Environment issues hitting the economy

A GLOBAL debate is in full swing over what should replace the Millennium Development Goals (MDGs) once they expire in 2015. For Asia, this discussion could not have come too soon, as all evidence suggests that it will take a significant reordering of priorities for the region's high economic growth to continue.

Environmental protection and climate change must become a banner issue - and it will be crucial for the region's economic well-being that policy makers and the business community finally put their weight behind this development agenda.

Such a rearrangement of priorities is not far-fetched. In fact, it would just be an articulation of the growing recognition among decision makers that the helter-skelter exploitation of natural resources that helped to secure three decades of rapid growth in Asia is becoming unsustainable, and that new approaches are needed.

That said, the current policy climate for putting a higher premium on the environment is scarcely favourable.

The slowdown in industrialised countries, crisis in the eurozone and concerns over rising food and commodity prices has created global uncertainty.

Many countries fear that taking bold action on environmental care, especially on carbon emissions, will cut into their already vulnerable economic growth.

Not surprisingly, progress has been discouraging on reaching a binding pact under the United Nations Framework Convention on Climate Change that would commit countries to emission reduction targets.

The MDGs set targets on carbon emissions, biodiversity loss and forest cover, among other things.

Asia performed badly on reversing the rise in carbon emissions and now leads the world in the magnitude of the rise of emissions.

Among the Asean countries, nine of its 10 members are reported to be sliding on carbon emissions.

Only Singapore reduced emissions, from about 47,000 tonnes in 1990 to below 32,000 tonnes in 2009.

Worsening air pollution in many Asian cities - Beijing's chronically bad air quality is a case in point - is a daily reminder of the high environmental cost of the region's pattern of growth.

The socio-economic consequences are also cross-cutting and include costly health and productivity losses. In some countries, these are estimated to be several percentage points of the gross domestic product.

Linked to environmental degradation is the rising incidence and damage from natural disasters. Over the past four decades, a relatively short span of time, there has been a very marked increase in floods, storms and droughts that is arguably connected to climate change.

Asia is bearing the brunt of this phenomenon, with 50 per cent of the increase in the global damage from these hazards sustained in the region, and 90 per cent of the increase in the people affected.

Asia's rapidly growing cities are becoming increasingly vulnerable to disasters. More than a billion people were added to the cities during 1980-2010, and another billion inhabitants are projected by 2040.

Yet, awareness of disaster risk reduction in much of the region is disturbingly low.

Despite the devastating floods and storms of recent years, disaster risk reduction measures still do not generally feature systematically in national development plans (even in countries where they strike with regularity).

Disaster mitigation is also a vital advocacy in a new development agenda.

Simply put, the gap between what has been done in Asia on climate and the environment and what needs to be done is widening rapidly.

This presents Asia's economic managers with a policy dilemma. Stronger action on these fronts is desirable, but would that not actually slow economic growth?

The emerging calculus is that the opposite is true. Action on environmental sustainability, whether through greater energy efficiency, pollution controls or disaster prevention, is in a country's economic interest.

It is a faint-hearted response to the environmental and climate crisis in setting a post-2015 development agenda that would be costly for Asia's growth.

Such a stress on environmental protection does not mean that poverty reduction - the signature MDG target - is no longer a pressing concern: far from it.

Despite Asia's remarkable progress in reducing poverty over the MDG-era, the region is still home to two-thirds of the world's poor, many of them concentrated in South Asia.

It is just that a weak response on environmental protection and climate change will impede efforts to generate growth and reduce poverty further.