THE ENVIRONMENT AND

SUSTAINABLE
DEVELOPMENT IN ASIA
 INTRODUCTION
 The protection of the environment has increasingly become a
major concern for many economist, managers, and policy
makers across the world. More than ever, individuals,
communities, governments, and international agencies feel
threatened by the dramatic rate of deterioration of such
natural treasures as agricultural soil, rainforests, and river
systems; there is fear of extinction of fish stocks and
exhaustion of mineral or oil resources. The main concern is
how to ease environmental pressures and meet current
consumption needs at the same time. In developing
countries, the latter seem to take precedence over the former.
 The Economics of the
Environment
Environment
 the surroundings or conditions in which a person,
animal, or plant lives or operates.
 The environment is a unique economic resource.
At the most basic level, we human beings cannot
be without the land that we walk and live on,
without the air that we breathe, and without the
water that we drink.
Economic Value of the
Environment
 The environment does have well-defined economic
functions. The natural resources of a country directly
provide essential inputs to most production activities.
Forests provide timber for the housing and construction
industry. Rivers and seas provide rich fish harvests, and
natural navigable waterways serve as important
channels for the transport of goods. The rich rainforests
are an important source of medicinal plants and
chemicals
 The Market for Environmental
goods
Environmental goods are typically non-market
goods, including clean air, clean water, landscape,
green transport infrastructure (footpaths, cycleways,
greenways, etc.), public parks, urban parks, rivers,
mountains, forests, and beaches.
• Any system of exchange or trade (the market) accords an economic value to
any good or service that is bought or sold. If market forces are left to
themselves, the exchange results in market-determined prices and output levels
that are efficient and maximizes total welfare in the economy. This basic
microeconomic principle also applies to the market for environmental goods.
 Why the Market for Environmental
goods often fails
 Market failure is often seen in the environmental goods
market because many natural resources are open-access.
Rivers, the sea, the air we breathe, the mountain ranges,
the watersheds, and the forests are some familiar
examples. Open-access resources are often considered
common property, and having no well-defined owners,
it is impossible to exclude anyone from using or
availing of the resource. Anyone can graze, harvest, or
fish. If so, the market will find it difficult to restrict
consumption to socially optimal levels
 Market failure in the environmental sense implies
that the market-determined price and output levels of
environmental goods are not efficient and must be
modified to achieve optimum outcome for the
society. Market failure in the exchange of
environmental goods/services occurs because of the
inability of the system to accord correct pricing for
these goods.
 The level of overuse or overconsumption of
environmental goods strongly suggests that the
market often fails for such godods.Evidence of this
type of market failure is widespread: polluted rivers,
polluted air, overfished seas, overgrazed lands, and
so many more
1. Property rights - define the theoretical and
legal ownership of resources and how they can
be used. Property can be owned by individuals,
businesses, and governments. These rights
define the benefits associated with ownership of
the property.
2. Open-access Resources - Under open
access, individuals are free to use a resource
without regard for the implications accruing to
others. We say that an individual in such settings
has priviledge to use the resource but has no
right to prevent others from using it.
 13.2.4 Dynamic efficiency,
Sustainability, and Discount rates
 Dynamic efficiency – involves improving
allocative and productive efficiency over time.
This can mean developing new or better products
and finding better ways of producing goods and
services.
 The efficient allocation of natural resources needs
to be considered in the context of sustainability of
use over time as any decision today can influence
the quality of the environment and the stock of
resources available in the future
Sustainability - refers to the ability to maintain or
support a process continuously over time. In
business and policy contexts, sustainability seeks to
prevent the depletion of natural or physical
resources, so that they will remain available for the
long term.
Discount rate - is the interest rate used to
determine the present value of future cash flows in
a discounted cash flow (DCF) analysis.
 Addressing Market failure in
Environmental Goods
a) Engagement in public education on the
environment

b) Development and implementation of command

and control regulations ,and

c) The provision of economic incentives in the

market system
 Provision of information
 A process within which information is provided
to users or users' community without any
individualization of content or purpose-
specialization of the information or the delivery
process.
 Regulation
 a rule or directive made and maintained by an
authority.
 The regulation of pollution markets, through the
use of command and control policies, has greater
ability to modify environmentally degrading
behavior and improve or protect the quality of the
environment in an economy.
 Taxation
 Taxation is a term for when a taxing authority, usually a government,
levies or imposes a financial obligation on its citizens or residents. Paying
taxes to governments or officials has been a mainstay of civilization since
ancient times.
 The use of tax in environmental policymaking has proven to be a useful
instrument for seeking better ways to achieve sustainable levels of
environmental resource use. In principle, the governments could achieve
optimal rates of resource use by imposing taxes that reduce the incentive
for producers to enter common access properties or manufacture polluting
products. A tax is a way of inducing firms or households to internalize the
cost of their harmful production or consumption activities. When imposed
on manufactured output, the tax effectively increases the price of the
good, which then encourages less consumption in the economy. A 30
percent tax imposed on each liter of leaded petrol consumed will
effectively discourage marginal users of motor vehicles from relying on
their cars as their main form of transportation.
 Marketable Permits
 Marketable permits are regulatory tools
designed to allocate privileges or obligations
more efficiently by harnessing the market's
decision-making powers. Marketable permits are
intended to lower compliance costs, ease
administrative burdens, and incentivize
innovation more than traditional regulation.
 An innovative way to address market failure,
particularly with regard to open access resources,
is to create a property rights system through the
use of marketable permits. These permits allow
holders to harvest a common resource up to a
certain limit, or grant them a license to pollute
the environment up to a specified amount. This
"right" to pollute is sometimes not an appealing
notion, but there are strong indicators that these
permits may yet be the most efficient way to
reduce pollution and resource overuse
 The state of Environment in Asia

Asia’s Natural Environment

according to…..
 World Resource Institute(WRI)

- the region lays claim to 88% of the world’s

aquaculture harvest, almost half of the world’s
marine-fish catch, and over one-third of the worlds
agricultural lands.
 Main Drivers of Environmental Change in Asia
in this section, we will discuss the underlying forces that cause Asia's growth to be
the single most identifiable cause of environmental degradation in the region.

 Increased Production - greater output from the same

amount of input.
There is, for example, increasing demand for timber to support
the production of wood products for both domestic and export
markets. This means that the region's natural forests are under
significant pressure from illegal or indiscriminate logging and
replacement by plantation forests. Given the difficulty of
verifying the origin of wood and wood products, it is highly
likely that several countries around the world are significant
importers of illegally harvested timber and timber products.
Increased household Consumption
 Rapid economic growth in the region is also fuelled by the
demands of an expanding global and regional consumer base. In
Asia, household consump tion expenditures have been growing
at higher than global rates. Between 1995 and 2002, the highest
expansion in household consumption occurred in the densely
populated economies of Southeast Asia and China.
 Rising incomes, thus, easily translate into increased demand for
more cars and means of transport, for new, bigger housing, and
for more television sets and other electronic equipments in the
house; it also means more non-organic waste production per
person. In general, the income and life- style change result in
smaller, but more energy-intensive households. As an example,
the demand for refrigeration has expanded rapidly-per-capita
sales of refrigerators increased by as much as sixteen times
between 1995 and 2000 in China, and twenty-two times in
Thailand and Vietnam (Consumer Asia, 2002).
Poverty
 Much of the environmental degradation in many
parts of the world can be directly attributed to the
low standard of living that currently exists,
especially in developing countries. Low current
income makes it very difficult for households to
meet daily consumption needs, and thus,
environmental resources are unwisely exploited
to supplement their incomes.
Population factor
The high incidence of poverty is one factor that is
directly putting great pressure on environmental
resources in many developing countries. Because
these countries tend to have high rates of population
growth, population is seen as a significant
contributor to the rapid degradation of the
environment. Indeed, depletion of nonrenewable
resources is accelerated by rapid population growth.
Urbanization
 Although Asia and the Pacific, along with Africa, are still
among the least urbanired regions in the world, their
urban populations have been growing faster than that of
other regions during the past decade and a half. In 1990,
33.3 percent of the population of Asia lived in urban
areas, compared with 40.9 percent in 2006. The fastest
influx of people from the rural areas to cities has
Occurred in the ASEAN countries, where the share of the
urban population rose from 31.6 percent in 1990 to 44.9
percent in 2006.
 The effects of this rapid urbanization on the region are
being felt most acutely in heavily populated slums, which
are city areas characterized by substandard housing and
poor access to basic services.
 Promoting Sustainable
Development in Asia
Command and Control policies
 is one of the many approaches used in public policy. It comprises
of rules and legislation imposed by governments, and is often
backed up by the threat of coercion, fines or state penalties.

Economic Incentives
 Economic incentives meaning can be referred to as a reward or
motivation provided in monetary terms. It produces a desired
response from the parties by altering their natural behavior.
Examples of incentives are subsidies, tax credits, discounts, and
cashbacks.
Improve institutional capacity
 Institutional capacity can be defined as the
capability of an institution to set and achieve
social and economic goals through knowledge,
skills, and systems. Increasing institutional
capacity can also involve capacity building
trainings, study tours and live design exercises.
 Summary

Environment plays a huge role in economics thus

proper handling and appropriate knowledge about it
is needed to preserve it ,and improve the
development in Asia