Towards green growth in Southeast Asia.

188 Pages·2014·2.88 MB·English

by  OECD

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Chapter 1. The case for green growth in Southeast Asia ro
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Chapter 2. Mainstreaming green growth into national development planning t
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Chapter 3. Founding green growth on sustainable resource use t
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Chapter 4. National policy options for managing the impact of urbanisation on green growth ie in Southeast Asia
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OECD Green Growth Studies
Towards Green Growth
in Southeast Asia
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FOREWORD – 3
Foreword
Southeast Asia is at a crossroads. The region has enjoyed strong economic growth,
but – as elsewhere in the world – this growth model has relied on unsustainable natural
resource exploitation, resulting in environmental degradation. The region’s leaders face a
choice: continue to pursue a short-sighted, grow-now-clean-up-later model that has proven
disastrous, or adopt a far-sighted green growth strategy that can sustain long-term growth
without hampering the wellbeing of future generations.
This report argues that green growth is the way to go for Southeast Asia: it will be
more beneficial and less costly, while at the same time it will help lay the foundation
for stronger, cleaner and fairer economies and societies. The experience of many OECD
and other emerging countries shows that growth strategies that ignore environmental
performance eventually result in expensive clean-up and mitigation measures, as well as
large welfare losses. The report highlights that Southeast Asia has a golden opportunity
to leapfrog over the low-performing, polluting, resource-inefficient technologies of more
developed countries, given that large swathes of the region’s infrastructure and industrial
models are still being developed. Moreover, it points out that the structural changes
necessary to achieve long-term economic growth, reduce poverty, protect the environment
and attain high levels of well-being will require tying environmental performance to
economic growth.
Carried out in consultation with officials and researchers from across the region,
Towards Green Growth in Southeast Asia provides a framework for regional leaders
to design their own solutions to move their countries towards green growth. While
recognising the pressures that Southeast Asian economies face to increase growth, fight
poverty and enhance well-being, the report acknowledges the links between all these
dimensions. It underscores the window of opportunity that the region has now to sustain
its wealth of natural resources, lock-in resource-efficient and resilient infrastructure, attract
investment, and create employment in the increasingly dynamic and competitive sectors of
green technology and renewable energy.
Some key policy recommendations are that these challenges can be met by scaling up
existing attempts to strengthen governance and reform countries’ economic structure; by
mainstreaming green growth into national development plans and government processes;
by accounting for the essential ecosystem services provided by natural capital and ending
mindless natural-resource exploitation; and by guiding the sustainable growth of cities to
ensure well-being and prosperity.
The OECD has strengthened its engagement with Southeast Asia in recent years, as
a strategic priority. We recently launched a Southeast Asia Regional Programme in order
to articulate better this collaboration and support domestic priorities, policy reform and
regional integration. The Programme aims to foster the exchange of good practices and
mutual learning among policy makers. Towards Green Growth in Southeast Asia offers
good illustrations of how this co-operation can be advanced. The OECD will work towards
TOWARDS GREEN GROWTH IN SOUTHEAST ASIA – © OECD 2014
4 – FOREWORD
mainstreaming the report’s recommendations in areas such as governance, investment, and
public-private partnerships for infrastructure.
Setting Southeast Asian economies on a green growth path will require policy and
institutional reforms, but most of all it will require leadership. The OECD stands ready
to support the region in seizing the opportunities that green growth offers to advance
sustainable, inclusive development.
Angel Gurría
OECD Secretary-General
TOWARDS GREEN GROWTH IN SOUTHEAST ASIA – © OECD 2014
ACkNOWlEDGEMENTS – 5
Acknowledgements
This report was prepared by Mauro Pisu and Alexis Robert. Mauro Pisu was the project
leader and co-author and Alexis Robert was editor and co-author, with contributions by Sáni
Zou, Balázs Egert and Annabelle Mourougane. Balázs Egert and Annabelle Mourougane were
previous project leaders. Jan Corfee-Morlot and Nathalie Girouard provided oversight as senior
managers from the Development Co-operation Directorate and Environment Directorate,
respectively, as part of the OECD horizontal work programme on green growth. The report
received financial support from the korea International Cooperation Agency (kOICA).
Chapter 1 was drafted by Mauro Pisu, Balázs Egert and Annabelle Mourougane.
Chapter 2 was drafted by Alexis Robert and Sáni Zou. Chapter 3 was drafted by Mauro
Pisu. Chapter 4 was drafted by Alexis Robert. Annabelle Mourougane conducted the initial
research for the project and produced the synthesis paper that provided the starting point
for this report: OECD (2013), “What Have We learned from Attempts to Introduce Green-
Growth Policies?”, OECD Green Growth Papers, No. 2013/02, OECD Publishing.
Government officials provided invaluable inputs during policy consultations conducted
in March-April 2014 in Indonesia, Malaysia, the Philippines, Thailand and Vietnam.
Officials representing Cambodia, Indonesia, lao PDR, Malaysia, Myanmar, the Philippines,
Singapore and Viet Nam provided extensive feedback on earlier drafts of the report during
and after the regional workshop, “Towards Green Growth in Southeast Asia”, which took
place in Jakarta on 11-12 June 2014 in collaboration with the Indonesian Ministry of
Finance.
The report also benefited from comments of external reviewers: Chris Baldock
(National Capital Coalition), Jingmin Huang (ADB), Abhas Jha (World Bank), Amy
leung (ADB) and Saut Sagala (Institute of Technology Bandung); Rana Roy (author of the
2014 OECD report The Cost of Air Pollution: Health impacts of road transport) and Nils
Axel Braathen provided guidance on the calculations of the cost of outdoor air pollution
in Chapter 4; Julia kete conducted the analysis of climate aid in urban areas referred
to in Chapter 4. The authors wish to thank the Members of the OECD Development
Assistance Committee (DAC) and the OECD Environmental Policy Committee (EPOC)
who commented on the report, and colleagues from the OECD and IEA Secretariats: Juan
Casado Asensio, Anna Drutschinin and Stephanie Ockenden (Development Cooperation
Directorate); loïc Daudey, Tadashi Matsumoto and William Tompson (Public Governance
and Territorial Development Directorate); Justine Garrett and Ziga Zarnic (Environment
Directorate); Martin Wermelinger (Development Centre); Roger Martini and Carl Christian
Schmidt (Trade and Agriculture Directorate); Eleonora Antar, Shigetoshi Ikeyama, Florian
kitt and Simone Targetti Ferri (International Energy Agency).
Fiona Hinchcliffe, Christine Graves, Beth Del Bourgo and Amy larkin provided editorial
support. Claude-Annie Manga Collard and Marielle Guillaud provided administrative
support throughout the project. Peter Vogelpoel typeset the publication.
TOWARDS GREEN GROWTH IN SOUTHEAST ASIA – © OECD 2014

TABlE OF CONTENTS – 7
Table of contents
Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Chapter 1. The case for green growth in Southeast Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.1. Recent macroeconomic performance has been strong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
1.2. Environmental challenges threaten long-term growth and human well-being. . . . . . . . . . . . . . . .21
1.3. Green growth is necessary for sustained economic growth and improved well-being . . . . . . . . .28
1.4. The right framework conditions will ease the way towards green growth. . . . . . . . . . . . . . . . . . . 31
1.5. A set of green growth indicators can help formulate policies and track progress . . . . . . . . . . . . .49
1.6. Conclusion: Economic growth does not have to mean environmental degradation. . . . . . . . . . . .53
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Annex 1.A1. Domestic material consumption in Southeast Asia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
Chapter 2. Mainstreaming green growth into national development planning. . . . . . . . . . . . . . . . .65
2.1. Green growth strategies should be established and integrated into national development plans. .66
2.2. Green growth is increasingly integrated into ASEAN national development plans . . . . . . . . . . .70
2.3. Inter-ministerial co-ordination for green growth is improving . . . . . . . . . . . . . . . . . . . . . . . . . . .82
2.4. Conclusion: Co-ordinated and coherent action is urgent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88
Chapter 3. Founding green growth on sustainable resource use. . . . . . . . . . . . . . . . . . . . . . . . . . . . .93
3.1. Development in Southeast Asia is leading to natural capital depletion. . . . . . . . . . . . . . . . . . . . . .94
3.2. Sustainably managed forests are an important source of green growth. . . . . . . . . . . . . . . . . . . .100
3.3. Sustainable fisheries support livelihoods, food security and biodiversity . . . . . . . . . . . . . . . . . . 111
3.4. Green energy can sustain the region’s growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
3.5. Extractive industries can become more sustainable and contribute to green growth. . . . . . . . . .127
3.6. Sustainable resource management requires good data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Annex 3.A1. Mineral, oil and gas resources in ASEAN countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Chapter 4. National policy options for managing the impact of urbanisation on green growth . . 147
4.1. Most Southeast Asian countries are urbanising rapidly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
4.2. The costs of unsustainable urban development are high. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
4.3. National policies can guide urban development towards green growth. . . . . . . . . . . . . . . . . . . . 162
4.4. Conclusion: Now is the time to lock in sustainable urban development. . . . . . . . . . . . . . . . . . . . 178
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
TOWARDS GREEN GROWTH IN SOUTHEAST ASIA – © OECD 2014
8 – TABlE OF CONTENTS
Figures
Figure 1.1 ASEAN countries have experienced fast GDP growth . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Figure 1.2 Natural capital contributes a large share of the region’s total wealth . . . . . . . . . . . . . . . .21
Figure 1.3 Air pollution is generally high in ASEAN countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Figure 1.4 High levels of fertiliser consumption and organic water pollution . . . . . . . . . . . . . . . . . .23
Figure 1.5 Urban waste production is on the increase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Figure 1.6 Climate change could have a large impact on GDP in Southeast Asia in 2060. . . . . . . . .25
Figure 1.7 ASEAN countries’ small but growing share in global CO emissions . . . . . . . . . . . . . . .26
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Figure 1.8 CO emissions are higher per unit of GDP produced than per capita . . . . . . . . . . . . . . . .26
2
Figure 1.9 Reducing energy intensity is a priority for Southeast Asian countries . . . . . . . . . . . . . . .27
Figure 1.10 CO intensity of electricity production could be reduced . . . . . . . . . . . . . . . . . . . . . . . . .28
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Figure 1.11 Tax revenue-to-GDP ratios are low in Southeast Asia. . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Figure 1.12 Tax effort varies in Southeast Asia, China and India . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Figure 1.13 ASEAN R&D spending could be higher. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Figure 1.14 The density of start-up businesses could be increased . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Figure 1.15 Public spending on education is generally low in ASEAN countries . . . . . . . . . . . . . . . .45
Figure 1.16 Tertiary education enrolment rates could be improved. . . . . . . . . . . . . . . . . . . . . . . . . . .46
Figure 1.17 High pupil-to-teacher ratios in some ASEAN countries. . . . . . . . . . . . . . . . . . . . . . . . . .47
Figure 1.18 The financial sector and stock markets can be deepened further . . . . . . . . . . . . . . . . . . .49
Figure 1.A1.1 Domestic material consumption in Southeast Asia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Figure 2.1 An agenda for national action on green growth in developing countries . . . . . . . . . . . . .66
Figure 3.1 Natural capital contributes greatly to the total wealth of Southeast Asia countries . . . . .95
Figure 3.2 Growth is only weakly sustainable for most countries . . . . . . . . . . . . . . . . . . . . . . . . . . .96
Figure 3.3 In some ASEAN countries natural capital is being depleted at increasing rates . . . . . . .97
Figure 3.4 Biodiversity is under threat in ASEAN countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99
Figure 3.5 Forests create significant wealth in Southeast Asia. . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
Figure 3.6 The share of forest area is decreasing in most ASEAN countries. . . . . . . . . . . . . . . . . . 101
Figure 3.7 Although increasing, afforestation does not compensate for natural forest loss. . . . . . . 101
Figure 3.8 Agricultural land is expanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102
Figure 3.9 Bilateral development co-operation targeting the forestry sector varies across ASEAN
countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Figure 3.10 Fisheries production is significant in Southeast Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Figure 3.11 Aquaculture in Southeast Asia is a large and fast-growing sector . . . . . . . . . . . . . . . . . 115
Figure 3.12 Countries vary in their reliance on renewable energy. . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Figure 3.13 Renewable energy sources vary across the region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Figure 3.14 The share of renewables has fallen in most ASEAN countries. . . . . . . . . . . . . . . . . . . . 119
Figure 3.15 Foreign equity restrictions in electricity generation . . . . . . . . . . . . . . . . . . . . . . . . . . . .123
Figure 3.16 Mismatches between natural resource use and accumulation of physical and human
capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Figure 4.1 All Southeast Asian countries are urbanising, but at different rates. . . . . . . . . . . . . . . . 149
Figure 4.2 Share of urban population by city size in Southeast Asia . . . . . . . . . . . . . . . . . . . . . . . . 149
Figure 4.3 Number of cities classified by city size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .150
Figure 4.4 Urban expansion in Southeast Asian cities tends to outpace population growth . . . . . . 152
Figure 4.5 Air pollution levels exceed WHO standards in most cities . . . . . . . . . . . . . . . . . . . . . . . 153
Figure 4.6 Pollution levels in the region’s largest cities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .154
Figure 4.7 Air pollution costs are high in the region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Figure 4.8 Car ownership is rising in Southeast Asia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .156
Figure 4.9 Car ownership is rising fastest in countries with the smallest share of urban dwellers .156
Figure 4.10 The share of the urban population living in slums is declining worldwide. . . . . . . . . . .160
Figure 4.11 Southeast Asian cities vary in the prevalence of slums. . . . . . . . . . . . . . . . . . . . . . . . . . 161
Figure 4.12 Use of improved water drinking sources within Southeast Asia. . . . . . . . . . . . . . . . . . . 161
Figure 4.13 Use of improved sanitation facilities within Southeast Asia. . . . . . . . . . . . . . . . . . . . . . 162
Figure 4.14 An agenda for national action on green growth in developing countries . . . . . . . . . . . . 163
Figure 4.15 Two ASEAN countries are among the top five recipients of adaptation-related ODA in
urban areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .166
TOWARDS GREEN GROWTH IN SOUTHEAST ASIA – © OECD 2014