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p. 16 of 57 BACK | NEXT I. The Changing Environment II. Driving Forces of Change Population Explosion Urbanization and Industrialization Income Growth and Inequality Technological Changes Governance Institutions, Policy, and the Market Toward Sustainable Development III. Options and Opportunities IV. Toward Policy Integration V. Call to Action

Asian Environment Outlook 2001 : II. Driving Forces of Change

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Institutions, Policy, and the Market

ADB’s Emerging Asia: Changes and Challenges, concludes that environmental degradation in the Asia and Pacific region was above all a failure of policy and of institutions (ADB 1997). Population growth, poverty and affluence, the pace and path of technological advancements, and other driving forces that influence environmental change evolve within the context of international, national, and regional institutions and policies. Markets, politics, the NGOs, and other institutions play key roles in the relationship between economic growth and the environment. Institutional failures discussed below include a lack of political will and commitment to environmental protection, limited financing for environmental improvement, continued dominance of sectoral approaches to policy making, market distortion, and poor compliance and weak enforcement.

Institutional and policy failures resulted from the presumption that developing countries can “grow now and clean up later.” Governments acted as if the elimination of poverty through sustained economic growth and other socioeconomic goals were distinct from and independent of environmental goals. Investment in environmental protection was considered a secondary objective that could be dealt with after “real” problems were attended to. When environmental goals and environmental performance requirements were identified, they were rarely integrated into economic development or sectoral policies.

Protection of the environment was regarded as a policy goal to be pursued exclusively within ministries of environment. Few countries (the notable exception being Singapore) mobilized other line ministries (such as trade, finance, and industry) to the task of environmental improvement. Similarly, local and regional urban planning was rarely pursued as an integrated policy that also included environmental concerns.

Environmental agencies in the region are often marginalized, underfunded, and inadequately staffed, restricting their ability to design and implement effective environmental policies (see Box 2-8). Despite an impressive array of environmental regulations, environmental quality in the region continues to decline. One reason is that the laws simply are not enforced, either through neglect, because government agencies lack the technical capacity, or because of corruption. Weak compliance and enforcement in the region can be attributed to the following:

• Lack of public support and participation in monitoring and detection and reporting violations
• Poor environmental monitoring
• Inadequate training of monitoring and inspection staff
• Lack of accountability for environmental mismanagement
• Ill-informed and nontransparent judiciary systems

Poor environmental performance in the region can also be traced to the uncritical adoption of rigid command-and-control approaches to environmental regulation developed within the context of the mature industrial economies of the OECD. Command-and-control approaches were adopted without sufficient appreciation for the cost and complexity of implementation. Much of the basic institutional framework upon which command-and-control approaches were based — capacity to monitor compliance and to respond to cases of malfeasance — were absent from various countries within the region.

Informed and effective decision making requires a considerable amount of information on a wide range of environmental data and trends (see Box 2-9). However, even rudimentary environmental databases are lacking throughout the region. Systems of national accounts and other standard measures of economic performance and social well-being exclude the costs and benefits associated with the use of environmental services and present a misleading picture of the economy. There appears to be little prospect of environmental accounting becoming a mainstream component of development planning and national economic accounts.

Environmental degradation in many areas has resulted in part because of the absence of effective property rights over common pool resources, such as fisheries and forests. Environmental degradation has also resulted from subsidies on resource use and from the failure of resource pricing to reflect full environmental costs. Subsidies that distort market signals are rampant in the region. Subsidies can have adverse effects on people and the environment, even though they are often justified as helping the poor to obtain affordable fuel, food, and water. There is ample evidence that the rich take advantage of subsidies and that the poor are often excluded from subsidized services such as piped-water supplies. Irrigation subsidies amount to $11.4 billion per year in Asia (FAO 1994). Part of these subsidies assists farmers, but the balance leads to waterlogging and salinization and depletion of aquifers. Governments in the region also heavily subsidize fertilizers and agricultural chemicals that in most cases are overused and contaminate water supplies. Subsidies for export crops and for the establishment of tree plantations promote conversion of forests to other land uses.

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