Authors: Tajuddin Zahid, Yan Lynn Region Head: Hteik Tin Min Paing
Editor: Praharsh Mehrotra
The ASEAN region will become the fourth largest economy in the world by 2050 (Gupta, 2018). The pursuit of economic growth, however, should not disregard sustainability in Southeast Asia, which is a highly vulnerable region to climate change related disasters. It is also predicted that the region’s gross domestic product (GDP) would be severely impacted by climate change by 2060 (Towards green growth in Southeast Asia , 2015). Therefore, sustainable development is highly important for the region even from a purely GDP-oriented perspective.
Sustainability is defined as the capacity to provide well-being to future generations, which can be indicated by a comprehensive measure of inclusive wealth, covering both market and non-market assets (Kurniawan & Managi, 2018). GDP has been criticized for long that it is not a complete indicator of development because it excludes depletion of natural resources and environmental degradation. The depreciation of renewable and non-renewable natural capital has a negative effect on per capital inclusive wealth (Kurniawan & Managi, 2018).
Environmental Degradation and Economic Development in ASEAN
Take Indonesia for example, of list of the countries responsible for the most carbon emissions in the world the country is the only ASEAN nation specifically listed, emitting 2% of all carbon emissions in the world (Each Country’s Share of CO2 Emissions, 2008). Carbon Emissions in Indonesia began to rise significantly in the 1970s, coupled with a corresponding rise in electricity consumption, due to that country’s economic growth that continued unabated until the Asian financial crisis of 1997 (World Bank, 2016). Interestingly, the first documented occurrence of the haze in Singapore and Malaysia also appeared in the early 1970s around the same time as the rise in carbon emissions in Indonesia (Koh, 2013).
While the primary cause of concern with regards to the environment is on carbon emissions it is important not forget the direct impact humans have on natural habitats. In Singapore almost sixty percent of all coral reefs were destroyed due to land reclamation, due to the increasing demand for space as the population grows. In Vietnam the Formosa Ha Tinh Steel Factory dumped toxic waste into nearby waterways resulting in massive deaths of fish and other marine life.
Natural Resource Exploitation
Although Southeast Asia has been growing rapidly in terms of GDP, the growth model was based on natural resource exploitation with natural capital accounting for more than 20% of total wealth. Such an amount of exploitation leads to environmental degradation and is not sustainable in the long run. The region also recorded a declining share of forest area especially in Cambodia, Laos, Myanmar and Timor-leste (ASEAN falling behind on SDG targets, 2020). In Indonesia Borneo, tropical rain forests are reduced severely due to export of palm oil and timber. In some countries, despite national legislation in place, there is often a weak implementation such as illegal logging which might be due to political self-interest and short-sighted policies.
Urbanization and Carbon Emissions
Along with economic growth, urbanization is also one of the significant factors that contribute to increased carbon emissions. According to a study by Prastiyo & Hardyastuti (2020), economic and industrial development causes an increase in urbanization, which leads to more use of electricity and fuels such as oil, coal and natural gas and vice versa. It also found that every 1% increase in the ratio of urban population to the total population in Indonesia will increase emissions by 14278 ton CO2 eq/capita. It is because of the increased use of energy that comes with urbanization. Increased coal consumption is one of the consequences of urbanization in Indonesia as well (Kurniawan & Managi, 2018). Poorly planned urban areas with traffic congestion and insufficient public transportation also contributes to high carbon emissions. While pursuing economic growth, the governments should also focus on developing urban areas with effective planning of comprehensive land use and adequate public transport service (Wang, Chen & Kubota, 2015).
Another important sector that harms the environment is agriculture due to greenhouse gas emissions (GHG). Although not immediately known to have a harmful impact on the environment, agriculture is one of the main GHG emitting sectors, that accounts for at least 20% of total emissions worldwide (Prastiyo & Hardyastuti, 2020). Agriculture is the first industrial sector along with factory and fisheries, on which many Southeast Asian countries depend for economic growth. The main GHG emitter of agriculture is rice cultivation, which is common in Southeast Asia. To reduce GHG emissions from agriculture, cultivation methods such as water-efficient rice cultivation and intermittent irrigation can be used (Prastiyo & Hardyastuti, 2020).
Capital and Environmentalism (Environmental Kuznets curve)
Models like the environmental Kuznets curve has sought to establish a link between the development of an economy and the attention a nation pays to conserving their environment. Environmental Kuznets curve is an inverted-U shaped curve between deterioration in environment and economic development measured in income per capita.
According to a study in Indonesia, it is empirically supported that energy consumption increases carbon emissions and economic growth is one of the main factors that contribute to carbon dioxide emissions (Shahbaz, Hye, Tiwari & Leitao, 2013). In the short run, carbon emissions increase due to increased energy consumption and economic growth. However, in the long run, there is the bidirectional causal relationship between energy consumption and carbon dioxide emissions, implying that the current energy structure needs to be replaced with energy efficient technologies to decouple carbon emissions. The study also found the unidirectional causality from financial development to carbon emissions, indicating that CO2 emissions will decline with development in the financial sector. The adoption of advanced technologies. It is because of the ability of the financial sector to encourage the firms to use advanced technologies that emit lower CO2. Another factor that can reduce CO2 emission is trade openness, which can provide developing countries the access to low carbon technologies. The study shows that there is an inverted-U shaped relationship between economic growth and CO2 emissions in Indonesia. The results imply that financial sector and technology import can help to reduce CO2 emissions with environmentally friendly technology while maintaining economic growth.
The relevance of Green Growth in Poor Countries
International organizations like OECD advocate that green growth can provide developing countries many favourable outcomes such as poverty reduction, economic growth, reduced vulnerability to climate change and natural disasters, energy security, and so on. According to Barbier (2016), there will be potential trade-offs between short-term macroeconomic goals and long-term environmental goals. Barbier posits that green growth policies are more suitable for high-income countries because a certain level of structural transformation and industrial development is presumed in those theories. He also points out that green growth policies can have disproportionate effects on the poor’s livelihood and may not improve or could even reduce growth in terms of gross domestic product (GDP). In developing countries, sustainable (resource-based) development alone would not necessarily tackle the persistent problem of rural poverty. One such policy is appropriate targeting of research, extension and agricultural development which not only improves the livelihoods of the poor but also reduce environmental degradation. Barbier (2016) concludes that the relevance of green growth in poor countries can only be achieved by tackling the problems of natural resource use and poverty at the same time.
The Practicality of Green Growth Theory
Although green growth has been increasingly promoted as the way forward for economic development in a sustainable earth, a recent study shows that green growth theory is not empirically supported although theoretically feasible (Jason & Giorgos, 2020). The theory requires the followings:
1. The achievement of permanent absolute decoupling of resource use from GDP
2. The achievement of permanent absolute decoupling of carbon emissions from GDP, and at a rapid rate that can prevent exceeding the carbon budget for 1.5 or 2 degree Celsius.
According to the paper, the empirical projections show that those requirements are impossible to be achieved even under highly optimistic conditions. It implies that there is a need for developed nations to engage in the de-growth of production and consumption and for the developing nations not to focus on the narrow growth-focused development agenda. The paper claims that any policy programmes based on green growth theory such as the Sustainable Development Goal may not be sufficient and need to be revisited.
As Southeast Asia strives to achieve economic development, it is salient for the nations to keep sustainability on the agenda. Environmental Kuznets curve suggests that environmental degradation will decline as a country develops with high GDP per capita. The support from the financial sector and technology would also help to pursue sustainability as economic growth ensues. Since sustainability is becoming an urgent issue in today’s world, it would be necessary for developing countries to make “green” policies as well. Such policies would nonetheless need to address the structural problems such as natural resource dependency and poverty. However, green growth as a basis for a sustainable development agenda might not even be feasible in actuality and may need to find alternative solutions. That is a good reason to worry about Southeast Asia which is one of the regions to be heavily impacted by climate change in coming decades.
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