Green Productivity: Towards a Sustainable Future in Asia Dr. Eduardo T. Gonzalez Development Academy of the Philippines

Green Productivity: Towards a Sustainable Future in Asia

Dr. Eduardo T. GonzalezDevelopment Academy of the Philippines

Outline of presentation

Levers of change Scenarios Sustainable options

Environmental degradation is a constraint on future growth within

the Asia and the Pacific region and a barrier to efforts to eradicate

severe poverty.

Prospects for a livable future in the region remain clouded with uncertainty if the forces that are causingthe deterioration of the environment continue on a destructive trajectory.

Key Environment Issues in Asia & the Pacific

Land Forest Biodiversity Fresh water

Coastal & Marine

Atmosphere Urban areas

Disasters

Land degradation

Desertification Land use

change

Forest degradation

Deforestation

Habitat loss Forest loss and

degradation Alien species

Water Scarcity

Pollution

Degradation of coastal and marine resources

Pollution due to mining and coastal development

Air quality Ozone depletion Greenhouse

gas emissions and climate change

Air pollution Waste

management Water supply

and sanitation

Floods Drought Volcanoes Earthquake

Levers of change Population Urbanization and

industrialization Income growth and

inequality Technological changes Governance Institutions, policy and

markets

The resource demands of population growth e.g. increased consumption of energy and materials, remain one of the most significant drivers of environmental degradation in the region. Over the next 15 years,

approximately 700 million people will be added to the population of Asia. Much of the rapid population growth rate will occur in areas already under severe environmental stress.

Resource demands of populationPopulation

Demographic transition

In South Asia, infant and child mortality is falling fast, resulting in a greater share of youth in the population and an expanding active labor force. By contrast, the

next 25 years will result in significant “greying” of the population in much of East Asia. The impacts on

environment of these demographic shifts range from shifting patterns of consumption to labor supply for

future economic development.

Population

Urban and rural migrations

Urban and rural migrations are major obstacles to adequate management of urban environmental concerns in the Asia and Pacific region. Rural migrants are driven to rapidly growing cities in

search of employment and improved social welfare. This economically disadvantaged population

typically settles in environmentally hazardous areas such as riverbanks, swamps and estuaries.

Population

Population densities

Population densities have been one factor driving land degradation in portions of the Asia and the Pacific region. Population growth in rural areas

has a significant impact on agriculture. Agricultural land use increased by 13 percent in

the last 30 years largely at the expense of lowland forests and their rich biodiversity.

Population

Increasing urban populationAs the population of the Asia and Pacific region has grown, it has also become more urbanized. By 2015, the percentage of population that is

urban is projected to increase to about 48 percent in East Asia and about 46 percent in Southeast Asia and the Pacific. By approximately 2020,

over half of Asia’s population will live in cities; the urban population will triple in 2020.

Urbanization and industrialization

Unplanned rapid urbanization

The speed of population growth in urban areas has outpaced the development of environmental

infrastructure in many large cities. Problems range from lack of access to clean water to poor air quality, inability to manage solid wastes and transportation. The number of vehicles is doubling every 7 years in the Asia and Pacific region, substantially increasing

urban air pollution and energy consumption.


Rapid industrialization

Unplanned rapid urbanization has been driven by rapid industrialization in East and Southeast

Asia. Over the past 30 years, industrial pollution has been a major source of pollution in urban

areas and a significant driver of intensified resource use.


Geographical dispersion of production

Asia’s share of global output, which was roughly 10 percent in 1950 and 30 percent in 1995, is expected to reach 55 to 60 percent in 2025. This growth involves

geographical dislocation rather than elimination of resource-intensive activities within the context of global

production chains. The resulting dispersion of manufacturing activity is associated with relocation of

materials-and pollution-intensive industries and of second-generation technologies.


Increased consumption

Income growth among APO member countries will undoubtedly present additional demand for energy,

water, and other resource inputs for commercial use. Commercial energy use in developing Asia and

Pacific region is expected to double over the next two decades. On this basis, by 2020, the Asia and Pacific

region will surpass OECD countries as the largest source of emissions worldwide.

Income growth and inequality

Culture of material consumptionIn the Asia and Pacific region, the “good life” is

defined as the ever-increasing consumption of luxury goods and services, not the satisfaction of basic needs and wants. This is reflected in the increasing use of

private automobiles and other durable consumer goods. The number of cars in East Asia, for example,

increased 14-fold from 1975 to 1993, more than seven times the global average rate of increase.


Deepening income inequality

The impact of income growth on the environment may depend substantially on the

degree to which growth in the Asia and Pacific region is broadbased. When growth is not

broadbased, opportunities are missed to reduce poverty and the vulnerability of the poor to a

host of environmental concerns.


Perverse incentivesIn many cases, technological changes have

ameliorated the environmental and resource effects of economic growth e.g. toward decarbonization of economic activity and a decrease in energy use per unit of economic output. But in Asia and Pacific region, perverse incentives exist for the continued

use of highly polluting coal and pollution-intensive, outdated modes of automobile and bus

transportation.

Technological changes

Slow rate of improvement

In general, the rate of improvement in energy, materials, and pollution efficiency of technologies has been slow relative to the economic growth in many Asian and Pacific economies. Industrial

growth in Japan, for example, has more than offset the significant improvement in the efficiency of

fuel and electricity.


Technological inefficiencies

Technological inefficiencies are widespread in the region. Nowhere is this more apparent than in the

generation, transmission, and distribution of electricity. Power plants in developing countries

consume 44 percent more fuel per kilowatt-hour of electricity generated. Transmission and distribution losses are up to 30 percent compared to less than 10

percent in US and Japan.


Globalization Globalization of information and consumption patterns has accentuated tendencies toward the

worldwide adoption of a culture of material consumption. Transnational corporations, which

faced saturated markets for consumer goods within advanced industrial economies, have identified developing Asian and Pacific economies as the

major opportunity for market expansion.


Business as usual

The rate of adoption of green environmental technologies has been slow, despite numerous efforts to promote the use of efficient process technologies as well as end-of-pipe pollution controls. Widespread use

of these technologies in the region is questionable under current policy frameworks and lacking political

will and incentives for clean production.


Use and maintenance of technologies

Technologies that depend on the availability of requisite monitoring equipment or adequate

systems of technical support risk causing major environmental disasters and resource inefficiency

when inappropriately used or maintained, problems that are magnified by tendencies towards large-scale, capital intensive projects in areas such as

water and energy supply.


The experience of the 1997 Asian financial crisis stressed the importance of transparency and

accountability within government to mitigate possible corruption and mismanagement as well as the lack of requisite regulatory oversight over

economic processes.

Governance

Transparency and accountability within government

Direct participation by civil society

Civil society, including environmentally-oriented NGOs of citizen groups and NGOs

representing small businesses and trade associations, have increased in number and

influence in the Asia and Pacific region. But the slow development of inclusive governance in the

region has hampered efforts to reconcile competing societal goals.

Governance

Privatization and the private sector

Many mining and logging concessions have been granted by government in areas where property rights

are disputed. Mining concessions have allowed operators to dispose of toxic wastes to land and water resources claimed by indigenous groups. Awarding

concessions to military affiliates has led to the flouting of regulations designed to mitigate

environmental impacts of resource exploitation.

Governance

A failure of policy

Environmental degradation in Asia and the Pacific region was above all a failure of policy and of institutions. Institutional

and policy failures resulted from the presumption that developing countries

can “grow now and clean up later.”

Institutions, policy and the market

Investment in environmental protection

In Asia and the Pacific region, expenditure on environmental programs rarely exceeded 1 to 2

percent of the GDP compared to defense budgets, which range from 0.8 to 6 percent of the GDP.

To meet the environmental program needs of the region, expenditures of at least 7 percent of GDP

will be required.


Failure of resource pricing

Environmental degradation has also resulted from subsidies on resource use and from failure of resource

pricing. Subsidies that distort market signals are rampant in the region. Irrigation subsidies amount to

US$11. Billion per year in Asia. Part of these subsidies assists farmers, but the balance leads to waterlogging

and salinization and depletion of aquifers.


Lessons from the future:

“Contrasting yet plausible stories can be told for how the world and its regions will develop in the next 30 years; each has fundamentally different implications for the environment.”

Global Environment Outlook 2002

A tale of four futures

Markets First

Sustainability First

Policy First Security First

GEO 2002

Markets First:market-driven developments converge on the values and expectations that prevail in industrialized countries

Policy First: strong actions are undertaken by governments in an attempt to reach specific social and environmental goals

Security First:assumes a world of great disparities, inequality and conflict, brought about by socio-economic and environmental stresses

Sustainability First: a new development paradigm responds to the challenge of sustainability, supported by new, more equitable values and institutions

Markets FirstThe wealth of nations and the optimal play of market forces dominate social and political agendas. Trust is placed in further globalization and liberalization to enhance corporate wealth, create new enterprises and livelihoods, and so help people and communities to afford to insure against — or pay to fix — social and environmental problems. Ethical investors, together with citizen and consumer groups, try to exercise growing corrective influence but are undermined by economic imperatives. The powers of state officials, planners and lawmakers to regulate society, economy and the environment continue to be overwhelmed by expanding demands.

Policy FirstA coordinated pro-environment and anti-poverty drive balances the momentum for economic development at any cost. Environmental and social costs and gains are factored into policy measures, regulatory frameworks and planning processes. All these are reinforced by fiscal levers or incentives such as carbon taxes and tax breaks. International ‘soft law’ treaties and binding instruments affecting environment and development are integrated into unified blueprints and their status in law is upgraded, though fresh provision is made for open consultation processes to allow for regional and local variants.

Security FirstSocio-economic and environmental stresses give rise to waves of protest and counteraction. As such troubles become increasingly prevalent, the more powerful and wealthy groups focus on self-protection, creating enclaves akin to the present day ‘gated communities’. Such islands of advantage provide a degree of enhanced security and economic benefits for dependent communities in their immediate surroundings but they exclude the disadvantaged mass of outsiders. Welfare and regulatory services fall into disuse but market forces continue to operate outside the walls.

Sustainability FirstA more visionary state of affairs prevails, where radical shifts in the way people interact with one another and with the world around them stimulate and support sustainable policy measures and accountable corporate behavior. There is much fuller collaboration between governments, citizens and other stakeholder groups in decision-making on issues of close common concern. A consensus is reached on what needs to be done to satisfy basic needs and realize personal goals without beggaring others or spoiling the outlook for posterity.

Implications: Asia and the Pacific

Population living in areas with severe water stress: Asia and the Pacific (%)

Energy-related sulphur dioxide emissions: Asia and the Pacific (million tonnes sulphur)

Energy-related nitrogen oxide emissions: Asia and the Pacific (million tonnes nitrogen)

Energy-related carbon dioxide emissions: Asia and the Pacific (million tonnes carbon)

Municipal solid waste generation: Asia and the Pacific (index related to value of 1 for base year 1995)

Extent of built-up areas: Asia and the Pacific (% of total land area)

Land area impacted by infrastructure expansion: Asia and the Pacific (% of total land area)

Natural Capital Index: Asia and the Pacific

Population living with hunger: Asia and the Pacific (%)

Carbon dioxide emissions from all sources (billion tonnes carbon/year)

Carbon dioxide emissions from all sources (billion tonnes carbon/year)

Building an alternative but sustainable future

Sustainable options Adoption of proven policy

alternatives Development of investment

opportunities Development and deployment

of new technologies Advances in energy use and

supply Strengthening societal drivers Strengthening regional

environmental governance

Adoption of proven policy alternatives

Implement policy innovations that reduce pressures on the natural environment in ways that support rather than undermine improvements in socioeconomic welfare

Adopt credit mechanisms that allow manufacturers to upgrade production technology that yield environmental benefits even though the primary motivation is to reduce costs or improve quality

Use facility licensing as a point of effective policy intervention to improve the environmental performance. In Singapore, access to promotional privileges and to factory space and infrastructure services predicated on investors’ ability to meet tough air and water emission standards.

Adoption of proven policy alternatives

Consider water pricing is an effective instrument in controlling inefficient water use. In Bogor, Indonesia, a rise in cost of water for domestic use from US$0.15 to US$0.42 per cubic meter encouraged a 30 percent reduction in consumption.

Development of investment opportunities

If new urban-industrial investment is based on technologies and economic practices that are less energy-and materials-intensive and old resource-intensive industries are replaced, the environmental effects of new economic growth will be substantially reduced.


New investment can influence the spatial distribution of economic activity in ways that reduce environmental impacts and poverty e.g. development of eastern seaboard of Thailand, special economic zones in the Philippines, managed industrial estates in Singapore.

Anticipated future investment can influence the sector composition of economic activity, accelerating a shift away from resource processing toward less polluting, knowledge-based industries and service sector.


Cleaner production in environmental infrastructure that tackles wastewater pollution both at the source and final treatment points e.g. Thailand Samut Prakarn Wastewater Management Project

Community-based forest management as a national strategy for the management and sustainable development of forest resources e.g. Philippines, decentralized forest management in Nepal and Papua New Guinea

Development and deployment of new technologies

Taiwan and a few other economies have demonstrated how investments in science and technology infrastructure and the development of public-private partnerships in research and technology can substantially accelerate the process of technology upgrade within industrial economies and yield both environmental and economic benefits.


Even though the preference is pollution prevention, end-of-pipe pollution control remains an economically feasible response to some air and water pollution concerns.

Development and use of “environmental technologies” such as renewal energy systems and electric cars directly in response to reduced energy and GHG emissions.

Products and process that yield environmental benefits e.g. materials substitution, more sensitive monitoring technology, super efficient cooking coils, “smart” materials


Cleaner production extending far upstream and downstream pf production process to include design of the product; selection, extraction and processing of inputs; and distribution, use and ultimate disposal of the product.

“Natural capitalism” assigns a monetary value for natural capital and human resources consumed or damaged per unit of production, wringing up to a hundred times as much benefit from each unit of energy or material used.

Advances in energy use and supply

Major advances in reducing environmental impact of energy supply can be achieved through shifts in energy mix e.g. from wood, coal, and oil to gas, hydroelectric power, and nuclear power.

Biofuels are and will continue to be an important source of energy in Asia. Hence, management of a more efficient biomass energy systems is essential.

Advances in energy use and supply

The energy business is poised to become a service industry and will be characterized by competition and entrepreneurial risk-taking, encouraging participation of SMEs.

Also likely is the creation of “virtual” utilities that provide household and institutional electricity on a fee-for-service basis through provision of locally tailored power and demand-matching appliances.

Strengthening societal drivers

Public pressure is a powerful driver of improved environmental performance, especially when local communities are mobilized to monitor and hold accountable potential polluters.

Globalization of trade and the elimination of trade barriers are placing unprecedented pressures on even domestic industries to achieve a competitive position through greater efficiency and responsible environmental management.

Strengthening societal drivers

Courts can play a central role by ensuring that the stated rights of review and redress of citizens under recent environmental legislation in many Asian countries are actually respected.

Strengthening institutions of environmental governance will require expanding natural resource management roles to include civil society and private business, decentralizing and devolving natural resource management functions, and developing the institutional capacities and accountabilities of new players.

Strengthening regional environmental governance

Aarthus Convention as potential model for redress regardless of citizenship

Enforcement of major environmental agreements e.g. Convention on International Trade in Endangered Species

Global financing with environmental conditions

Global public policy making Carbon trading

The shape of future warfare

“ The conflicts will now be fought over diminishing supplies of our most precious natural resources… Power struggles over

petroleum, water, gems and timber will be the new engines of war.”

Resource Wars: The New Landscape of Global ConflictBy Michael T. Klare

Green Productivity: Towards a sustainable future in Asia

Thank you and Mabuhay!

Documents

Green Productivity: Towards a Sustainable Future in Asia Dr. Eduardo T. Gonzalez Development Academy of the Philippines