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p. 28 of 57 BACK | NEXT I. The Changing Environment II. Driving Forces of Change III. Options and Opportunities Adoption of Proven Policy Alternatives Development Investment Opportunities New Urban-Industrial Investment Opportunities Development and Deployment of New Technologies Advances in Energy Use and Supply Strengthening the Societal Drivers of Improved Environmental Performance Civil Society and Public Pressure Globalization and Environment Courts Enhanced Inclusive Governance and Institutional Reform Regional and International Governance Building Opportunities for Policy Integration IV. Toward Policy Integration V. Call to Action

Asian Environment Outlook 2001 : III. Options and Opportunities

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Enhanced Inclusive Governance and Institutional Reform

Sustainable development in the Asia and Pacific region will require a major investment in strengthening institutions of environmental governance. Again, the beginnings of these changes are already visible in the region, which show that the exercise of authority over natural resources can be rendered transparent and accountable; decision making over environmental protection can be more representative and participatory; and authority and capacity for environmental governance can be placed at the appropriate level. Implementing these changes as norms will require expanding natural resource management roles to include civil society and private business, decentralizing and devolving natural resource management functions, and developing the institutional capacities and accountabilities of new players at these new levels. The success of this reform agenda requires the explicit integration of environmental interests into mainstream governance mechanisms.

Enhanced governance begins with strong participating institutions, including governments, business, community organizations, and NGOs. There are important opportunities for strengthening the design and capability of all of these participants. At the same time, relations among these organizations and opportunities for full participation in policy-making are important dimensions of good environmental governance. Experience throughout the region has demonstrated the limitations of over-reliance on governments to provide environmental and natural resource management. With respect to environmental protection, government agencies charged with regulation and enforcement has often lacked accountability for meeting environmental objectives, especially when these have appeared to conflict with economic growth objectives. A more institutionally plural approach to environmental governance is characterized by a higher degree of collaboration between the state, civil society, and the business sector to improve stakeholder participation in environmental decision making.

Perhaps the most difficult part of this transformation will be managing the existing institutions and vested interests constructed around current organizational arrangements. Top priority should be given to strengthening the capacity of line ministries so that they can understand and act on the most important environmental dimensions of their sector. Resource sectors dealing with renewable resources such as land, water, forests, coastal and marine, and protected areas especially need to supplement their traditional technical skills with management and social sciences skills. This range of skills will equip the sectors to work more effectively with local communities whose use rights and management systems have often been neglected but who remain reliant on the sustainable use of these resources for their livelihoods. Resource sectors dealing with non-renewable resources or involving infrastructure or industry such as mining, energy, transport, and urban development, need to think of improvements in environmental protection and management as representing untapped benefits rather than additional costs.

The allocation of authority between levels of government also will be important. In Indonesia, an effort is underway to empower local and municipal governments to raise their own funds and manage their own affairs, largely bypassing provincial governments. In Central Asia, more power is vested in the local government chiefs than in the intermediary oblast jurisdictions, but they enjoy this influence only through the grace of strong central governments. In the Philippines, “regions” (subnational groupings of provinces) have been empowered in recent years to act as strong intermediaries between central line ministries and rather independent local government units. In India, the states wield considerable power relative to the national government but effects to empower local governments have been inconsistent from state to state. In Sri Lanka, management of more than half of the sectors already has been formally devolved to provinces that still remain too weak to absorb many of their new responsibilities. As the Asia and Pacific region seeks new and more effective environmental institutions, reforms must be placed in this context of ongoing decentralization (see Box 3-11).

No successful system of environmental governance lacks central government regulatory agencies that have the mandate, resources, and capabilities to monitor environmental performance and sanction firms that violate agreed upon environmental standards. Many countries in the Asia and Pacific region lack such government institutions. Opportunities do exist for national environmental institutions with legal mandate to take the lead advocacy role in environmental management and to guide decentralized institutions in dealing with environmental issues and problems as they emerge (see Box 3-12). Environmental management capacity appears to be a major constraint for such institutions to achieve their mandate. Investing in strong regulatory organizations at both the central government and regional scale offers significant opportunity for substantial improvement in environmental performance.

The role of firms in environmental governance is also changing in important ways within the region. Once viewed only as unwilling adversaries, many firms are now going “beyond compliance” in their environmental activities. Many leading transnational corporations are undergoing an unprecedented transformation in the understanding of their role in sustainable development, calling for changes in the whole industrial system as well as in their own strategic planning and actions.

The call for a new approach to environmental management and associated institutional reform comes at a time when regional trends are favoring restructuring of government bureaucracies and increased reliance on the private sector for development financing. Although unregulated financial markets have been blamed in part for the East Asian economic crisis, a strong movement continues toward greater reliance on market forces to shape the direction of economic development. New environmental institutions will need to be devised in this context to encourage the fullest possible integration of environment and development concerns.

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