The grey continent

Statistics is only one part of the story. The grime combined with apathetic governments and poverty in certain parts of Asia and the craze to rapidly industrialise makes for an epic by itself. Environment mostly figures way down the list of official priorities in most Asian countries. The message has always been "grow now, clean up later".

 
Last Updated: Sunday 07 June 2015 | 21:11:47 PM

The grey continent

-- If there is one single factor which binds most Asian cities together, it is pollution. According to Emerging Asia: Changes and Challenges , an Asian Development Bank publication and Toward an Environmental Strategy for Asia , a World Bank discussion paper, environmental sacrilege across Asia is widespread and the region has to contend with many damaging epithets to its credit, significant among them being: it is the world's most polluted and environmentally degraded region; 10 of Asia's 11 mega cities exceed World Health Organization's (who) guidelines on particulate matter by a factor of at least three, four exceed acceptable lead levels and three exceed acceptable ozone and sulphur dioxide (SO2) levels. Further, out of 15 dirty cities in the world, according to a study conducted by the WHO and the United Nations Development Programme (undp) as far back as 1987, 13 belonged to Asia itself.

Statistics is only one part of the story. The grime combined with apathetic governments and poverty in certain parts of Asia and the craze to rapidly industrialise makes for an epic by itself. Environment mostly figures way down the list of official priorities in most Asian countries. The message has always been "grow now, clean up later". Little was it realised that the absence of a 'go green' policy could result in a region torpedoed by ecological nightmares. And wherever environmental regulations were set up, they were ineffectively designed and inadequately implemented. Asia simply lacks the institutional capacity to implement its environmental policies, if any .

Sullied cities

 We protest: South Koreans dem asia's race to become more industrial and economically privileged has had its fall outs. The picture is none too pretty: more population, more poverty, more air, water and noise pollution, continuing resource depletion, less ecological diversity, all plague the continent. Some areas have localised problems like the danger of rising sea levels could pose for Pacific islands.

air pollution : Rapid industrial growth has given to Asian cities this legacy of air pollution which could slowly become the singlemost disabling factor for its multitudes. According to Emerging Asia: Changes and Challenges , an Asian Development Bank ( adb ) publication, the air in Asia's cities is among the dirtiest in the world.The levels of ambient particulates - smoke particles and dust, which are a major cause of respiratory diseases - are generally twice the world average and more than five times as high as in industrial countries and Latin America. Throughout Asia, lead emissions from vehicles are also well above safe levels. Ambient levels of sulphur dioxide (SO2) - an important pollutant that traverses across national borders and contributes to acid rain, which in turn damages crops and eats away at synthetic structures - are 50 per cent higher in Asia than in either Africa or Latin America. These levels are, however, still only one-third of the levels prevalent in industrialised countries.

The Asian region has also shown a higher global energy consumption compared to the rest of the world. Whereas the global energy consumption between 1990 and 1993 fell by one per cent, in Asia, the consumption rose by 6.3 per cent. Asian reliance on coal, especially by India and China, and oil has resulted in higher carbon emissions. In fact, CO2 (carbon dioxide) emissions are growing four times as fast as the world average. With industries consuming more than 40 per cent of the energy in Bangladesh, India, China, South Korea, Malaysia, Myanmar and Vietnam, it is clear that industries must use energy efficient technologies to reduce air pollution.

Industrial pollution lets loose a wide range of pollutants which include - SOx (sulphur oxides), NOx (nitrous oxides), total suspended particulates ( tsp ), co (carbon monoxide) apart from CO2 and hydrocarbons like methane. According to a World Bank ( wb ) discussion paper by Carter Brandon and Ramesh Ramankutty, Toward an Environmental Strategy for Asia , approximately 59 per cent of particulates and 39 per cent of SO2 is emitted by industries in Beijing. In Bangkok, the industry emits about 21 per cent of tsp. Apart from these mega cities, there are a much larger number of smaller cities with even more severe air pollution problems, mainly because they were developed as industrial centres due to their proximity to raw materials and fuel sources. Shenyang and Taiyuan in China, Illigan City in the Philippines and the Singrauli region of India are prominent examples.

Such toxic releases can play havoc with the health of the people. The industrial disaster in Bhopal in 1984 is a terrifying example. Yet another threat is occupational hazards. Workers continuously exposed to a polluted environment have experienced a higher incidence of health problems ( See box : Poison in Thailand ).

Industry pollutants: veritable spread
The industrial sector in Asia has shown an amazing increase in output in recent years. An expanding industrial sector affects the pollution load in two basic ways. The first is to increase the total volume of pollutants in the short and medium terms. The second is to change the pollution intensity of industrial output (the amount of pollution generated per unit of output). In Asia, both the growth and the intensity effects are leading toward heavier pollution loads in the short and medium terms. As there is no comprehensive data on either pollution loads or pollution intensities, the World Bank has developed the Industrial Pollution Projection System ( ipps ) to gauge the trends in industrial pollution in Asia. The ipps uses pollution coefficients from the us manufacturing concerns for 1988 and applies them to industrial output in Asia.

As there is no data on Asia, the ipps has used coefficients developed by US economists which correlate economic growth with production of some 320 toxic pollutants. This can be used to calculate how industrial output increases pollution. However, the accuracy of this method depends upon how closely the technology used in Asia resembles that in the us in 1988. This model can, however, be looked at in two different ways. It is possible that as industries in Asia are less regulated than in usa , pollution loads could be higher. Also, considering that technology used in Asia is newer and more efficient than in usa , the result could be less pollution.

The ipps trends for Indonesia, the Philippines and Thailand are shown for the years 1975 to 1988 ( see graph: Pollution trends ). The six pollutants shown are two indicators each for water pollution (biological oxygen demand ( bod) and suspended solids), air pollution (SOx particulates) and toxic wastes (a composite index of various toxins emitted into the air or water or in solid wastes and heavy metals). Between 1975-88, these three countries had broad-based increases in pollution intensity across all forms of pollution, including 10-fold increases in Thailand, eight-fold increases in the Philippines and four-fold increases in Indonesia. However, an even more important conclusion of the ipps analysis is that the intensity, or unit volume of toxic releases per unit of output is also increasing dramatically in Asia - particularly in East Asia ( See table: Growing toxicity). In comparison, the toxic indicator in Japan fell by two-thirds between the late 1960s and 1987. The relative Gross Domestic Product ( gdp ) rates showed that it increased 2.48 times in Thailand between 1975 and 1988, 1.45 times in the Philippines and 2.16 times in Indonesia respec-tively ( Source: World Bank, World Data, 1990-95 ). This shows that depending on the nature of industrialisation, a doubling of gdp can lead to as much as 10 times increase in the pollution load.

Growing toxicity
Industrial production over the years has resulted in greater intensity of toxins

COUNTRY YEAR COVERED GROWTH   FACTOR
Indonesia 1976-86 5.40
Pakistan 1974-84 3.17
Malaysia 1977-87 3.05
South Korea 1977-87 2.50
Thailand 1976-86 2.48
China 1977-87 2.12
India 1976-86 1.97
Bangladesh 1976-86 1.75
Sri Lanka 1977-87 1.59
Philippines 1977-87 1.12
Japan 1977-87 1.11

Note:Toxicity intensity is a measure of toxicity per unit of output. The growth factors are the ratio of toxic intensities for the begining and end of the 10-year period shown, when the toxic releases are linearly weighted for degree of human toxicity

water pollution : Asia's rivers fare none the better. They are far more polluted than those in the rest of the world. According to the Global Environment Monitoring System's Water Programme under the aegis of who , Asia's rivers have four times the world average of suspended solids and 20 times the levels prevalent in oecd (Organization for Economic Cooperation and Development) countries.

Organic wastes in Asian rivers are also on the increase. More the bod , higher is the state of pollution of the lake or river. Asian rivers show a bod demand which is 1.4 times the world average, 1.5 times oecd levels and many times higher than in Latin America. Specifically, the rivers contain three times as much bacteria (faecal coliform) from human wastes than the world average and more than 10 times oecd levels. The reported median faecal coliform count in Asian rivers is 50 times higher than the who guidelines. Last of all, Asia's surface waters contain 20 times more lead than surface waters in oecd countries, mainly from industrial effluents. Only nitrate levels, which indicate the presence of human or animal waste or runoff from chemical fertilisers, are lower in Asia than in the rest of the world.

Deteriorating water quality is probably the most serious environmental problem in Asia. Polluted water is a leading cause of morbidity and mortality ,particularly among children. While untreated sewage is the most significant source of organic pollution, industrial pollution contributes a much wider range of pollutants. While most industries in Asia have pre-treatment facilities, in many cases these facilities are not operated and the wastes are simply dumped into the sewer system or available water bodies.

During the dry season, industrial waste water is an important constituent of total water flow. As total urban, industrial and agricultural demand on water resources increases, dry season shortages can cause higher concentration of pollutants. The combination of increase in industrial output and increased withdrawals of river water means that whatever dilution effects were previously observed are no longer achieved. This is particularly true in the urban areas and densely polluted river basins of China, India and Indonesia.

solid wastes and toxic pollutants : Asia's rapidly rising incomes have an unfortunate fall-out: an increase in the gene-ration of solid waste. The shift from own-grown to purchased food, the move from staple to meat-based diets and the increasing use of less biodegradable packaging mean that rising income tends to be associated with more municipal waste. On an average, a one per cent rise in income brings about a 0.34 per cent rise in municipal solid waste.

However, far more dangerous than municipal wastes are the growing quantities of hazardous and toxic wastes that hospitals, factories and households generate. China, which gene-rates 50 million tonnes of toxic wastes a year and India, which generates 40 million tonnes a year, produce much more hazardous wastes per person than South Korea or Japan. In Asia, 60 to 65 per cent of hazardous waste is put in dumpsites or landfills, 5 to 10 per cent is dumped in the ocean and the rest is incinerated or chemi-cally treated. In most cases, proper safeguards are absent or largely ineffective. High concentrations of industry in urban areas compound the problems of polluted groundwater and surface water and urban and semiurban dumps.

deforestation and land degradation : The forest cover in Asia is shrinking by one per cent a year. What is more alarming is the fact that the region as a whole has relatively less forest cover than the rest of the world. According to adb, deforestation has mainly occurred due to excessive fuelwood collection and logging; construction of infrastructure, especially roads and dams; or conversion of land to agricultural use.

Land degradation is acutely felt in Asia. It has only 0.3 ha of agricultural land per person compared to 1.6 ha in the rest of the developing world and 1.4 ha in oecdcountries. The quality of soil in Asia is also poor compared to other countries: fewer number of crops can be grown on it. Soil erosion is Asia's most widespread natural resource problem and is severe in Southeast Asia, South Asia, China and India. In India, 27 per cent of the soil suffers from severe erosion while the corresponding figure for China is 6.4 per cent.

Poor irrigation practices have resulted in salinisation and waterlogging. Some 130 million ha (mha) of Asian cropland, most of it in China, India and Pakistan, are salinised and waterlogged. Desertification has also claimed many areas in South Asia. As many as 63 mha of rainfed land and 16 mha of irrigated land have been lost to desertification.

loss of biodiversity : Asian countries with the exception of Bhutan and Malaysia, have lost between 70 and 90 per cent of their original wildlife habitats. The main reason for this debacle can be attributed to increasing human pressure. Other factors include the incapacity of government machinery to effectively manage the protected areas.

Asia's coastal and marine fisheries and mangrove and coral reef systems are among the most diverse in the world. More than 1,200 species of fish inhabit the Maldives waters alone. Though freshwater ecosystems in Southeast Asia are among the best developed in the world, more than half of Asia's wetlands have been lost. Most wetlands of international significance are at threat due to various causes that include hunting, drainage, pollution, destructive fishing practices and conversion to other uses such as human settlement.

Root causes

 A partially burnt  body float myriad problems that confront the region include burgeoning population figures, poverty, economic development, weak official infrastructure. The relationship between population and environment is a close one. It is believed that rising populations could lay an extra stress on the natural resources. However, it is not the increase in population that destroys the environment, but rather the behaviour of the populace towards the latter. For example, some countries like Taiwan and South Korea have ensured that population pressures do not result in resource degradation. This they did through a combination of sustainable growth in agricultural producti-vity and job creation outside agriculture. But countries like India and the Philippines were slow to react and favoured capital-intensive industry. Surplus labour was unable to shift to alternative employment from agriculture and environmental damage rose to great proportions.

Again, slower rates of population growth has not necessarily contributed towards less environmental degradation. Sri Lanka and Thailand, which have registered decreasing population rates, have also shown a similar high rate of environmental degradation. In case of population growth and land degeneration, it is not necessary that higher population figures erode the land base. As the adb publication states, Japan and usa are both examples of countries where increasing population density has been accompanied by improved land conditions. It is increasing population figures combined with poverty that could create more damage to the environment.

As for water shortages, Indonesia with one of the world's highest freshwater endowments per person, faces water shortage. China, India and Pakistan face severe water shortages that have more to do with water subsidies than population growth. The World Resources 1987 report published by the usa-based World Resources Institute states that if Pakistan's irrigation system increased its efficiency by 10 per cent, the water saved could irrigate another two mha. But as long as Pakistan's farmers do not have to bear the true cost of water, they are unlikely to appreciate its scarcity and are likely to waste it.

Poverty has almost become synonymous with Asia. Nearly one billion people in Asia live below the poverty line and consi-dering that their first priority is to survive, environmental protection does not mean much to them. Natural resources like fuelwood, fodder or fish and water are all accessible to them. Invariably, the poor tend to live in areas more prone to environmental-disasters such as flooding and landslides or near polluting factories and hazardous dump sites. Environmental degradation reinforces poverty, which in turn reinforces environmental degradation and the vicious circle continues. Like population growth, poverty seems to exacerbate environmental problems in the presence of market and policy failures.

Development versus environment
Do higher income levels imply a worse environment? This question has sparked off several research studies and a relationship known as the 'environmental Kuznets curve' has been arrived at, which in an inverted u -shaped pattern shows that as the country gets richer, its environ-ment will get worse before it gets better ( See graph: For better or worse ).

As economic development accelerates, agriculture becomes more intensive, resource extraction increases and industrialisation takes off; thus the rates of natural resource depletion begin to increase and the quantity and toxicity of wastes begin to rise. Eventually as economies become richer still, their economic structure shifts toward industries and services that use natural resources less intensively. Greater prosperity brings with it increased environmental awareness and a willingness and capacity to pay for a cleaner environment. As a result, countries enforce environmental regulations more strictly and spend more money on the environment. Subsequently, environmental degradation levels off and gradu-ally declines.

This relationship seems to apply to both urban and rural environments. While the environmental Kuznets curve has been criticised by many scholars, it is indeed true that cities like Bangkok, Seoul and Shanghai are far more polluted than they were 20 to 30 years ago, and their pollution levels are rising at rates that match or exceed their rates of economic growth. Conversely, cities in the industrial countries are cleaner today than they were 20 or 30 years ago.The Kuznets curve for Asia suggests that with increasing economic development, the environment will take a beating before bouncing back to good form and that during the next 20 to 30 years, environmental quality will improve slowly in East Asia and in the higher-income countries of Southeast Asia, such as Malaysia, and will continue to deteriorate in South Asia and the lower-income countries of Southeast Asia.

In Asia, certain types of pollution tend to rise more rapidly with higher income, but they also tend to fall more quickly. Higher initial population density together with more rapid industrialisation may account for the rapid rise, while increased environmental awareness and the availability of new abatement technology permit pollution to be reduced at relatively lower income levels.

But should economic growth always result in worsening environment or can the Kuznets curve be flattened? All it seems to take, according to adb, is effective policy decisions to ensure that economic growth can be harmonised with the surrounding environment.

Exorbitant costs
partial estimates of the economic costs of environmental degradation, selected economics and years

ECONOMY FORM OF ENVIRONMENTAL DAMAGE YEAR ANNUAL COST ($ MILLION) COST AS A PERCENTAGE OF GROSS NATIONAL PRODUCT
China Productivity losses caused by soil erosion, deforestation, and degradation; water storage, and destruction of wetlands 1990 13,900-26,600 3.8-7.3
Health and productivity losses caused by environmental pollution in cities 1990 6,300-9,300 1.7-2.5
General environmental degradation and pollution 1989 31,000 8.5
Indonesia Health effects of particulates and lead above WHO standards in Jakarta 1989 2,164 2.0
Pakistan Health impact of air and water pollution and productivity losses from deforestation and soil erosion Early 1990s 1,706 3.3
Philippines Health and productivity losses from water and air pollution in vincity of Manila Early 1990s 335-410 0.8-1.0
Thailand Health effects of particulates and lead above WHO standards 1989 1,602 2.0


Creaking official machinery: can it save the environment?
The adb also adds that Asia's policy and institutional failures are mainly due to two factors: non-partici-pation of the private sector in providing environmental services and failure of the public sector to cater to environmental improvement. Shortage of funds seems to be the pressing reason for the inefficiency of the governments. Environmental services are not charged to the users and where they are, the funds are used for purposes other than environmental clean-up. Another factor that has contributed to the poor state of environment is poor environmental policies. More often than not, policies of rich countries have been adopted without local considerations and have not been implemented properly.

In the case of water management , most governments in Asia provide for subsidised water supply. Natural water resources are thought of as open access goods - a classic case of market failure. Governments have neither established well-defined, secure property rights over water (whether state, municipal, communal or private), nor do they charge proper prices for irrigation water and in many cases supply water free of charge. In Bangladesh, Nepal and Thailand, for instance, the total costs of supplying water are at least 10 times greater than the revenues collected.

Sadly, the poor for whom the subsidy is really meant actu-ally pay more for water. They lack access to services and often pay a much higher price (three to eight times as much) to obtain water from vendors or they pay a high cost in terms of foregone activities to fetch water from distant sources. Estimates suggest that some poor people pay as much as 10 per cent or more of their incomes to gain access to safe water. The wealthy are usually the main beneficiaries of subsidised public service. Their excessive consumption limits water availability for the poor.

As for pollution control , the most common policy tools are end-of-pipe standards, licenses, fines, and specific government orders to cease pollution. Governments often impose a uniform pollution standard across an industry, but monitoring is almost always inadequate. Policymakers are now trying to experiment with incentive-based economic instruments like tax-incentives and pollution charges.

In India, the 1986 Environmental Protection Act provides for minimum national standards that are binding for all industrial firms nation-wide. As the standards are framed in terms of maximum concentrations of pollutants in effluents and emissions, factories have an incentive to dilute their pollution, not necessarily to reduce it. Statistics from the Central Pollution Control Board show that during the 1990s only seven per cent of factories in polluting industries (117 out of 1,641 medium and large factories) actually complied with the norms. Economic instruments to combat pollution in India are largely limited to accelerated depreciation allowances for pollution reducing equipment and reduced customs duties, and these have not provided firms with incentives to choose the cheapest antipollution options.

Southeast Asian countries also rely on the command-and-control appro-ach, which is a combination of discharge permits and fines on excess emissions. Effluent and emission standards are the most common regulatory tools. The Philippines, for instance, has ambitious air and water quality standards that apply to all industrial esta-blishments and power generation facilities regardless of their size and location. However, these standards are inefficient and are not adequa-tely monitored and implemented. Malaysia's air pollution standards are measured in tonnes of pollution load encouraging dilution of pollu-tants as in China and India but it overcomes this problem partly by effective monitoring.

Null and void

 Floods in Bangladesh take a h the overall quality of life of the nation suffers considerably when environmental rot sets in. This could either be in the form of economic or non-economic costs. Estimates of the economic costs of environmental degradation in Asia range from one to nine per cent of a country's Gross National Product ( See table: Exorbitant costs ). Effects on people's health -- from exposure to air and water pollutants and to heavy metals -- constitute the largest share of all environmental damage in terms of welfare loss. In Jakarta, for instance, particulates are a leading cause of premature death and lead emissions result in a significant loss of cognitive capacity among children. Estimates of damage from these two pollutants alone amount to as much as us $2.2 billion if both economic and welfare losses are added together.

As adb pointed out, water misallocation also incurs high costs. the overemphasis on agricultural irrigation results in water shortages for domestic and industrial use. The inadequate provision of water and sanitation services similarly comes at a huge price. As for putting an environmental infrastructure in place, in Asia, it is considered more of a luxury which contributes to health and quality of life but little to economic growth.

Conventional project appraisal underestimates the benefits that accrue from investment in environmental infrastructure, such as water supply and sanitation systems, wastewater treatment plants and pollution abatement technologies, according to adb . A policy paper of wb released in 1992, titled Water Resources Management , on the health benefits that result from water provision and sanitation reveals that adequate clean water and sanitation could prevent half of the deaths from diarrhoea, around three million people a year world-wide. Another survey discussed in D Canning's background paper, Productive and Environmental Infrastructure in Emerging Asian Economies , for the adb publication, found that a 20 per cent increase in clean water supply or sanitation could raise life expectancy significantly. The close link between environmental infrastructure, life expectancy and economic growth suggests that environmental investment should become a priority even in poor countries.

Natural resource depletion has also occurred substantially in Asia. The world's two largest tropical timber exporters, Indonesia and Malaysia, are in Asia, as are several oil producers, including Brunei, Darussalam, Indonesia and Malaysia; many Asian countries are significant producers of coal and non-fuel minerals and all Asian coastal states have substantial fish stocks. In most Asian countries non-renewable resources are being rapidly extracted and renewable resources are being harvested more quickly than they can be replaced. As the adb publication questions: can Asia sustain its development if it is running down its stocks of both non-renewable and renewable resources?

Asia has the lowest land area under protection as nature reserves when measured on a per person basis. Insufficient control of protected areas has resulted in their gradual erosion. The quality of national parks and other protected areas, and hence the revenues derived from them, are being compromised for several reasons: inadequate protection, low-quality services, and underpriced admission. For example, protecting and improving Thailand's Khao Yai National Park would cost between us $7-14 million a year, but it could generate us $35 million a year from higher entrance fees. The management of such parks can be privatised with environmental and social concerns adequately safeguarded through regulation, environmental performance bonds or bank guarantees.

A better option

 Disposal problems: collecting environmental negligence is cos-t-ing the Asians dearly. But as adb states, the potential to reverse the downward trend exists. Asian policymakers need to adopt a different environmental policy, one that will sustain and stretch the resources further. Though regulation should be the keyword, a more flexible approach and implementation policy combined with more reliance on economic instruments should be put into action.

For instance, a flexible antipollution approach would use economic instruments to substitute for or complement regulatory standards. This, according to adb , would allow the industry a much freer hand in setting its own means of compliance based on the cost of pollution to the polluting entity.If there is sufficient institutional capacity to implement industry-specific programmes, some governments may also provide information and other incentives to encourage the adoption of clean technologies.

Different pollution minimising options should also be provided to polluters. For instance, if a factory can choose between changing its product processes, inputs, or pollution abatement efforts; relocating; or paying charges for polluting rather than being forced to stick to a single technology or emissions standard, it will choose the cheapest option.

Money wise
The cost benefits of a flexible form of pollution control are stupendous. A study calculated the difference between the price of China's existing combination of discharge permits and fines on excess emissions (a command-and-control system) with the cost of a full emission charge system (a market-based instrument). Based on a sample of 260 enterprises in Beijing and Tianjin with multiple water pollution sources, it was found that an emission charge that would achieve the current abatement rate for each pollutant would reduce abatement costs from $47 million to $13 million per year, a saving of $34 million from this group of enterprises alone, or a 70 per cent reduction from the cost of the command-and-control system.

A comparison of the proposed command-and-control-based antipollution investment program in China and India with the least-cost alternatives also demonstrates the inefficiency of Asia's current policies. The command-and-control approach consists of investments required in the power sector from 1992 to 2000 to achieve a certain percentage reduction in emissions of major pollutants. The least-cost policy consists of selecting least-cost technologies using a model that minimises costs. The cost of the command-and-control approach is 10 times higher than the least-cost alternative for China and three times higher for India. The saving is greatest in the case of particulates, Asia's most serious and widespread air pollution problem. Even if a more efficient regulatory system meant that only two-thirds of the current cost of environmental protection could be saved, the effect would be equivalent to tripling environmental expenditures under the existing system. By improving efficiency, a more flexible and effective regulatory regime can also enhance a country's competitiveness.

Asian policymakers will have to slowly bring about emission charges, tradeable permits and other economic instruments. To be effective, the more sophisticated instruments require effective monitoring and enforcement whereas many simpler economic instruments such as product charges and deposit refund systems do not, because they are incorporated into the product price. Several Asian countries have begun to introduce market-based instruments for environmental management on an experimental basis.

Charges and permits for effluents require effective monitoring. In Malaysia, the introduction of charges on palm oil effluent in the late '70s was remarkably successful. Despite a 50 per cent increase in the number of palm oil mills between 1978 and 1982, the extent of water pollution as measured by the bod levels fell from 222 tonnes of effluent per day in 1978 to only five tonnes in 1984. These changes did not result in a loss of competitiveness for the palm oil industry or reduced production.

Asian communities need to phase out subsidies which have only proved costly to the environment. Globally, the annual costs of subsidies detrimental to the environment (including water, energy and pesticide subsidies ) exceed us $500 billion. Asia currently accounts for about a third of this estimate.Asian environmental policy must be characterised by a strong but limited governmental role, by effective management, by an efficient pricing policy, by secure property rights and by a prominent role for the private sector and civil society.

The state of environment in Asia in say, the next 30 years will, therefore, depend on Asia's own policy choices. As adb forecasts, in the coming 30 years, Asia will become more industrialised but the sector will be dominated by light rather than heavy industries. Its population is also likely to increase by 50 per cent to reach almost five billion by the year 2025. With only 24 per cent of its population currently living in cities, Asia is the world's least urbanised region; however, at the current rate of urban population growth, by 2020, adb predicts that half of Asia's population will be living in cities.

Like other developing countries, Asian countries too face the possibility that stringent environmental standards will not only make their products non-competitive, but will also be used as non-tariff barriers.

Money matters
Environment-related funding needs for the Asian and Pacific region, selected years 1991-2025 (1990 $ million)

FIELD 1991 1995 2000 2005 2010 2015 2020 2025 AVERAGE GROWTH RATIO PER YEAR (PER CENT)
Water supply 5,941 6,919 8,924 10,306 11,840 13,689 14,489 16,017 3.0
Sanitation 3,008 3,340 4 ,187 4,762 5,404 6,010 6,595 7,150 2.6
Population 4,233 4,568 5,027 5,421 5,818 6,194 6,555 6,899 1.4
Education _ 2,249 2,486 2,993 3,394 3,774 4,140 4,487 3.4
Agriculture _ 1,738 2,537 2,995 3,553 4,232 5,059 6,065 8.6
Transportation _ 1,875 8,817 13,390 14,806 16,096 17,499 19,054 15.0
Industrial Waste _ 1,564 9,039 20,781 26,616 32,460 39,482 48,026 19.5
Biodiversity 67 67 67 67 67 67 67 67 0.0
Forestry 3,701 3,701 3,701 3,701 3,701 3,701 3,701 3,701 0.0
Electric power _ 6,679 19,376 40,969 63,216 82,521 102,979 5,550 12.9
Acid rain 407 512 684 887 1,140 1,447 1,822 2,278 5.2
Global climate 5,365 5,365 5,365 5,365 5,365 5,365 5,365 5,365 0.0
Total 22,723 38,577 70,212 111,637 144,921 175,160 207,953 244,660 7.2

- = not avaible
Note:Asian and Pacific region refers to a sample of 30 countries in Asia plus Fiji and Papua New Guinea

Environmental infrastructure
Infrastructure provision is a function of population growth and of growth in gdp per person as adb puts it. Because policyma-kers tend to view environmental infrastructure as unproductive, the relationship between growth and infrastructure provision is lower than for productive infrastructure. For example, a 10 per cent increase in gdp per person results in only a three per cent increase in water supply and a two per cent increase in sani-tation as per D Cannings's paper referred to earlier.

Assuming urban water supply costs of us $ 200 per person and rural supply costs of us $60 per person, annual net investments in water supply are projected to range between a low of less than 0.2 per cent of gdp for Malaysia and Thailand to more than 0.7 per cent for Nepal and Pakistan. For most Asian countries to achieve water supply coverage of 100 per cent in the next 10 years, their annual net investment must at least double or triple, but will nevertheless remain at less than one per cent of gdp according to adb . The most important exceptions are Bangladesh, Myanmar, Nepal and Pakistan, where investment requirements will rise to between two to four per cent of gdp per year, which is obviously excessive for poor countries. China, India and Indonesia are intermediate cases (with rises to 1.5 per cent of gdp ) but in absolute terms they face the greatest demands, because they have by far the largest populations and high rates of urbanisation.

The aggregate costs of 100 per cent coverage in water supply and sanitation during the next 10 years for all of developing Asia are approximately us $30 billion per year, compared to $10 billion per year to maintain the current level of service in the face of population growth.

adb estimates of environment-related funding needs for the Asian and Pacific region for 1991-2025, based on the assumption that environmental policies will not change are presented in the table: Money matters . Estimates for water supply and sanitation are based on an average annual growth rate that is consistent with full coverage over 30 (rather than 10) years. The aggregate funding needs for all sectors rise from less than us $40 billion in 1995 to almost us $250 billion in 2025, an average annual growth of 7.2 per cent in expenditures or twice the projected average growth rate of gdp . If such an enormous investment requirement were to be funded wholly by the public sector, this would pose intolerable fiscal burdens.

Alternative policy approaches that involve pricing reform and improved management would reduce the burden considerably. Full-cost pricing of water, for instance, would achieve nearly full coverage without supply expansion in most Asian countries. As adb states, with an improved approach to environmental policy, the private sector could meet a large part of these investment requirements. With improved policies, Asia could keep its environmental expenditures to less than two per cent of gdp or thereabouts with the public sector providing less than half this amount.

This article has been excerpted from Emerging Asia: Changes and Challenges , an Asian Bank Development publication (1997) authored by Theodore Panayotou of the Harvard Institute for International Development; and Toward an Environmental Strategy for Asia , a World Bank discussion paper authored by Carter Brandon and Ramesh Ramankutty.

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