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`Green growth' and some doubts

Print edition : May 20, 2005 T+T-

The fifth UNESCAP Ministerial Conference on Environment and Development in Seoul stresses the need for `green growth'. But will this become another ploy to ignore the inequities in distribution?

in Seoul

IT may surprise many people that the latest edition of the Ministerial Conference on Environment and Development of the United Nations Economic and Social Commission for Asia and the Pacific was on the theme of `Green Growth'. Evergreen environmentalists, while shaking their heads in disbelief, might look for hidden ploys by big businesses and governments to "green wash" environmentally destructive economic activity by coining terms such as `Green Growth'. Growth economists, at the other end of the spectrum, would view with suspicion such attempts at shifts in conventional economic policy-making and wonder whether this is an underhanded challenge by the U.N. to the reign of neo-classical economic orthodoxies in policy-making. While both environmentalists and economists have reasons to worry, where does the truth lie? As often in matters relating to the environment and economic growth, somewhere in between.

As the note put out by the ESCAP Secretariat points out, industrial production in the Asia-Pacific region, home to 61 per cent of the world's population and covering 40 per cent of the world's territory, increased by almost 40 per cent, as compared to the global increase of only 23 per cent. However, this phenomenal growth was accompanied by some serious environmental problems with possibly disastrous, long-term consequences. Per capita water availability is reaching scarcity limits in many areas subject to seasonal shortages. More than 462 million people were affected by drought, which brought death and homelessness, in South Asia alone during 2000-2004. Over 60 per cent of the water used is in agriculture in at least 30 countries in the region.

Agricultural production increased by some 62 per cent between 1990 and 2002, mainly through massive consumption of agricultural chemicals. Overuse of agrochemicals has endangered the productive capacities of agricultural land, impacted on water quality, wildlife and health. There have been dramatic declines in fisheries resources and continued degradation of coastal ecosystems. If urgent attention is not paid to some of the pressing environmental problems, the state of the environment of the Asia and Pacific region is likely to reach thresholds from which recovery may be near impossible. There can be also the tendency to play a waiting game until every threshold is passed, but it is clear that precious little can be done after crossing the threshold of repair.

It is in this context that one must read ESCAP Executive Secretary Kim Hak Su's statement to the conference that "unsustainable growth exerted increasing pressure on the natural resources and the carrying capacity of the environment. Natural resources and ecosystem services are of immense economic value; some are literally priceless since they have no known substitutes". But what is of interest is that he also emphasised the importance of moving away from a `grow first, clean up later' approach.

The UNESCAP Regional Implementation Plan for Sustainable Development in Asia and the Pacific, 2006-2010 referred to shifting the development paradigm from `grow now, clean up later' to environmentally sustainable economic growth, or `Green Economic Growth'. One agrees that such a shift is both urgent, in relation to the multiple stresses on the region's natural resources and environment, and reasonable, with reference to economic policy. But can all this happen in the face of the neoliberal economic orthodoxies being thrust on the political leaderships of the countries of the region by neoliberal economists sitting in powerful positions of policy-making? Will this become a ploy to overlook the inequities in distribution and ignore the aspirations of the people? The challenge lies here, not in the question whether `Green Growth' is possible or not.

After all, had powerful institutions such as the World Bank not been propagating, for the past three decades or more, the belief that rapid economic growth is the only panacea? Even when the Bank did address the issue of `Environment and Development' (the 1992 World Development Report was on this theme), it was only to argue that more economic growth was the automatic solution to environmental problems. In the WDR of 1992, World Bank economists even discovered an "environmental Kuznets curve", whereby they could argue that though growth was initially bad for the environment, persisting with growth was necessary because it would be good for the environment later. It did not exactly happen that way.

While economists of different hues can always be accused of summoning this or that evidence to support one or the other argument, for or against the environment, science has fairly settled the issue and a paradigm shift has taken place. In 1972, when the Club of Rome made public its famous `Limits to Growth' thesis, positing limits to economic growth in terms of scarcity of resources, resource economists and others showed the fallacies involved and how resource limits could be overcome. However, the real paradigm shift had to be made in relation to nature as a sink; especially, the atmosphere as a sink absorbing globe-warming and ozone-depleting gases, when it was realised that while resource limits could be overcome, sink limits were absolute. The natural ecosystem, including the atmosphere, had absolute limits as to how much of the wastes of economic growth it could take as a sink. This leaves us with no other choice but to address the central problem and deal with the scale of our "growth", "the physical size of the economy relative to the containing ecosystem", as the eminent ecological economist Herman Daly has put it, thus beautifully capturing the relationship of the economy to nature and the dilemma we are in.

The World Bank did, however, catch up on the distinction between "sources" and "sinks", in the WDR 2003, `Sustainable Development in a Dynamic World', though it did not, and could not, understand the links, nor did it show the intellectual ability to understand critical issues related to sources and sinks, such as scale. If economic policy should seriously address the issue of sustainable development, it should address the three central economic problems, of allocation, distribution and scale. But neoliberalism and the orthodoxies associated with it in terms of economic theory and policy address only allocation.

If it is imperative that economic policy addresses the needs of nature and society, and not just the market, can it do so without addressing the problem of economic scale and redistribution and concern itself only with allocative efficiency via right prices? Herman Daly, who quit in protest as Senior Economist of the Environment Department of the Bank, again succinctly describes the situation: "Standard economics strains out the gnat of allocative efficiency while swallowing the twin camels of unjust distribution and unsustainable scale. As distribution becomes more unjust, big money buys political power and uses it to avoid any redistribution. A favourite ploy for avoiding redistribution is to emphasise economic growth."

The UNESCAP conference, in advocating `Green Growth', indirectly referred to unsustainable scale but completely bypassed the issue of equity, so central to sustainability - ecological, social, cultural, and last, but not the least, economic. Like rapid economic growth, `Green Growth" should not become another ploy for not addressing the issue of equity, both internally within nations and between nations in the global economy. The UNESCAP needs to remind itself constantly that as a U.N. body it is committed in terms of the U.N. Charter to a normative world view and has a duty to address and the issue of equity, unlike multilateral financial and trade institutions wedded to a positivist world view.

The conference also talked about "internalising environmental costs". How this would be done, under globalisation and in a globalising world which undermines the ability of nations to internalise environmental and social costs, is another question. When economic integration, powered by free market economics, promotes a race to the bottom in terms of the lowest common denominator in social and environmental standards, internalising environmental costs is a pipe dream. It has more to do with the cosy, enchanted theoretical world of an emerging class of "environmental economists" cut off from the social realities of poverty and hunger. What goes as "environmental economics' or "resource economics" are both, at best, sub-fields of neoclassical economics.

Having said that, one must concede that the UNESCAP's fifth Ministerial Conference on Environment and Development could very well be a landmark conference for the future of the Asia and Pacific region. The hard work put in by the professional staff of the UNESCAP's substantive division, the Environmental and Sustainable Division, in preparing this significant conference received rich praise and did reflect in the quality of the conference and the professional seminars that were part of it. In the 60th anniversary year of the United Nations, and at a time when the U.N.'s credibility and authority, including that of its highest functionary, are continuously sought to be undermined, it is vital that U.N. staff members show intellectual competence and independence from the overpowering and suffocating atmosphere of neoliberal orthodoxies.

In that sense, the Seoul conference could also mean a new chapter in the UNESCAP and the U.N.'s espousal of a sustainable and equitable world. The Environment Minister of Korea, H.E. Kwak Kyul-Cho, said, "I believe this conference was an outstanding achievement to promote our efforts towards a synergy between the environment and economy." The conference also launched a `Seoul Initiative' on Green Growth.

The venue of the conference is also significant, not because of Korea's economic achievements, much touted at the conference, but because the Republic of Korea is a fiercely democratic society with an active grassroots democracy that works with great persistence for an equitable and sustainable Korean society.

Lawrence Surendra is an environmental economist based in Seoul.