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p. 2 of 57 BACK | NEXT I. The Changing Environment Economic Transformation State of the Environment in the Region Counting the Toll Looking Ahead II. Driving Forces of Change III. Options and Opportunities IV. Toward Policy Integration V. Call to Action

Asian Environment Outlook 2001 : I. The Changing Environment

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Economic Transformation

Over the past four decades, the region’s rich resources have undergone dramatic changes resulting from accelerated economic and social transformation. Large increases in population, agricultural output, industrial production and capital, and advances in science and technology have transformed the economic foundations of most countries within the region. Economic change has been supported in part by the region’s natural resource base, both as a source of material inputs and a sink for pollution, and other negative outputs from economic activity. Now these processes of development have put the region’s unrivaled natural resources at great risk. Environmental degradation in the region is pervasive, accelerating, and unabated. At risk are people’s health and livelihoods, the survival of species, and ecosystem services that are the basis for long-term economic development. Economic development and poverty reduction are increasingly constrained by environmental concerns, including degradation of fisheries and forests, scarcity of freshwater, and poor human health and premature death as a result of air and water pollution. areas in the world.

During the 1960s, the economies of most South and Southeast Asia underwent a remarkable transformation that boosted agricultural production and fundamentally changed rural Asia. Diversification, commercialization, and advances in crop production technology fueled agricultural growth in many of the Asian Development Bank (ADB) developing member countries (DMCs) and were instrumental in reducing poverty in the area (ADB 1997 and 1998). The Green Revolution that began in the late 1960s was a welcome remedy to food shortages and the startling population growth in Asia, Latin America, and Northern Africa. The remarkable efforts of international agricultural research and extension organizations resulted in new, high-yielding crop varieties and new water and soil conservation techniques. These efforts were followed by investments in rural infrastructure and irrigation, increased inputs such as fertilizers and pesticides, and resulted in the implementation of policies that regulated agricultural trade, commerce, and credit.

Agricultural intensification was just one aspect of an overall economic transformation of developing economies within the region. Even with substantial increases in agricultural productivity, the relative contribution of agriculture to gross domestic product (GDP) actually declined in many DMCs. For example, in Indonesia, the agricultural share of GDP declined from 35 percent in 1970 to 20 percent in 1996.

Industrialization and urbanization also became the dominant forces behind economic growth in the DMCs in Southeast Asia and India. By the mid-1980s, the flow of international capital and intensified export-oriented trade helped create large urban centers that were commercial, financial, and industrial giants. The region now has nine cities with populations each exceeding 10 million people.

The economic transformation has been accompanied by a significant decline in poverty, especially in the high-growth economies of East Asia (see Box 1-1). Poverty rates in most East and South Asian countries that benefited from the Green Revolution dropped significantly as a result of higher agricultural productivity and greater urban employment opportunities. In many cases, these changes resulted in higher living standards.

From the beginning, it was clear that rapid growth in the Asia and Pacific region was being achieved only at high environmental cost. Except for Japan, the Republic of Korea, and Taipei,China (each of whom effectively configured institutional reforms to better accommodate the Green Revolution), increased agricultural productivity was associated with (i) widened disparities in income and social services, particularly in South Asia; (ii) intransigent poverty; and (iii) a one-sided focus on irrigated agricultural and high-potential areas that neglected rainfed agricultural areas (ADB 2000a). Intensified crop and livestock production combined with misdirected incentives contributed to increased chemical and organic wastes (and accompanying health risks), forest and biodiversity loss, and soil erosion.

Government policies also promoted inappropriate irrigation processes and inadequate drainage systems that resulted in large-scale salinization, water logging, and eutrophication in agro-ecosystems. Fisheries, the other major food source in the region, are also under tremendous pressure, particularly in rivers, lakes, and coastal areas affected by pollution from land-based activities. Fisheries face serious decline in catch, and poorly conceived aquaculture systems provide examples of some of the region’s most spectacular economic and ecological debacles.

In most cases, rapid industrialization and urbanization took place without adequate attention to environmental concerns, resulting in massive industrial pollution of the region’s air and waterways and escalating demands for energy and other material and resource inputs. Megacity Management in the Asian and Pacific Region provides a detailed account of rapid, large-scale urbanization and its environmental consequences (Stubbs and Clarke 1996). Although cities offer many residents considerable opportunities (in education, entertainment, income, etc.), for a higher quality of life than rural areas, they are also becoming increasingly unhealthy places because of air and water pollution. Cities are also major consumers of energy and materials. In cities lacking adequate urban infrastructure, major environmental problems emerged in sanitation, water supply, transportation, and waste disposal. Failure to provide economic opportunity and basic environmental services to urban and rural poor could have destabilizing environmental, political, and economic consequences of global proportions.

Environmental degradation especially impacted the poor and undermined to some degree the broad-based social welfare benefits of economic growth. Typically, it is the poor who are most immediately dependent on threatened fisheries, forests, and other natural resource systems for their livelihoods. The health effects of declining air and water quality especially impact the urban poor who lack access to clean water and adequate sanitation. Also, the poor are often the most vulnerable to natural disasters.

Over the past 15 years, and in response to mounting environmental problems, many countries in the Asia and Pacific region strengthened environmental regulatory institutions. In a few countries in the Asia and Pacific region, strong and well-financed environmental regulatory institutions were in place and demonstrated considerable success in reducing air and water pollution and addressing other environmental problems. In most cases, however, the pace of policy and institutional reform has been desperately slow and lacked the financial resources and political will necessary to address environ-mental problems. Modest gains from incremental policy reform have been overwhelmed by intensive economic growth and rapid urbanization and industrialization (Angel and Rock 2000).

Collectively, this environmental degra-dation constitutes a substantial constraint on future economic development within the region and a major obstacle to efforts to eradicate severe poverty in the DMCs. The Asia and Pacific region is not alone in facing these environmental pressures. But of all the regions of the world, it is within this region that the dynamics of economic growth and environmental degradation interact most forcefully, presenting an urgent challenge for policy makers to shift the trajectory of development to pathways that result in improved social welfare and restore rather than degrade the region’s life support systems.

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