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Asian Environment Outlook 2001 : III. Options and Opportunities
Development Investment OpportunitiesOne of the key challenges facing the Asia and Pacific region is the volume of new urban-industrial investment anticipated over the next two decades. Paradoxically, this challenge also provides substantial 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. The question is how best to influence new investment choices. The clearest example of opportunities provided by new investments lies in technology choices made by firms. It is typically far easier for firms to achieve a shift in technology under new investment conditions than retrofitting an existing plant. Sunk costs in existing facilities are often a significant barrier to in situ technological change, especially for large capital projects. For example, existing power plants, even those based on economically and environmentally inefficient technologies, rarely are taken off-line until long after initial construction investments are recovered. Investments in ancillary equipment (such as distribution pipelines and building specifications) as well as worker training and management systems can present further obstacles to major process changes within an existing factory. The costs of switching to cleaner process technologies are typically lower under new investment conditions. It is important to note that the opportunities associated with new investments are not limited to new production facilities. Expansion of existing facilities, shifts to new production lines, and changes in product mix all potentially involve new investments and provide opportunities to shift to less energy- and materials-intensive technologies. New investment is not limited to large firms. Influencing the technology choices of small firms is a major opportunity for reducing energy and materials use and pollution. Another potential opportunity provided by anticipated future investment is the possibility of influencing the sector composition of economic activity, accelerating a shift away from resource-and pollution-intensive industries toward less polluting, knowledge-based industries and the service sector. A shift in sector composition away from resource processing has occurred in many DMCs as a result of rising incomes. New investment also provides the opportunity to influence the spatial distribution of economic activity in ways that reduce environmental impacts and poverty. On a small scale, this can involve ensuring that industrial activity is conducted at locations that provide requisite waste disposal and treatment systems, energy-efficient fuel supplies, and other required environmental infrastructure services (for example within industrial parks). Spatial planning at a regional scale could direct industry away from critical environmental zones and take full advantage of the dilution capacity of natural ecosystems. This would ensure that industrial production does not create major health problems because of proximity to residential areas. Development of the eastern seaboard of Thailand, special economic zones in the Philippines and elsewhere, and managed industrial estates in Singapore point the way to careful spatial planning and management of industrial activity.
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