Accelerating the Transition to a Sustainable Economy

Speech by ADB President Haruhiko Kuroda on 31 January 2013 at the Delhi Sustainable Development Summit in New Delhi, India

Introduction

Your Excellencies, distinguished guests, ladies and gentlemen:

It is my great pleasure once again to have the privilege of speaking at this important annual gathering. I would like to express my appreciation to the Government of India and The Energy and Resources Institute for their efforts in organizing this summit.

In recent decades, the Asia and Pacific region has been highly successful in improving material standards of living for its people. But our growing prosperity has also come at a steep price in the form of environmental degradation and growing economic inequality. Continuing on this path places our ecosystems’ health at risk, and jeopardizes our collective security in water, food, and energy. The case for sustainable development has never been stronger.

I want to share with you some thoughts on how we can accelerate the transition to a sustainable economy. First, we need to de-couple economic growth from the intensive use of natural resources, as reflected in the theme for this conference. Second, to enable this change, we must dramatically improve human and institutional capacities. And third, we need to make economic growth more inclusive, since increasing inequality will undermine our efforts at transformation. I believe that these goals are mutually supportive.  

De-coupling economic growth from the intensive use of natural resources

The need to de-couple economic growth from the intensive use of natural resources is clear. Resource constraints and climate risks are damaging our food, water, and energy security.

It is estimated1 that global demand on our ecosystems now exceeds the earth’s regenerative capacity by more than 50%. Nowhere is the need for transformation greater and more evident than in our use of energy, the primary source of CO2 emissions. A transition to clean, renewable, and decentralized energy systems opens up huge opportunities for entrepreneurship and job creation. Realization of an “energy access for all” policy could generate up to four million direct jobs in off-grid renewable electricity by 2030, supporting many more jobs in linked economic sectors.2 Switching to renewable energy will also conserve another resource that is under increasing stress in Asia: water. The water footprints for solar and wind power are less than 1% that of coal.3 For our part, ADB has continued to expand support to clean energy with investments in the region recently exceeding $2 billion per year.

The transport sector is the fastest-growing source of greenhouse gas emissions in the region.  In the past decade alone, the total motorized vehicle fleet in Asia and the Pacific has more than doubled to over 450 million vehicles.  The good news is that successful sustainable transport systems such as bus rapid transit systems are arising around the region.  Given its rapid urbanization and the emergence of many mega cities in Asia, decoupling economic growth from the intensive use of natural resources is an extremely important agenda which we all need to tackle.

Developing human and institutional capacity

De-coupling economic growth from intensive resource use means substituting knowledge for increasingly scarce natural resources. This, in turn, requires substantial increases in human capital.

For example, the use of clean energy technologies will require us to master increasingly diversified, decentralized energy systems. But the benefits will not be limited to reduced greenhouse gas emissions and lower reliance on imported fuels. Millions of highly skilled jobs will also be created.

Special emphasis must be placed on education for women. Research shows that increasing female literacy is one of the most effective strategies for making communities stronger and less vulnerable to the impacts of climate change, including climate-related disasters.4 Here, we have considerable work yet to do. Despite the impressive gains in achieving gender parity in education -- the third Millennium Development Goal -- throughout Asia and the Pacific overall, South and West Asia continue to lag.5 Addressing this gap should not be viewed as a cost, but as an opportunity.

To capture the benefits of increasing human capital, we must also build institutional capacity, including the capacity to manage the environmental commons more fairly and effectively. Good governance and sound institutions are critical.

Promoting inclusive growth

Lastly, the gains from economic growth must be broadly shared. 

As of 2008, over 800 million people in developing Asia were living on less than $1.25 per day.6 In 2010, over 350 million Asians still had no access to clean water and over 1.7 billion lacked access to proper sanitation. From early in the 1990s through the late 2000s, inequality, as measured by the Gini coefficient, increased from 32 to 43 in China and from 33 to 37 in India. Although overall poverty decreased through this period, poverty reduction was compromised by this growing inequality. Had inequality not increased, an additional 240 million people might have escaped poverty.

Inequality undermines sustainable growth in many ways. By reducing social cohesion, inequality weakens the sense of shared goals that is necessary for transformational change. By limiting access to higher education and training, inequality excludes from the skilled workforce many who could make substantial contributions.

The most effective way to ensure that the region’s growth is increasingly inclusive is to create opportunities for remunerative, productive, and fulfilling jobs. A green economy provides a solid basis for such a transformation.

ADB's role

Ladies and gentlemen:

ADB is determined to support developing member countries in accelerating the transition to a sustainable economy. We will extend assistance for the three areas I have talked about today: de-coupling economic growth from the intensive use of natural resources, improving human and institutional capacities, and promoting inclusive growth.

A green and sustainable economy will be built on a low-carbon and climate-resilient infrastructure. Asia and the Pacific are rapidly urbanizing, and by choosing sustainable modes of transport, energy production and urban design, we place the region on a sustainable development trajectory for decades to come.

We also promote diversified, knowledge-intensive economies that are not only more resilient to today’s natural disasters and other economic shocks, but that also reduce climate risks in vulnerable communities and ecosystems. A skilled workforce, supported by green infrastructure, provides a strong basis for technology innovation and promotes competitive economies based on green technologies.

We recently revised our corporate score card, and strengthened our focus on inclusive growth. We will try to make changes together with our partners and clients in achieving more equitable and shared economic growth.

Closing

Ladies and Gentlemen, I have shared with you our vision for a transformation to a sustainable economy. It is a vision of improved resource efficiency and reduced depletion of the region's natural resources. It is also a vision of higher resilience for our diverse societies, and of more broadly shared prosperity.

Discussions for the post 2015 development agenda provide a unique opportunity to catalyze and sharpen our efforts toward sustainable development.

We should not underestimate the challenges involved in realizing such a vision. It involves substantial changes in the ways we earn our living; provide energy for our homes and businesses; travel; and how we achieve personal fulfillment. However, we can find a whole new world of opportunity in this endeavor. I look forward to our ongoing discussions on how we can achieve this sustainable future together.

Thank you.


WWF and partners (2012). China Ecological Footprint Report 2012. Consumption, Production and Sustainable Development.
International Renewable Energy Agency (2012). Renewable Energy Jobs & Access. United Arab Emirates: IRENA
Wilson, et al. (2012). Burning Our Rivers: The Water Footprint of Electricity. Portland, Oregon: River Network.
Blankespoor et al. (2010). The Economics of Adaptation to Extreme Weather Events in Developing Countries. Center for Global Development Working Paper 199.
United Nations (2012). The Millennium Development Goals Report 2012.
PPP.