68 In the case above, the need to preserve native forests collided with Thai export promotion policies: wood chips increasingly became an important export commodity. Eucalyptus has the advan- tage of being fast growing, and thus appeared to be a good candidate because it could produce quick results on degraded land.69 Furthermore,

65 JICA's Economic Cooperation to Kingdom of Thailand (February 1990), unpublished. 66 Lohmann, 'Tree Plantations," p. 14. 67 Ibid., pp. 9-17; Philip Hirsch and Larry Lohmann, "Contemporary Politics of the

Environment in Thailand," Asian Survey, vol. 29 (April 1989), p. 449. 68 See Summary of the Sixth National Economic and SocialDevelopment Plan (198 7-1991) (Bangkok:

National Economic and Social Development Board, 1986), p. 21. 69 Hirsch and Lohmann, "Contemporary Politics," p. 449.

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because eucalyptus is fast growing and can grow widely in Thailand, its use has been condoned by Thai government agencies trying to achieve a policy in the Sixth Plan of reforesting 40 percent of the land in the country.70 Therefore, eucalyptus cultivation would appear to be consistent with the government's policy of reforesting the northern regions through private sector contracts.71

Nothing on the Japanese side would be likely to counter the popu- larity of eucalyptus, no matter what its environmental effects. Japanese business interests mesh with those of the Thai government since Japan is a prime market for wood chips and Japanese companies have been active investors in eucalyptus production in Thailand as well as in reforestation of fast-growing softwoods elsewhere in Southeast Asia.72 The confluence of Thai policy and Japanese private sector benefit coupled with the request principle justify requests for aid to develop eucalyptus for commercial purposes. Eucalyptus replanting is also consistent with the Japanese government's interest in promoting development of renewable resources through reforestation under the aid program,73 and conforms to international aid efforts to halt rainforest destruction through, among other things, promotion of forestry and forest-based industrial development. The latter includes logging.74 Japan can therefore claim legitimate reasons for meeting those requests even with its new emphasis on environmental protection.

The Thai case is typical of the recipient country environments in whichJapan's aid program is implemented. In addition to ambiguous def- initions of what environmental aid is and what it is not, recipient governments perceive hard choices in determining the extent to which they can balance environmental protection and acceptable levels of economic growth. Japan's major aid recipients all face the tradeoff between aid for environmental development and aid for infrastructure development and export production. Malaysian officials, for example, accept the idea of Japanese aid for the environment, and have followed up by publicly expressing their expectations that such aid will be forthcoming. The Malaysian government has also made it clear, however, that it does not

70 Apichai Puntasen, Somboon Siriprachai, and Chaiyuth Punyasavatsut, "Political Economy of Eucalyptus: Business, Bureaucracy and the Thai Government,"Journal of Contemporary Asia, vol. 22, no. 2 (1992), pp. 189-90.

71 See Fourth National Economic and Social Development Plan (1977-1981), pp. 149-52; Lohmann, "Tree Plantations," p. 13.

72 Sumi, ODA, passim; Lohmann, "Tree Plantations," p. 11; see also Asahi Shimbun, April 14, 1993, p. 10.

73 See Kankyo Hakusho (White paper on the environment) (1990), p. 211, passim. 74 See Marcus Colchester and Larry Lohmann, The Tropical Forestry Action Plan: What Progress?

(Penang, Malaysia: World Rainforest Movement, 1990), pp. 9-10, 13-14.

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welcome Japanese aid which interferes with its goal of industrial development.75 Moreover, while most have made efforts to strengthen conservation and protect natural resources, they have also made decisions for domestic political and economic reasons that achieve the opposite.76

CONCLUSION

What can we expect from Japan's new policy of providing aid for environmental conservation? Certainly Japan's impact will be greatest in the amount of aid funding it provides. Its support of large projects and contributions to multilateral agencies will undoubtedly continue. New environmental guidelines will help prevent the repetition of past cases of aid projects which have caused environmental damage. Beyond that, its impact will be relatively weak. Japan still does not have the institutional capacity to promote a proactive environmental aid program. It still relies on the initiative from recipient governments and carries out increasing levels of aid activity with too few staff.

The request base of Japan's foreign aid is critical in understanding whatJapan can actually do in specific cases. To the extent that recipients want Japanese loans, by far the largest part of Japan's aid program, for uses other than environmental protection, Japan's environmental contribution through the aid program will continue to be indirect at best. Grant aid will continue to be the most common venue for environmental aid, which means thatJapanese efforts will still be limited by project size and by the tendency to build and supply equipment.

Finally, Japan's aid for the environment will be limited by the reactive nature of the aid program itself. Environmental aid is a new policy area whose outline has been generated elsewhere. The international environmental policy window opened in the late 1980s whether Japan was interested or not. The Japanese response has been substantial in monetary terms, but not in terms of policy innovation. Japan has not engaged in the more innovative environmental aid areas, such as debt-for-nature swaps which might relieve the cycle of natural resource destruction to pay for old and new debt.

Northern Kentucky University, November 1993

75 Lee Poh Ping, Japanese Official Assistance to Malaysia, presented at the First Japan-ASEAN Forum on Development and ODA, United Nations University, Tokyo, November 19-20, 1990; Asahi Shimbun, July 1, 1993, p. 5.

76 Hurst, Rainforest Politics, passim; Lester Ross, 'The Politics of Environmental Policy in the People's Republic of China," Policy StudiesJournal, vol. 20 (Winter 1992), pp. 629-32.

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Documents

Assessing Japan's Environmental Aid Policy