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Asian Environment Outlook 2001 : V. Call to Action : Regional Policy Recommendations
Economic Reform Actions
Integrate economic and environmental decision making to provide a value to ecosystem services.
Simultaneously pursue economic and environmental goals and overcome information gaps, sunk costs,
uncertainty, and other sources of market failure. Governments can make environmental priorities internal
to core economic planning if clear performance goals are identified and applied consistently. For example,
DMC governments that apply performance based budgeting can include environmental performance as a
decision making criterion. In support of business sector efforts at integrating economic and environment goals,
policy makers must promote a supportive environment for eco-efficient retrofitting through
enhanced depreciation schedules, tax breaks, or environmental certification schemes.
Establish resource pricing and eliminate all policies that create perverse incentives. This approach
may be the best short-term investment for governments. Abandoning subsidies that disproportionately benefit the rich
may be politically difficult because vested interests have structured whole sectors on the expectation that these
subsidies will continue. However, the normal excuse that elimination of subsidies will harm the poor can nearly in every case be
shown to be false. The first step for governments is to conduct comprehensive environmental audits of all
subsidies, opening such inquiries to public debate and participation in the often difficult deliberations. A
second priority is to reform energy markets and remove distorted pricing regimes. Phase out of subsidies that distort the production and
consumption of energy or that propagate inefficient systems is a responsible approach. However, subsidies can continue
to be used to meet the government’s responsibility for providing access to electricity and commercial energy to
disadvantaged people in remote, rural areas, bearing in mind that access to electricity may be one of the key indirect
factors for promoting slower population growth rates. Establish charges for water to reflect environmental and social costs, including both the cost
of providing water and the disposal costs of wastewater. Again, transparent cross-subsidies for basic domestic water use can be provided for the poor. Urban areas
can consider a polluter-pays approach to water supply that combines a broad-based pollution charge to all
wastewater generators and a service fee to those connected to the wastewater system. In addition, the
experience of many countries, both inside and outside of the Asia and Pacific region demonstrates the MBIs
can be used effectively for environmental protection (see Table 5-1).
Capitalize on positive economic forces for change to reduce or offset negative consequences of the
driving forces of change in the region. Use the substantial new investment that is expected
to flow into Asian DMCs over the next two decades as an opportunity for firms to shift to technologies that are less energy- and
materials-intensive. Environmental improvement through new investments can also come from expansion of existing
facilities, shifts to new production lines, and changes in product mix. Policy makers can assist by ensuring that loans and funds
for technology upgrades are available and by ensuring that an economic safety net is in place for those displaced by economic
change. Credit and tax instruments can facilitate innovation, investment, and technology change particularly for companies with very
limited capital such as SMEs. Also, education is critical in solving environmental problems. Governments must
train the thousands of professionals in the environmental sciences and encourage participation in professional
organizations. Governments can foster such associations by paying membership fees for their officials and by
providing time off to attend training courses and conferences.
Use environmental improvements as an important part of the effort to eradicate severe poverty within
the region and critical to efforts to secure sustainable livelihood. Apply operational principles that
govern the ADB’s long-term strategic framework. Operational principles include the following: (i) a
country focus to ensure ownership of ADB’s development interventions and actions; (ii) selectivity
and focus of work in areas where a commitment to change exists and to ensure closer cooperation between
development partners; (iii) quality and excellence through strengthening of economic and sector work;
improvement in business processes, project administration, and analysis and evaluation; and strengthening
of knowledge management; (iv) building of enduring relationships with stakeholders; and (v) greater
transparency and external feedback, strengthening of corporate governance, and intensification of
anticorruption activities. Experience demonstrates that regional authorities that systematically and routinely
share information are more responsive, more effective, and achieve long-lasting, superior outcomes.
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