East Asian governments urged to harness market forces to improve environment, save money

04/06/04

Better environmental management is key to Asia's economic development: UN University researchers

Many East Asian countries could save tens of millions of dollars and improve environmental compliance of industries by blending more market incentives into their traditional "command-and-control" legal and regulatory approach to environmental protection, according to a book launched today by the United Nations University.

The authors says East Asian countries rely primarily on a command-and-control approach regulating effluent and emissions standards but typically lack effective institutions for implementation, monitoring, and compliance.

"Generally speaking, a rigid command-and-control approach leads to high compliance costs and widespread under-compliance," according to East Asian Experience in Environmental Governance, published by UNU Press. The problem is compounded in East Asia by "the lack of enforcement capacity as well as insufficient human and financial resources for large-scale investment in environmental protection.

The command-and-control approach in China has been ineffective in part because authorities there "set effluent disposal costs below the marginal cost of reducing pollution. Therefore, it is cheaper for factories to pay the disposal cost instead of reducing emissions," the book says.

In Malaysia, water effluent standards are set on the basis of pollution concentration levels, which invites, at least in principle, "the opportunity for dilution rather than real reduction." Malaysia is credited, however, with one of the region's few effective implementation systems, including "consistent and effective monitoring programmes."

Several East Asian countries have begun experimenting with market mechanisms to aid efforts at environmental management charging polluter fees for effluents, for example.

An earlier World Bank study demonstrated that Beijing and Tianjin, with multiple water pollution sources, could reduce pollution abatement costs from $47 million to $13 million per year by introducing an emission charge, a saving of $34 million from this group of enterprises alone, or a 70 per cent reduction from the cost of the command-and-control system.

Creation of apex governmental agencies that coordinate economic development and environmental protection is essential for effective, long-term economic growth, the book says. They can also help reduce complexity in policy and legislation as well as inter-ministerial conflicts of interest.

Among other potential innovations, organizations with ISO 14001 certification can receive priority in bidding for governmental contracts, encouraging a ''greening'' of the market-place.

"Economic instruments and market mechanisms permit cost saving and can lead to sustainable growth," said report editor Zafar Adeel, Assistant Director of UNU-INWEH, the UN University's Canadian-based water academy. "A policy model based on a mix of command and control and market-based mechanisms linked to effective governmental management is showing positive results in countries like Malaysia, and is characterized by the role of government as a facilitator rather than provider; by a prominent role played by the private sector and civil society; and by pricing reform on environmental goods and services."

Long-term thinking is needed when developing environmental protection policies. "Failure to introduce environmental protection measures would in the longer term imply a loss of income as a result of the depletion of the natural resource base. For example, implementation of the polluter pays principle can have dramatic effects on how industries view their waste effluents and treatment processes."

The authors emphasize that technology transfer from developed countries offer developing countries "the potential to bypass many of the constraints which were once seen as threats to economic growth."

As well, "East Asian nations can capitalize on the recent advances in information technology to their best advantage.

"The Chinese registry of potentially toxic chemicals . . . is a clear example of increased levels of transparency in information dissemination." Other examples include government websites in Thailand and Japan offering state of the environment and water quality data.

"These trends will eventually take environmental governance to a higher level where civil society is well informed about issues and closely involved in the process. The role of NGOs in serving as catalysers of such developments cannot be overemphasized."

Said UNU-INWEH Director Ralph Daley: "While this study highlights the need for new thinking and innovative approaches for meeting environmental challenges of all kinds in East Asia, its core message applies throughout the world. We hope the success stories included in this study provide countries with new insights and ideas for future environmental stewardship.

"A key element of a successful environmental governance regime is the capacity to understand the relevant issues and implement appropriate management actions. For its part, UNU-INWEH emphasizes capacity building in developing countries through training and research activities. There are four essential pillars to any effective capacity development program: the capacity to educate and train; to measure and understand environmental systems; to legislate, regulate and achieve compliance; and to provide appropriate, affordable services and products."

Source: Eurekalert & others

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