CHAPTER TWELVE - ESCAP

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INTRODUCTION

Whilst institutions and legislation provide thebasic infrastructure for systems of environmentalgovernance (see Chapter 11), policy instruments andmechanisms constitute the means by which a systemof governance influences the dynamics of social,political, economic and environmental processes.This chapter reviews the policies, approaches andtechniques used in the region in environmentalgovernance at the macro- and micro-levels, anddiscusses the methods that have been applied,including command, control and incentive-basedmechanisms. It also reviews the existing andemerging monitoring and assessment techniques thatare being adopted in the Asian and Pacific Region toimprove environmental governance.

ECONOMIC AND COMPLEMENTARYPOLICIES

The merging of environmental and economicdecision-making involves a fundamental realignmentof developmental policies, with the process ofdevelopment being viewed as a multipurposeundertaking that includes an implicit and definedconcern for the quality of the environment.Significant progress towards that end has been madethrough the integration of sustainable developmentprinciples in the national planning of some of thecountries of the Asian and Pacific Region.Increasingly, aspirations for sustainable developmentare also forming part of the macro- and micro-economic policy making process. Nationaldevelopment plans routinely incorporateenvironmental policies and resource managementprinciples, and sectoral and trade policies areincreasingly reflecting environmental concerns.Moreover, a number of countries in the region haveinitiated action plans and activities to achieve thegoals of sustainable development.

A. National Policy Frameworks and PlanningMechanisms

1. National Strategic PlanningThe formulation and enactment of a national

strategic plan or policy document on sustainabledevelopment is the first step to the incorporation ofenvironmental issues into the national agenda fordevelopment. A common thread underlying nationalaction plans and policy documents is thedevelopment of objectives, concerns, goals, policyoptions and development strategies for sustainabledevelopment, which provide a clear focus to theefforts of different agencies, individuals and

organizations. The development of national planningmechanisms is increasingly underpinned by longterm strategies that outline the institutionalmechanisms for inter-sectoral coordination,enforcement and policy making for publicparticipation, and create the climate for altering andshaping behavioural patterns conducive to the goalsof sustainable development. Furthermore, thepreparation process for such documents generatesthe cross-fertilization of ideas and views from experts,scientists, politicians and the public at large, whichhelps to build consensus on the approach to achievingsustainable development.

For example, in the Republic of Korea, the 1995Green Vision 21 document was prepared as along-term environmental policy to improve thequality of life by harmonising preservation anddevelopment. In order to achieve its goals, theMinistry of Environment has developed annual plansand mid-term action plans. The relevant lineministries, such as the Ministry of Construction andTransportation and the Ministry of Industry andResources, then developed their own action plans inline with the overall strategy. Viet Nam has alsoprepared Environmental Vision 2020 as well as theNational Strategy for Environmental Protection2001-2010 and the National Environmental ActionPlan 2001-2005 to address both long term strategic,as well as medium and short term, planning goals.In Malaysia, the Second Outline Perspective Plan(OPP2) 1991-2000 calls for the prudent managementof resources and the ecosystems, as well as for thepreservation of natural beauty and a cleanenvironment to ensure sustainable development forpresent and future generations. A number of othercountries have also prepared and adopted nationalconservation plans and strategies for sustainabledevelopment. A selection of these are listed inTable 12.1.

A major lesson learned from sustainabledevelopment strategies, national action plans orsectoral plans throughout the region, is thefundamental importance of understanding andaccommodating the interdependence of differentconcerns-economic, social and ecological.

2. Centralized Versus Decentralized Decision-Makingand PlanningThe decentralization of action plans has also

been reflected in the trend towards increaseddecision-making at the local level. For example,People’s Republic of China reported that at the endof 1996, two-thirds of the 30 provinces, autonomousregions and municipalities had organized theirrespective Leading Groups and established workingoffices to implement their Local Agenda 21. In

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Malaysia, each state is empowered to enact laws onforestry and to formulate forest policy independently.The executive authority of the Federal Governmentonly extends to the provision of advice, training,research and technical assistance to the states andthe maintenance of experimental and demonstrationstations. Indonesia has initiated Local Agenda 21with the specific objective to prepare practicaloperational plans for implementing sustainabledevelopment at the regional and provincial levels.In New Zealand, an increasing number of localauthorities are preparing programmes that can beconsidered local Agenda 21. Three local authoritieshave joined the International Council for LocalEnvironmental Initiatives. Environs Australia(formerly the Municipal Conservation Association)has taken the lead in translating Agenda 21 intopractical measures to assist its implementation byLocal Government. In the Russian Federation,virtually all regions are developing local plans forsustainable development.

In many countries of the region, localauthorities and local planning are central to certainenvironmental activities. For instance, in Thailand,municipalities are encouraged to set up wastemanagement action plans, whilst in Sri Lanka, theissuance of Environment Protection Licensing (EPL)has been decentralized. Similarly, the issuance ofEnvironmental Compliance Certificates in thePhilippines has been transferred from the central EIAauthority to regional offices for certain projects.

In most countries of the region, land useplanning is also locally managed. In Malaysia, localplanning authorities prepare development plans, andit is envisaged that by the end of the Seventh MalaysiaPlan, each local authority would have at least onelocal (land use) plan. In Japan, Land Use MasterPlans established by prefectural governors, functionas a means of comprehensive intra-administrationcoordination. To reflect the shift towards greater localautonomy, Indonesia’s Agenda 21 proposes to grantgreater autonomy to Level II governments to facilitatedecentralization of land resource decisions.

The trend towards decentralization has led,perhaps inevitably, to occasional problems betweencentral and local governments. For example, therecent introduction of local autonomy in the Republicof Korea has initiated conflict on environmentalproblems between the central and local governments,and between local governments themselves. To dealwith such issues, conciliatory mechanisms such as a“Local Autonomies Association” were activated.Moreover, while devolution often leads to goodgovernance, it can also lead to inter-jurisdictionalcompetitions (Box 12.1).

Table 12.1 Governmental Environment ProtectionVision in Selected Countries of Asia andthe Pacific

Country/Territory/Area Selected Vision Document(s)

NORTHEAST ASIAPR China China’s Agenda 21Japan Basic Environment Plan; Action Plan for

Greening EnvironmentMongolia Mongolian Agenda 21 (1995)Republic of Korea Green Vision 21

SOUTHEAST ASIAIndonesia Indonesia Agenda 21Malaysia Vision 2020Myanmar Myanmar Agenda 21, Second Outline

Perspective Plan, 1991-2000Philippines Philippine Strategy for Sustainable

Development; Philippine Agenda 21Singapore Singapore Green PlanThailand National Plan

Environmental Vision 2020Viet Nam National Strategy for Environmental

Protection 2001-2010National Environmental ActionPlan 2001-2005

SOUTH ASIABangladesh Environmental Conservation Act, 1995;

National Environmental ManagementAction Plan

Bhutan National Environmental Strategy for Bhutan“The middle Path”, 1998

India National Conservation Strategies; NationalPolicy on Pollution Abatement

Islamic Republic of Iran National Environment Action PlanMaldives National Environment Action Plan 1999-2005Nepal National Environment Policy and

Action Plan I & IIPakistan National Conservation Strategy

and Action PlanSri Lanka National Environment Action Plan; Forestry

Master Plan; Coastal Zone Management Plan

CENTRAL ASIAAzerbaijan National Environment Action Plan 1998Kazakhstan National Environment Action PlanKyrgyzstan National Environment Action Plan 1996Turkmenistan State Programme of Regional Improvement

2000Uzbekistan National Environment Policy

SELECTED SOUTH PACIFICAustralia National Strategy for Ecologically

Sustainable DevelopmentCook Islands National Environmental Management

Strategy, 1993Fiji Sustainable Development BillKiribati Kiribati Environment Act, 2000Marshall Islands National Environment Management

Strategy, 1993Micronesia (Federated National Environmental ManagementStates of) StrategyNauru National Environmental Management

Strategy, 1999New Zealand Government Energy Efficiencies Leadership

Programme; Sustainable Land ManagementStrategy; Coastal Policy Statement

Niue National Environmental ManagementStrategy, 1994

Samoa National Environment and DevelopmentStrategy, 1993

Solomon Islands National Environment ManagementStrategy, 1993

Tonga National Environment ManagementStrategy, 1993

Tuvalu National Environmental ManagementStrategy, 1993

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The lack of local government resource, bothtechnical and financial, is also a constraint to effectivedecentralization. In Sri Lanka, for example, the optionexercised by a Provincial Council to enact its ownEnvironmental Act, and the related institutionalstructures, created severe operational constraints dueto lack of necessary expertise. In such a situation,efficient coordination between the central government(which is often responsible for allocating resourcesto local government) and provincial administrationsbecomes very difficult (ESCAP 1999). By contrast,Australia as a developed country has sufficientresources to support local government efforts. TheFederal Government has a National LocalGovernment Environment Resources Network andthe Local Government Environment InformationExchange Scheme to provide information and supportto local government to promote better environmentalmanagement.

B. Sectoral PoliciesNational-level plans and policies on sustainable

development are now being increasingly supportedby sectoral plans and policies. Indonesia, for example,has initiated the development of Sectoral Action Plansthat incorporate sound environmental principles intosectoral planning.

The fulfilment of national obligations underagreed global environmental conventions has also ledto a range of sectoral plans, including those relatedto greenhouse gases, biodiversity conservation and

the phasing out of ozone depleting substances. TheSouth Pacific island countries, for example, aredeveloping policies and strategies in response toclimate change with the support of the ClimateChange Training Programme, whilst countries thatare signatories to the Convention on Biodiversity,have completed or are in the process of completingtheir National Biodiversity Strategy and Action Plans(NBSAPs) (Chapter 3).

Sectoral plans and policies have also beentraditionally developed for land, agriculture andwater concerns. There are some efforts to integrateenvironmental considerations and broadersustainable development elements into such sectoralplans and policies (see Chapters 2, 4 and 10).

1. BudgetingIn order to be effective, macro- and micro-

strategic planning policies have to be supported byappropriate allocation of budgets. Unfortunately,most countries of the region subscribe to theconventional view that environmental infrastructureis a semi-luxury that contributes to health and qualityof life, but little to economic growth (ADB 1997b).Public expenditure on environment in the developingcountries of the region, for example, is typically lessthan 1 per cent, and environmental investments areperceived to be needed only in the later stages ofdevelopment.

However, a number of countries are advancingeconomic and fiscal policies, such as privatization

Box 12.1 Devolution of Power and Environmental Regulation in India

The constitutional amendments in 1992 that became operational in April 1994 provided for the devolution of power todemocratically elected local governments. The local governments for the villages (Panchayats), towns and cities have been empoweredto undertake environmental activities such as soil conservation, water management, social forestry, water supply, public health andsanitation and solid waste management etc.

Devolution of powers for environmental regulation among three levels of government (Central, State and Local) is intended toenhance participatory planning, and to reduce the cost of regulation, as well as reduce bureaucratic delays and uncertainty inimplementation and monitoring. However, in a free and growing market economy, there is a risk that it may contribute tounnecessary competition among the jurisdictions through the relaxation of environmental regulations to attract more business andinvestment.

The effectiveness of implementation of environmental laws and the degree of compliance by polluters varies significantlyamong the states, leading to instances where different State agencies have taken different decision over similar environmental issues.For example, the Government of Tamilnadu allowed the establishment of a chemical industry (Nylon-66) while the Government ofGoa rejected such a proposal. Similarly, a number of polluting industrial units were closed down in the capital city of Delhi, butwere welcomed by the neighbouring States. These examples indicate a lack of coordination among the State agencies. In response,an important safeguard against relaxation of norms has been put in place by the Central Pollution Control Board through theMinimum National Environmental Standards (MINAS). The State Boards can only make these standards more stringent if the localenvironmental conditions demand, but in no case can they make the local standards less stringent than the MINAS.

The Indian case points out that while devolution of power leads to good governance, it also demands establishment of checks,and balances through a mix of central and state regulations to avoid potential harmful inter-jurisdictional competition in theimplementation of environmental regulations.

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appropriate pricing and removing adverse subsidies,that may provide the means of sustaining and/orincreasing their environmental expenditure.Improvements in the use of economic instrumentsmay also improve resource-use efficiency and reduceprotection and rehabilitation costs by preventingoveruse.

Such economic and fiscal policies have alreadybeen initiated in the region through the introductionof economic instruments in Japan, Philippines andthe Republic of Korea. More recently Fiji, throughits Sustainable Development Bill, is working towardsproviding the use of market-based instruments,such as tradable rights and taxes in almost all sectorswhere there is an abundance of natural resources,particularly in the management of fisheries andmarine resources. This will ensure a move towardsmarket-based incentives which provide the rightmarket signals for the appropriate pricing ofresources, and generation of necessary investments.

2. Trade PoliciesThe four key issues of relevance to trade policy

in the region are: the international competitive effectsof environmental regulations; the trade effects ofenvironment-related product standards, and relatedecolabelling and ecopackaging regulations; the useof trade measures to secure internationalenvironmental objectives; and the effects of trade onenvironmental resources.

The developed countries of the region havemade efforts to create positive linkages between tradeand environment. Australia has called forinternational action aimed at assessing theenvironmental effects of trade policies so that reformscan be supported by appropriate environmentalpolicies. Both Japan and the Republic of Korea havetaken an active role in international efforts toharmonize and incorporate trade and environmentalissues through the WTO Committee on Trade andEnvironment. However, the position taken by Indiamay well reflect that of many developing countriesof the region. India supports an open, equitable,rule-based, cooperative, non-discriminatory andmutually beneficial economic environment. It holdsthe view that the solution lies not in unilaterallybanning trade, but in a two way system of technologytransfer, from developed to developing countries, andthe pricing of commodities at a level that does notnecessitate their overexploitation or jeopardize theirdevelopment priorities. Trade measures should beapplied for environmental purposes only when theyaddress the root causes of environmental degradation,so as not to result in an unjustified restriction ontrade.

The dumping of obsolete and pollutingtechnology and products is also a major concernraised by the developing countries of the region. Inthe absence of appropriate agreements, privateenterprises in developed countries with stringentenvironmental standards are encouraged to shifthighly polluting industries to countries with lowerenvironmental standards and regulations. Moreover,there seems to be growing awareness that certainproducts from the Asian and Pacific countries couldbe threatened with green bans or may be subject tocomplex ecolabelling or environmental certificationprocedures. For example, environmental groups inAustralia and New Zealand have proposed a ban onPacific Island hardwoods because of perceivedexploitation of landowners, poor logging practicesand the unsustainable nature of the industry. Timberexport from Southeast Asia has similarly been thesubject of targeting by European environmentalgroups; in response the countries like Indonesia andMalaysia have developed national systems andcapacities for certification. Some countries are alsotrying to turn the preference for environmentallyfriendly processes and products to marketingadvantage. Fiji’s low input small-holder sugar caneproduction systems, for example, is amenable toconversion to organic production to take advantageof premium prices for certified organically grown andprocessed products (ESCAP 1999); similar moves areunderway in the tea plantation sector in Sri Lanka,with the conversion of existing tea estates to “Biotea”cultivation.

3. Complementary Social Policies

(a) Property RightsExperience has shown that communities with

clear property rights with regard to nationalresources, manage these resources in a much moreefficient manner. Australia, for example, supportspolicies that: define property rights for water; assistin the development of water markets and watertrading; and provide irrigators with greater businessflexibility. It recognizes that appropriate pricingpolicies can also help in meeting the long-terminfrastructure needs of the irrigation sector.

Property rights can also influence the impactof trade policy on the environment, particularly incases where exploitation of a natural resourcedepends critically on the available stock, such as inagriculture or forestry (Lopez 1991). For example, ifthe trade policy increases the value of timber, thereis likely to be more investment in, and maintenanceof, the resource with landowners internalizingenvironmental costs. Many countries of the region

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provide examples of links between property rightsand conservation. In Malaysia, privatization ofexisting forest plantations has been encouraged,particularly in Peninsular Malaysia; the purpose issimilar to that in Sri Lanka where Plantation SectorReforms (privatization) have improved theproductivity, investment profile and efficiency of thesector. In People’s Republic of China, theGovernment formulated an encouraging policy thatthose who control the area get the benefit, andthrough this encouraged family contracting, corporatesharing, leasing and auctioning of the usage rights ofthe land.

India has strongly supported the linking ofbiodiversity conservation with the need to developan internationally recognized regime for recognizingthe property rights of local communities, particularlyin relation to genetic resources. Pending this, allpatent applications would be required to disclose thesource and origin of the genetic material used; sharethe knowledge and practices about the use of geneticresources by the local communities and identificationof such communities; and give a declaration that laws,practices and guidelines for the use of such materialand knowledge systems in the country of origin havebeen followed.

(b) Public ParticipationPublic participation is integrated into the

governance mechanisms for sustainable developmentin many countries of the Asian and Pacific region.Communities, NGOs, industry associations, andindigenous peoples are now provided withopportunities for representation in sustainabledevelopment and environmental institutions.

The level of such public participation variesbetween the developed countries, developingcountries and economies in transition. Uzbekistan,for example, had no arrangements for the creationand functioning of NGOs, but since independence,their emergence and development became possibleand they currently play a substantial role in theformation of public opinion and in governmentaldecisions on important social issues. In the RussianFederation, NGOs activity has also increased, but dueto the lack of supporting legislation and poorlydeveloped systems for information dissemination,the development of dialogue and cooperationbetween government restitution and NGOs is notyet widespread.

Increased understanding and knowledge at thecommunity level, and recognition of existing localself-help mechanisms, however, have led to increasedefforts that directly link governance for sustainabledevelopment to the communities. It is recognizedthat community participation is a long-term process

that requires formal procedures supported by the timeand effort required to build community consensus,and a willingness by government agencies torecognize this consensus and incorporate it into theplanning and implementation stages.

METHODS AND TECHNIQUES

A. Command and Control Instruments

1. National Level InstrumentsCommand and control approaches have been

applied to several sectors. For example, themanagement of forest resources in many countriesemploys a system of governmental concessions thatlicense the allocation of allowable cuts, with the threatof cancellation or reduction of a concession as amechanism for ensuring that the resource is protected.Brunei Darussalam’s Reduced Cut Policy, forexample, provides mechanisms for protecting forestresources and associated biodiversity and has resultedin a 50 per cent reduction in logging area. Incommercial fishing, the command and control systemis exemplified by New Zealand’s Quota ManagementSystem (see Chapter 5). A number of countriesemploy a command and control approach forregulating effluents or emissions, whereby standardsare set to a level where the discharge, emission, ordeposition of waste, does not affect any beneficialuse or result in conditions which are hazardous topublic health, safety or welfare or to ecologicalresources (see Chapters 4 and 6).

In certain cases, building codes or controlregulations are utilized instead of standards. In Fiji,where there is no formal legislation on air quality ornoise standards, all new factories, dwellings andpublic entertainment buildings have to be formallyapproved and the conditions of approval typicallyrequire the control of air and noise pollution. InPakistan, a Building Energy Code has been preparedas a supplement to the National Building Code. Itincludes specific recommendations for both buildingdesign and mechanical equipment, such as fans,lights, and air-conditioning. Improved buildingdesigns were found to reduce household energy billsby up to 20 per cent, which could be lowered to50 per cent with the use of efficient home appliances.In Singapore, the developer submits building plansto the Ministry of Environment for clearance ontechnical requirements on environmental health,drainage, sewerage, air and water pollution control,and hazardous and toxic wastes.

The achievement of standards is also pursuedthrough the requirement of technology fixes or limitsto use. Bhutan has taken a combination of initiativesto curb pollution from traffic and cooking stoves

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(Box 12.2). Vehicular pollution control has alsoreceived increased attention in other countries.Indonesia’s short-term targets include the reductionof lead content in gasoline by 66 per cent, provisionof unleaded gasoline in all urban fuel outlets andregulations on the emission level of road vehicles.In India, the use of unleaded petrol in four-wheelvehicles fitted with catalytic converters has beenintroduced in four metropolitan cities (Mumbai,Calcutta, Delhi and Chennai), with plans to graduallyextend this to other cities. The Committee on CleanFuels of the Pakistan Environment Protection Councilmandated the introduction of catalytic converters intwo-stroke engines. In Malaysia, catalytic convertershave been required since 1993 for all new cars.Singapore also mandates that all petrol-drivenvehicles be fitted with catalytic converters.

Some command and control efforts havefocused on particular sectors and priority areas.Indonesia’s PROKASHI programme was launched in1989 with the objective to develop strict policies forindustrial wastewater treatment. Its initial focus wason the worst industrial polluters in the 24 most highlypolluted rivers with the goal of reducing theirpollution load to 50 per cent. In REPELITA VI, the

country’s Sixth Five-Year Development Plan, theobjective has been broadened to reduce wastewaterdisposed to 50 rivers in 17 provinces by 80 per cent.In Thailand, the Ministry of Science, Technology andEnvironment (MOSTE) identifies and declares“pollution control areas”. The provinces covered bysuch areas are mandated to formulate a PollutionControl Action Plan that contains remedial andpreventive measures. This is then incorporated intothe Environmental Quality Management Action Planfor the province.

Bans and phase-outs have been the preferredapproach for truly unwanted pollutants, such asozone depleting substances (ODS). The import ofrefrigerators using ODS has been banned in Sri Lanka,whilst in Thailand, CFCs have been banned in theproduction of new domestic refrigerators. Manycountries of the region have also developed officialphase-out schedules for ODS; for example, Singaporehas a Tender and Quota Allocation System that capsthe consumption of ODS in accordance with MontrealProtocol guidelines and ensures the equitabledistribution of the controlled supply of ODS toregistered distributors and end-users.

Box 12.2 Control of Air Pollution in Bhutan

The major sources of air pollution in the urban centres of Bhutan are automobiles, and the burning of fuelwood for heating andcooking, as identified by a survey conducted in Thimpu by the National Environment Commission in early 1999.

More than 86 per cent of the vehicle fleet in Bhutan is concentrated in the urban centres of Thimpu and Phuentsholing. Theremaining 14 per cent are sparsely distributed in the other districts of Bhutan. As of April 1999, the total number of vehiclesregistered in Bhutan was around 16 335. In 1997 the total number of vehicles registered was 11 798 and in 1998 the total number was14 206. Between 1998 and 1999, there was an increase of 14 per cent in the number of vehicles registered in Bhutan. If this trendcontinues, the number of vehicle in Bhutan will double by the year 2010.

Due to the increasing vehicle fleet in urban centres, air quality is deteriorating and causing concern to the authorities. Thelikely consequences of deteriorating air quality will be an increase in the frequency of respiratory diseases such as asthma andchronic bronchitis among the urban population.

Some of the main causes identified for high levels of vehicular emission are, inferior fuel quality, aging vehicle population,improper and poor maintenance of vehicles, high altitude resulting in incomplete combustion, import of second-hand vehicles, andthe use of two wheelers which often employ 2 stroke engines.

Bhutan has taken major step in its efforts to curb problems relating to air pollution. The following are some of the measuresthat have been initiated to control air pollution:

• A vehicle emission control programme was initiated in 1995 on a pilot basis with a view to set up baseline data for the purposeof deriving vehicle emission standards. Today, all vehicles must carry an emission test certificate to meet emission testrequirements.

• Bhutan has also started importing unleaded petrol and premium quality diesel (low sulphur content).

• The import of second hand vehicles has been banned, together with the import of two stroke-engine two wheelers.

• The Government of Bhutan is also promoting the use of more fuel-efficient stoves for heating and cooking (saw dust stoves).

It is expected that these initiatives will not only help curb air pollution in urban centres but also reduce the pressure on theforests from the increased efficiency in biomass combustion.

Sources: Government of Bhutan

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In the management of toxic chemicals andhazardous substances, countries may identify prioritychemicals and substances and subject them to verystrict regulation. In Thailand, for instance, about918 chemicals were named in the MinisterialAnnouncement (1994) to be controlled by theMinistries of Industry, Agriculture and Public Health.In India, 18 categories of hazardous wastes have beenidentified and listed for strict regulation. Importsare restricted and exporters are required tocommunicate details of any proposed transboundarymovement of hazardous wastes to the CentralGovernment as well as to the concerned StatePollution Control Boards.

In some countries of the region, penalties areimposed for infringement of regulations. Companiesor individuals in Malaysia planning to importchemicals, which are banned or restricted in countriesthat produce them, have to get prior consent fromthe Government. Maximum fines of RM 500 000 orup to five years’ jail, or both, can be invoked forviolations. It is also a serious offence in Australia tomove hazardous wastes internationally without therelevant permit. The maximum penalty for offencesthat are likely to result in injury or damage to humanhealth or the environment is Aus$1 million for acompany, or up to five years imprisonment for anindividual. In addition, executive officers ofcorporations may be held liable if they are found tohave been negligent.

To combat potential impacts resulting frombiotechnology, India has prepared its RecombinantDNA Safety Guidelines and Regulations. TheRepublic of Korea, New Zealand and Australia havealso established systems that deal with these concernsthrough risk assessment and management. TheRussian Federation has also recognized the need toensure the safety of transboundary technologytransfers of genetically modified organisms and theirproducts, and has targeted the creation of a legaland regulatory framework for biodiversity as anurgent national priority. Indonesia has also takeninitial steps to develop biosafety procedures for thecontrol of genetic materials resulting from researchin the country, as well as for the import of modifiedliving organisms. It is also playing an active role inthe negotiations for an international biosafety protocolunder the auspices of the United Nations Conventionon Biodiversity.

Command and control approaches are alsodirected towards governmental organizations andemployees. In Japan, there is a strong focus on the“greening” of government – controlled industry, aswell as overall government operations. Thus, in thearea of government procurement, Japan is switchingover to recycled paper and is promoting the adoption

of low emission vehicles, including electric cars(Box 12.3).

While command and control measures areincreasingly being applied in the region, there areseveral constraints to their effective implementation.For example, with respect to biodiversityconservation, many developing countries have notyet been able to develop comprehensive managementplans for their protected areas. In Indonesia, lessthan five per cent of protected areas (out of a total ofover 700 existing and proposed protected areas) havecomplete management plans and most other siteshave not even been accurately surveyed or mapped.

At best, command and control approachesrequire a willingness to undertake enforcement andthe power to enforce regulations. The effectivenessof enforcement is also related to the severity ofsanctions, as perceived by the potential polluters. Acase study in Sri Lanka revealed that there areproblems with regard to enforcement of penalties:the current law is overloaded with command andcontrol mechanisms which cannot be matched byappropriate regulatory resources; lack of relevantregulations and existence of other soft law are makingthe regulations less effective whilst court delays areresulting in delayed judicial enforcement. The resultis that there is a reduced risk of sanction of polluters,and hence the laws are being ignored.

The lack of human resources to enforcelegislation is exacerbated by a mismatch between thetype of training and experience of available personneland the critical concerns at hand. In Indonesia andthe Philippines, for example, protected areasincreasingly include marine and wetland ecosystems.However, the agencies responsible for these areas donot have sufficient experts to manage them, becausein the past, the protected areas covered mostly forests.In Armenia, on the other hand, its State Forest Service“Hayantar” is affected by problems of bothinappropriate structure and weak capacity, becauseduring the Soviet era various core functions werecarried out centrally in Moscow.

Given the above-mentioned constraints, thelevel of enforcement is often low and an average levelof enforcement of 20 per cent is considered to berelatively high for the developing countries of theregion (Lohani, et al 1997).

2. Command and Control at Sub-national and LocallevelThe main command and control instruments

used at the sub-national level are zoning and landuse control. For example, Thailand’s Office ofEnvironmental Policy and Planning has initiated aprogramme of coral protection and rehabilitation bya zoning system based on the classifying of coral

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reefs according to conservation and economicdevelopment objectives. In Pakistan, the Port QasimAuthority has initiated a number of zoning controlactivities that involve relocating industries in largeindustrial estates to clear the coastline. Furtherexamples of coastal zone management mechanismsare provided in Chapter 5.

Land use planning is also used to strengthenthe rural-urban continuum and protect primeagricultural lands. India regulates the conversion ofagricultural lands to non-agricultural use throughland revenue codes, whilst Fiji has a comprehensive“Land Conservation and Improvement Act” wherefailure to adhere to good land husbandry can resultin farmers losing their lease entitlement.

The practice in Singapore is for the planningand development authorities to consult the PollutionControl Department (PCD) on proposed newdevelopments. The PCD not only assesses the impactof such new developments on the environment butalso ensures that new industrial and residentialdevelopments are properly sited and are compatiblewith the surrounding land use. Sri Lanka follows a

similar strategy. As part of its efforts to ensure properwaste disposal, industries are encouraged to site inindustrial estates and the relocation of certainindustries that generate hazardous wastes, such astanneries and the production of pesticides, is ongoing.

The recently passed Clean Air Act in thePhilippines provides another example of theapplication of the land use planning concept topollution control. It mandates that airsheds bedelineated using ecoprofiling techniques andemission quotas are then allocated to specificpollution sources.

The Republic of Korea encourages resourcesaving and environmentally friendly landdevelopment by constructing energy conserving andenvironmentally sound traffic systems, includingnetworked subway systems, exclusive bicycle roads,a bus lane system and radial and circulartransportation networks between metropolitan areasand their suburbs. At the same time, the developmentof multi-centred cities is promoted to disperse theconcentration of human and car traffic throughoutthe area.

Box 12.3 Greening of Government Operations in Japan

In Japan, the national government accounts for 2.2 per cent of gross national expenditure, representing a significant amount ofeconomic activity. Thus if the government conducts its operation in an environment-friendly manner, it can make a major contributionto reducing the burden on the environment.

Realizing this the government of Japan took a lead in adopting environment-friendly actions and encouraged the localgovernments, corporations and individuals to do the same. The process was initiated with the approval of an Action Plan by theCabinet in June 1995 for Greening Government Operations (Green Government Action Plan). Details on the implementation of theplan were agreed at a Council of Ministries and Agencies Concerned on Promotion of the Basic Environment Plan.

The Green Government Action Plan provided the actual measures to be carried out in various areas. Some of the most notableinitiatives implemented or under way for greening the government operations recently included:

• Environmental considerations are taken into account in construction and maintenance of buildings.

• Reduce waste generation by 25 per cent or more between 1997 and 2000 particularly reduce the quantity of combustible waste(paper, etc.) by 30 per cent or more in this period.

• Creation of awareness in government employees through participation and by organizing environmental protection seminarsetc.

• Establishment of a system to monitor progress.

In addition the government makes efforts to save water and energy and promotes recycling and other environmental conservationmeasures at all its offices. The plan sets out many concrete proposals including 11 numerical targets for achieving objectives onenergy savings, use of recycled paper and the introduction of low-emission vehicles.

A survey was conducted to determine the progress in implementing the Green Government Action Plan at all ministries andagencies during 1997. According to the survey, considerable progress was made in many fields however, in some fields performanceswere still short of targets. Most notably, the amount of waste was still excessive and the diffusion rate of low-emission vehicles(0.13 per cent) was far below the target set for the year 2000 (10 per cent).

The above measures by government of Japan would hopefully further enable greening of the government performance in thecountry.

Source: Environment Agency, Government of Japan 1999

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3. Command and Control at the Project Level

(a) Environmental Impact Assessment (EIA)In a large majority of countries, EIA has a

statutory basis either in the form of a separate act(e.g. Republic of Korea, Sri Lanka, Philippines, NewZealand) or an amendment to or provision underexisting environmental or planning laws (e.g.Indonesia and Malaysia) (see Chapter 11).

Many donor countries and agencies(i.e. multilateral banks) also apply the EIA process totheir development assistance projects. In responseto their national and international requirement,People’s Republic of China prepared its ManagementGuidelines on Strengthening Loan Projects for EIA,and guidelines have also been issued in countries ofthe region for EIAs in certain sectors. Thus theCentral Pollution Control Board of India has issuedguidelines for EIA in key industrial sectors, whilstBhutan has also developed sectoral guidelines forkey development sectors including hydropower,power transmission line, forestry, industries, miningand mineral processing and transportationinfrastructure. In addition, guidelines have also beenexpanded in many cases to include occupationalhealth and safety issues (e.g. in Australia) and theuse of environmental health impact assessments ofstrategic policies and development programmes andprojects (e.g. India and the Philippines). Theintegration of social aspects into EIA has also beeninitiated, incorporating the potential for culturaldisturbances, the impact on cultural sites, the loss ofaccess to subsistence resources, the pollution of watersupplies and the development of appropriatemechanisms to facilitate an ongoing relationshipbetween the developer and the landowners for theresolution of future disputes.

In general, at least three major outputs areexpected from the EIA process: an identification andanalysis of the environmental effects of proposedactivities; an environmental management plan whichoutlines the mitigation measures to be implemented;and an environmental monitoring programme. Insome jurisdictions, such as in Indonesia, separatedocuments are to be prepared for each of theseaspects. In others, such as in the Philippines, allthree are presented as part of the EIA document.

EIA reports are often reviewed by a designatedagency or by a special “Standing Committee” or“Scoping Commission”. In most cases a technicalevaluation is made by specialists as the basis of thereview. In Thailand, EIAs for private projects mustbe approved by a committee of experts before licensesare granted by the appropriate agencies, althoughthe process has recently been changed to requireadditional review groups. In Republic of Korea, the

Central and Regional Committees for EIA, whichconsist of academics, engineers and specialists, reviewall EIA outputs. India follows a procedure wherebythe EIA study has to be evaluated and assessed byan impact assessment division (Ministry ofEnvironment and Forests or the State Governmentdepending on the nature and location of the project)who may consult a Committee of Experts, if deemednecessary. In Fiji, all EIA reports are submitted tothe Environmental Assessment Administrator of theDepartment of Environment for an assessment andthe recommendations are subsequently submitted tothe National Council for Sustainable Developmentfor approval.

In general EIA implementation in the regionfaces many constraints. Common, though notuniversal, amongst these are insufficient proceduralguidance; inadequate baseline data upon which tobase analyses; potential delays in projectimplementation; the lack of expertise for assessingimpacts; inefficient communication of EIA results todecision makers; lack of inter-agency coordination;limited capacity for review of EIA reports; andinsufficient commitment to follow up on theimplementation of environmental protection andmonitoring requirements. Other notable problemsinclude the low status of the agencies in charge ofEIA in the overall bureaucracy, the perception thatEIA is simply another bureaucratic requirement, andunwillingness of certain governments to open theprocess up to public debate, the relative weakness ofaffected interest groups and lack of commitmentsamong government officials. For example, a casestudy in Malaysia (ESCAP 1999) showed that, whilethe EIA procedure was supposed to be carried out atthe feasibility stage, the lack of adequate studies aswell as late submissions of such reports have reducedEIAs to a mere formality.

Pressing issues and emerging challengesinclude the need to improve the quality of EIApractice (e.g. by establishing monitoring, review,and other control procedures), securing a morecost-effective process, further strengthening publicinvolvement and greater emphasis on training,technical cooperation and professional manpowerdevelopment.

(b) Environmental Risk Assessment (ERA)The inclusion of ERA into the mix of

environmental management techniques arises fromthe need to avoid and mitigate the risks and hazardsassociated with certain forms of development. Pastexperience such as the Bhopal tragedy in India,(ESCAP 1990), the continued increase in productionand movement of toxic chemicals and hazardous

269


wastes and concerns related to new technologies suchas biotechnology have made ERA increasinglynecessary.

Risk assessment also provides a more accuratepresentation of a project’s true worth by eliminatinginvestment bias towards projects that promoteoveruse or degradation allowing comparisons andrankings of different projects or alternatives for aproject. ERA has been applied, for example, by theADB to help make decisions on projects such as the700-MW coal-fired power plant in Pagbilao GrandeIsland, Philippines, and the Yunnan-Simao forestrydevelopment and pulp mill project in YunnanProvince, People’s Republic of China.

Some countries in the region have alsodeveloped their own systems for environmental riskassessment. For example, the Republic of Korea hasexpanded and accelerated its chemical riskassessment capacity and has introduced anEnvironmental Toxicity Prediction Programme.Australia has established a National IndustrialChemicals Notification and Assessment Scheme andan Existing Chemicals Review Programme to reviewlong established chemicals against contemporarystandards.

India applies ERA to industrial units and effortsare underway in the adoption of hazard analysis,off-site emergency plans, the establishment ofemergency response centres and poison controlcentres. India’s Ministry of Environment and Forestshas also established the National Register ofPotentially Toxic Chemicals (NRPTC) for collection,collation, analysis and dissemination of existingnational and international information supported bysub-national Registers to create a widespread networkthroughout the country.

ERA of projects is an emerging issue in manydeveloping countries in the region. It shares similarneeds and problems as those involved in thedevelopment and promotion of EIA and there is aneed to strengthen institutional arrangements andcapacities as well as review, monitoring andenforcement powers, with legal provisions for theeffective implementation of the process.

B. Self Regulation and Participation ofStakeholdersSelf regulation and voluntary or cooperative

control mechanisms are being increasingly promotedin the countries of the region, in part due togovernments’ limited capacities for enforcementthrough command and control mechanisms. Forexample, Japanese industries, with theencouragement of the government, have startedvoluntary emission control measures for some

hazardous air pollutants with a pledge and reviewsystem. In addition, the Japan Chemical IndustriesAssociation has implemented a pollutants releasesurvey and New Zealand’s Chemical IndustryCouncil has a Responsible Care programme for themanagement of hazardous wastes and chemicals. Thechemical industry in Australia has also undertakena voluntary programme to improve the health,environmental and safety performance of itsoperations. Further examples of private sectorself-regulation are presented in Chapter 13.

C. Market Based InstrumentsA range of economic instruments has been used

in the countries of the region to promote sustainabledevelopment (Table 12.2) and there are plans tostrengthen these in future. For example “Agenda 21– Indonesia” frames new programme areas topromote “economic approaches to natural andenvironmental resource management”, “preventiveapproaches to pollution”, and the “development ofsystems of economic, natural resource andenvironmental accounting”. People’s Republic ofChina also has plans to actively promote shifts in theeconomic development model and make economicefficiency the core of economic activity. This includesthe reduction of energy consumption and increasingproduction efficiency. Favourable prices, taxation andpreferential loan policies are to be adopted in fieldsthat are conducive to society and environment, suchas pollution control, clean energy development,utilization of waste material, and natural resourcesprotection. The protection of resources and theenvironment through economic instruments will bea guiding approach (Box 12.4).

Even in newly emerging economies, such asMongolia, the policy direction is towards the use ofeconomic incentives for the optimal utilization ofnatural resources and the protection of theenvironment. In Uzbekistan, the Cabinet of Ministersapproved the concept of the “establishment ofscientifically based economic and legal mechanismsfor the use of natural resources” on June 26, 1996.Reforms in sustainable agriculture in Armenia includeproviding the necessary legislative framework for theimplementation of a pricing policy, whilst the RussianFederation has created economic machinery to adaptthe water industry to market conditions and facilitateadequate financing of water management activities.

The following sections examine the differenttypes of market-based approaches as they areimplemented in various countries of the region,including environmental taxes; user fees; targetedsubsidies; eco-labels; disincentives; and depositrefund systems.

270

CHAPTER TWELVE

Box 12.4 Environmental Tax Reforms in People’s Republic of China

Environmental taxes are often criticized for being inflexible and difficult to adjust to changing conditions. One difficulty is thegrowth in number and size of pollution sources and the consequent higher level of emissions. Still another is the increase in thepublic’s willingness to pay for improved environmental quality as incomes rise and environmental sensitivity increases. In a rapidlyindustrializing and growing economy such as in People’s Republic of China, these factors are particularly important. The reformedPollution Levy System (PLS) in the country therefore includes annual escalation of the rates (proposed at 9 per cent) to deal withthese problems. This approach also provides enterprises with information to make optimal investment decisions. The new PLS isdesigned to be a national system, but People’s Republic of China’s regions vary widely in industrial intensity, income, populationdensity, and their demand for environmental quality. Accordingly, it provides for regional shift factors that incorporate theseconsiderations into rate determination. As a result, the richer, more heavily industrialized regions will pay a higher rate than lessdeveloped areas.

The reformed PLS adopts the “pollution equivalent” (PE) concept to provide an administratively feasible benefits basis for thesystem. Following this concept, each pollutant is rated according to its harmfulness and assigned a PE index value greater or lessthan the reference emission, which is assigned the value 1. This factor is then used to adjust the measured quantities of pollutantsaccording to their relative proportions in the overall emissions stream. Because a uniform rate is charged on this constructed taxbase, the rate structure itself remains uncomplicated while still accounting for the actual risks of the pollutants in question. Thereformed PLS simplifies the task of levying and enforcing the tax applying a flat rate to sources and pollutants where determiningactual emissions is impractical. Per vehicle charges for noise pollution, per capita charges for wastewater treatment, and perhousehold charges for garbage are examples. The pragmatic solutions to cover not only large industrial sources but also smallerenterprises and nontraditional emitters, including some non-point sources to use a flat fee only roughly related to emissions.

Projecting revenues from the reformed PLS over time is difficult both because incomplete data on the tax base and because thebehavioral responses to the incentive to reduce pollution are uncertain. However, a revenue simulation pilot study covering 77 citiesand using 1995 data found that receipts would have been about 10 times the amount actually collected by the old system, assumingno changes in behavior due to the tax itself. On the revenue use side, funds raised by the tax will continue to support environmentaladministration at all levels, and with the remainder for funds created to fill the investment gap in pollution control caused by capitalshortages and by inadequate general government revenue due to the existing tax structure.

Implementation on a pilot basis to test the programme began on 1 July 1998 in three large metropolitan areas in differentregions of the country, Hangzhou, Zhengshou, and Jilin. For the pilot programme, applicable tax rates have been set at one-half ofthose proposed for the reformed PLS. The pilot programme is set to last one year, and it will be followed by an intense evaluationwith subsequent required adjustments. Assuming all goes well, nationwide implementation of the new PLS is scheduled for 2000.

One factor in the success of the reform so far is the full participation of field-level personnel, who helped structure a programmeresponsive to the needs of municipalities, provinces, and the taxed entities. Another factor is the inclusion of persons with politicalexperience. Moreover, participation by key non-environmental agencies avoided provisions that otherwise would have been certainto spawn conflict.

Strengthening and expanding the monitoring, inspection, enforcement, and administrative functions and the performanceenvironmental authorities is a monumental-task and a major challenge to implementation. However, when compared with those ofusing more intensive command-and-control regulation to achieve the same level of pollution reduction, the tax approach appearsbetter because of its transparency and reduced opportunities for administrative exceptions.

Source: Environment 1999

1. Environmental TaxesEnvironmental taxes have been used to reduce

the use of automobiles and motor fuel and to reducepollution. Thailand has a tax structure that puts arate of 100 per cent or higher on automobile importsboth as a measure to curb excessive consumption ofthe item as well as to control a potential source ofpollution and congestion. The government also putsa price differential on leaded petrol.

Industries in Singapore may also apply forpermission to discharge their effluent containingbiodegradable pollutants directly into the publicsewers on payments of a tariff, allowing theadditional costs of treating the extra pollution loadat the sewage treatment works is to be recovered.

The Department of Environment andConservation of Papua New Guinea and the NationalEnvironment Commission of Bhutan have proposedthat the costs of environment impact assessment,monitoring and auditing performance should beborne by developers rather than the government.Alternatively, those costs, which are borne by thegovernment, should be recouped through theimposition of fees. This is actually already thepractice in the Philippines where developers arerequired, under the conditions of their EnvironmentalCompliance Certificates, to establish anEnvironmental Guarantee Fund (EGF) as well as aMultipartite Monitoring Fund.

271


Tabl

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Pollution ControlResource Management

272

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Pollution ControlResource Management

273


2. User FeesRoad pricing was introduced in Singapore as

early as the 1970s to reduce road congestion andcontrol air pollution. Charging of drivers who wantto use roads in the city centre during peak hours, ledto a reduction in congestion of 70 per cent (Panayotou,1994). The Republic of Korea also uses congestionfees on cars entering designated areas. In addition,high parking fees in public parking lots which havepreviously been open to the public without charge,and a heavy tax for households possessing more thanone car has been implemented.

In Singapore, the capital and recurrent costs ofbuilding and operating the water and wastewatertreatment plants are financed by the government andrecouped from users through fees and tariffs. Bycontrast, dedicated hospital waste incinerators arebuilt and operated by the private sector and userspay full cost fees to dispose of their waste.

The Philippines has recently implemented anenvironmental user fee for industries dischargingwastewater into the Laguna de Bay. In the pilotphase, one pollutant, biological oxygen demand(BOD), was considered. The first batch of industries,including major polluters representing ninety per centof pollution discharge into the lake, was initiated intothe system in 1997. In addition to meeting the existingdischarge standards, these industries were requiredto pay a fee for every unit of pollution they discharge.The polluters were also required to pay a small flatfee in addition to the variable fee to ensure acontinuous funding of the system’s administrativecosts. The environmental user fee system succeedednot only in creating revenue for the implementingagency but also encouraged the larger industries tocut pollution loads by over ninety per cent in somecases. The success of the environmental user feesystem in the management of Laguna de Baysupported the passage of further legislationmandating the use of market based instruments. TheClean Air Act of 1999 in the Philippines containsprovisions that establish an emission charge systemfor industrial permitting and in the vehicleregistration renewal system. The fees, as well as finesand penalties, go to an Air Quality Management Fundto finance containment, removal and clean-up as wellas support research, enforcement, monitoringactivities and technical assistance to relevant agencies.

User fees have also been successfully utilizedin forest management within the region. For example,by pricing forestry resources, incentives were createdfor forest protection as well as the raising of revenues:in 1980, Indonesia started a reforestation fee of$4 per m3 which has now been raised to $22 andearned more than US$1 billion for a fund for forestrestoration and conservation. Indonesia also plans

to use further innovative and sustainable financingsolutions, including charging ecotourists for the useand enjoyment of protected areas to generate revenueto sustainably manage their resources.

3. Targeted SubsidiesSubsidies have historically been targeted at

certain natural resource sectors that require particularprotection. For example, Malaysia has complementedefforts in sustainable timber production by providingtax exemptions for investment in timber plantations.Japan makes available substantial funds (2.5 billionyen) for low interest loans to private owners of forestsfor the revitalization of forest improvement activitiesunder the Temporary Fund Law for the Improvementof the Forestry Management Framework.

Other forms of subsidy related to naturalresources management include: preferential lowinterest loans for desertification control (People’sRepublic of China); reduction in the interest rates ofcredits given to support forest villagers; and newlegal and financial arrangements to encourage theprivate sector and farmers to be involved inplantation activities (Turkey); incentives for woodsubstitution, subsidies in use of fuel-saving devicesand alternative sources of energy supply like biogasand solar energy (India); provision of kerosene oildepots in places where regular energy supply forpeople can be ensured without harming the forests(Nepal); and provision of credit-providing financialinstitutions to coastal communities to finance thedevelopment of higher value-added fish-processingbusinesses (Indonesia).

Taxes have also been exempted or reduced, forexample in Thailand, to provide for investment inenvironmental protection and energy savingequipment. Singapore has tax incentive schemes toencourage owners of trade, commercial and industrialbuildings to use energy-efficient equipment andtechnology and efficient pollution control equipment.The Philippines allows tax deductions for theinstallation of anti-pollution equipment for pioneerindustries. In India, the incentive of a 35 per centinvestment allowance, compared to the general rateof 25 per cent, is provided towards the cost of newmachinery and plant for pollution control orenvironmental protection. Sri Lanka also providessome fiscal incentives to industries to use advancedtechnology for the control or minimization ofpollution or waste. In Nepal, a duty concession isprovided for environmentally friendly vehicles.

Some countries have set up specialized fundingmechanisms to provide support or subsidies. Toefficiently prioritize investment and secure newrevenue sources, the Republic of Korea introducedthe Special Account for Environmental Improvement

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funded through the various charges imposed onpolluters. A Pollution Prevention Fund in Thailandhas been established and is expected to serve ascatalyst for moving industry, especially small andmedium scale industry, towards a more sustainablepattern of development. In Sri Lanka, the PollutionControl and Abatement Fund (PCAF) and thee-friends fund by the National Development Bank,both for investment in effluent treatment machinery,have already shown encouraging results.

4. Eco-marks and EcolabelsEco-marks or Ecolabels are attached on

consumer products in some countries of the regionto indicate that they are either manufactured byenvironmentally sound processes, or can be used inenvironmentally sound ways, or generally over theirentire life cycle, impose fewer burdens on theenvironment than similar products. For a moredetailed discussion of ecolabelling schemes operatingin the region, see Chapter 13.

5. DisincentivesSubsidy reduction is another measure that has

been effective in encouraging shifts to cleanerproduction. People’s Republic of China, for example,has significantly reduced its subsidy for coal from61 per cent in 1984 to 11 per cent in 1995. Its totaleconomic subsidy for fossil fuels fell from $25 billionin 1990/91 to $10 billion in 1995/96 (World Bank1997). Central government budget subsidy to coveroperating losses in state-owned coal mines has alsobeen significantly reduced. Coal price controls wereremoved with growing privatization and about halfof the production is now from private mines. Thishas reduced government spending and throughstructural adjustment and technological change, hasencouraged energy conservation and environmentalprotection (Gray 1995, Wang 1996).

6. Deposit Refund SystemJapan maintains exemplary deposit-refund

systems for solid waste recycling. In Japan’s beerbottle recycling system, for example, beer makers levya fee on the bottles as well as on the containers ofbeer. The deposit is passed on from manufacturersto wholesale dealers, and then to retail shops andultimately to consumers. At each distribution stage,the refund is made when the used containers andbottles are collected.

Deposit schemes are also being appliedeffectively on packaging waste in Turkey andrecycling rates of up to 65 per cent are being achieved.Republic of Korea also implements a Deposit-RefundSystem for products containing toxic materials ordischarging mass wastes. Deposit and refund

practices have also been quite widespread in theconsumer industry of India and Sri Lanka (seeChapter 8)

7. ConstraintsEconomic instruments that are self-regulated

require fewer inspectors and court actions, andgenerally result in a reduction in bureaucratic delays.The use of market based instruments, such aspollution levies and environmental user fees, alsoraise revenue. However, these instruments becomeless effective when the charge rates are below themarginal costs of pollution control and are notindexed for inflation, and also the imposition of fullcost recovery too quickly can creates serious economicproblems for industry, as has been experienced ineconomies in transition including Kazakhstan,Kyrgyzstan and Uzbekistan (HIID 1996a and 1996b).Lack of human resources and expertise is a majorconstraint to their implementation.

Economic instruments have been found to yieldthe best results in situations where a strongmonitoring system is in place, supplemented by astrict enforcement system. Consultation withindustrial associations is essential to minimizingresistance to newly imposed systems, whilst publicinformation and programmes and incremental chargesystems are other basic ingredients in achievingsuccess.

D. International Standards and MechanismsTransboundary pollution does not recognize

political boundaries and, whether moved by wateror air or by trade and other means, eventually affectsand imposes external costs on downstream ordownwind countries. Moreover, in a world that isincreasingly linked by trade, financial flows andtechnological diffusion, the difficult task of promotinggrowth while at the same time pursuing sustainabledevelopment cannot be pursued by individualgovernments alone. It is for the same reason that anumber of tools and standards such as ISO 14000,ecolabelling, trade related standards, etc. have beendeveloped to check environmental degradation andpromote sustainable development (see Chapter 13).

MONITORING AND ASSESSMENT

A. Environmental and Natural ResourcesAccountingEnvironmental and natural resources

accounting provides a methodology for monitoringthe sustainability of an economy or the performanceof one or more of its sectors. The approach involvesmeasurement of environmental quality and resource

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stocks at the start and end of on accounting periodto determine the changes in natural assets as a resultof their use. Physical measurements of change inresources and environmental quality are alsotranslated into monetary units to build acomprehensive picture of the status of environmentaland economic resources.

Some countries in the region have alreadydeveloped systems for environment and naturalresources accounting. Japan has developed a Systemof National Accounts (SNA) that includes the SatelliteSystem for Integrated Environmental and EconomicAccounting (SEEA), drawing upon the standardscontained in the SNA Handbook on IntegratedEnvironmental and Economic Accounting of theUnited Nations. Particular importance is being givento quantitative and qualitative changes in Japan’sforest and agricultural resources.

In Australia, the valuation of natural assets andexpenditure on environmental protection isincorporated into its system of national accounts. ItsBureau of Statistics has developed national accountbalance sheets to include the market value of naturalassets including forests, subsoil assets and land.These estimates are based on resource use values andexclude non-monetary environmental values. A rangeof environmental accounts, including physicalaccounts in an input-output framework and financialaccounts for environmental protection, are also beingdeveloped.

The Republic of Korea has also established asystem of Integrated Environmental and EconomicAccounting (IEEA) to enable the government (andpotentially private firms) to obtain correct informationon citizen’s welfare. The project to establish the IEEAsystem is based on the United Nations System ofIntegrated Environment and Economic Accounts(SEEA).

Environment and natural resources accountinghas also proceeded in a more advanced stage in thePhilippines, Indonesia, Malaysia and Thailand. Inthe Russian Federation, there are plans to adopt amore rational approach to account for production inany given region on the basis of strict natural resourceaccounting. On forestry, for example, production isnot only based on the value of the timber but alsotake into account the economic and environmentalconsequences of the decisions to cut forests. Aland-survey and evaluation of forestland has beenstarted and the values are expressed in roubles perunit of forest area for each type of forest and in eachspecific region.

B. Environmental Assessment and IndicatorsEnvironmental assessment or an overview of

environmental problems of a country or an area is an

essential prerequisite not only for environmentalaccounting but also for overall policy planning. It isfor the same reason that State of Environment (SoE)reports are now being prepared at national and localas well as regional and subregional levels. Japan’sEnvironmental Pollution Control Headquarters (1969)produced the first National SoE report in the Asiaand Pacific Region and, Osaka City was the first localauthority to produce an SoE report. In recent years alarge number of reports have been produced in thecountries of the region at national level, althoughlocal level reports are relatively rare in the developingcountries of the region. At the Regional Level, ESCAPproduced the first SoE Report for Asia and the Pacificin 1985, whereas the late 1990’s saw a number ofsubregional SoE’s by ASEAN, SPREP and the MekongSecretariat.

Effective assessment needs a comprehensiveinformation system. However, a review of theinformation base of many countries in the regionshows four shortcomings in the assessment andreporting on the State of Environment. Firstly, thelack of quality control in data collection andlaboratory analysis of samples. Only in a few caseshas the reliability of collected information beenverified through ground checks and proofing.Secondly, the basic data available are often notadequate to make a realistic environmentalassessment. Several countries in the region oftenoperate on the basis of outdated data. Withoutupdates (e.g. on land use patterns or the utilizationof resources), the data is unreliable for decision-making. Third, the statistical compatibility onenvironmental parameters is far from satisfactory.Collected to serve administrative and economicpurposes, they are compiled according to differentmethods. The collected data are relevant only to thedepartments doing the assessment. Time series data,where available, are confined to the physical andmonetary inputs provided for developing theresource. Data useful for characterizing thesustainability of a resource are hardly collected,because systematic monitoring has begun in mostdeveloping countries only recently. Improvementsin the measurement techniques call for newbenchmark data. Fourth, and finally, environmentalassessment becomes subjective in the absence ofindicators of sustainable development and there hasbeen no consensus on how to measure (or define)sustainable development. Many countries in theregion would like to base the indicators on countriesspecific goals for achieving sustainability, which givedue weight to the particular constraints andchallenges of each individual country. For example,several countries would like to adopt a process ofpre-testing and review before adopting a set of

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sustainable development indicators as a standardmeasurement on their progress.

Other countries, such as Japan and the Republicof Korea, are beginning to apply their long experiencewith social, economic and environmental indicatorstowards the development of indicators for sustainabledevelopment. These efforts are guided by legislationand national plans, such as the “Basic EnvironmentLaw” and the “Basic Environment Plan” of Japan, aswell as by institutional needs, ranging from theestablishment of a National Commission onSustainable Development in India to a Council forSustainable Development in the Philippines.

Environmental indicators are also beingdeveloped for specific sectors. For example,Indonesia has applied “criteria and indicators” forsustainable forest management which improvedconcession performance. The Russian Federation hassimilarly drafted and confirmed its criteria andindicators of sustainable forest management. Theirfundamental purpose is to establish the frameworkconditions for the functioning of State forestmanagement agencies in such as way as to satisfythe requirements of present and future generationsof Russians and to coordinate the efforts for thesustainable development of the forestry sector as awhole.

Most current efforts, however, are directed atdeveloping comprehensive indicator systems. Japanis promoting the development and improvement ofan indicator system in which environmental factorsare appropriately evaluated in conjunction with theindicators of sustainable development. NewZealand’s National Environmental IndicatorsProgramme aims to develop indicators that willreflect the condition of the environment at a particularpoint in time, show the pressures that humanactivities place on the environment, and providemeasures of the effectiveness of any action in responseto these pressures.

Turkey’s Ministry of Environment is planningto cooperate with the State Planning Organizationand the State Institute of Statistics to integrateenvironmental and developmental information anddevelop national indicators on sustainabledevelopment. On this, Turkey has already carriedout inventories of the existing databases relevant tosustainable development.

In order to coordinate efforts in the region andto link these with regional and international efforts,the Inter-Agency Sub-committee on the Environmentand Sustainable Development (ICESD) in Asia andthe Pacific agreed to establish a regional project todevelop a set of sustainable development indicators,and requested ESCAP to coordinate this project.Accordingly, ESCAP is currently implementing a

project to assist in identifying a core set of sustainabledevelopment indicators in the Asian and PacificRegion (see Figure 12.1 and Box 12.5).

C. Environmental Quality MonitoringEnvironmental quality monitoring provides the

basic information for assessing the state of theenvironment and is central to the measurement ofenvironmental indicators. It focuses onenvironmental parameters relating to air, water, landand other natural resources through the establishmentof monitoring stations as well as utilization of remotesensing and GIS (see Chapter 15). Responsibility forenvironmental quality monitoring is often under agovernmental environmental agency, although otherrelevant government agencies also participate. InArmenia, for example, the Ministry of theEnvironment and Natural Resources maintainsnational monitoring networks all over the countrybut jointly supervises and monitors backgroundradiation pollution and emissions into the air, waterand soil with the Ministry of Health.

Figure 12.1 Step by step approach adopted for thedevelopment of Indicators forSustainable Development (ISD)

Review of existing work

Inception Workshops involving relevant stakeholdersto develop a national plan/process/methodology

identification of a set of suitable ISDs

Matching Priorities with indicators from available indicators menu i.e.CSD menu, ESCAP menu etc.

(Additional indicators could be added by the testing country if needed)

Matching data with indictors selected

Identify any additional data that need to be collected

Organize final workshops to finalize the sets of indicators identified inconsultation with stakeholders

Suggest approaches on the use of indicators of sustainable developmentin strategic planning for environment and sustainable development

Selection of national/provincial priorities(From existing national plans, programmes, etc.)

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In some countries, academic institutions areutilized for such monitoring, such as in Turkeywhere studies on air pollution have been carriedout by universities. In addition, a GEF/UNDPEnvironmental Management and Protection of theBlack Sea project is assisted by a pollution monitoringnetwork involving universities and other publicinstitutions. University laboratories can alsoundertake monitoring, especially when suchlaboratories include quality assurance procedures andtake part in regional or international inter-laboratorycalibration programmes. The Institute of NaturalResources (INR) of the University of the South Pacific,for instance, is involved in the monitoring of the Suvaharbour area as well as in monitoring programmesfor larger tourist resorts.

D. Issues and Problems in Assessment andMonitoringEnvironmental monitoring and assessment in

the region have improved considerably over recentyears, although major constraints remain in somecountries. These constraints include inadequatelegislative and institutional arrangements.Environmental monitoring and reporting in manycountries is distributed among various agencies at

the central, state and local levels and the lack orabsence of coordinating mechanisms has led to dataincompatibility, overlaps and conflicts in enforcement.It should also be noted that in the case of environmentand natural resources accounting as well as forenvironmental indicators, the collection and analysisof data and information could best be approached inan inter-agency manner. Such an approach is usedin the Philippines, where environment and naturalresources accounting is undertaken through theissuance of a Presidential Executive Order mandatingthe National Statistical Coordination Board to leadthe implementation of the system with theDepartment of Environment and Natural Resourcesand the National Economic Development Authority.

It is also important that data should bedistributed to decision-makers and the public in atimely manner. This has been done through SoEreports, although these are often constrained by theweaknesses of the existing mechanism for collectingdata and their distribution at infrequent intervals.Progress in information technology could helpmitigate these problem and initiatives that utilizee-mails, the internet and web pages have shownsignificant success in the timely dissemination ofenvironmental information.

Box 12.5 Indicators for Sustainable Development in Asia and the Pacific

Recognizing the importance of the development of indicators of sustainable development (ISD), ESCAP initiated a project onISDs in Asia and the Pacific with the assistance of the Government of Netherlands. A major objective of this project is to develop aset of indicators through a testing process to help identify trends in the promotion of sustainable development and assist thecountries in the region to utilize these towards strategic planning for environment and sustainable development.

The project was initiated by organizing a Regional Meeting on Indicators of Sustainable Development. A very important taskof the meeting was to familiarize the participants from countries of the region with the basic concepts and provide the backgroundinformation on national testing for development of appropriate sets of indicators. The meeting simulated in small groups, themechanisms for determining priorities and matching them with indicators. It contributed positively to the process of developmentof ISD’s in Asia and the Pacific which was manifested in the commitment of People’s Republic of China, Maldives, Pakistan and thePhilippines to act as pilot testing countries for the project.

To date, People’s Republic of China and the Philippines have developed a large menu of 65 and 80 indicators respectively aswell as a more condensed group of 28 and 18 core indicators respectively. Pakistan has identified a menu of 76 indicators and is inthe process of identifying core indicators within these. Maldives has identified the priority issues with the selection of indicatorsongoing.

A key issue is not only to have a group or set of indicators but also to integrate those into national, provincial and local levelstrategic environmental and sustainable development planning. This aspect forms the second phase of the project. In order todisseminate the work conducted under the first phase, and to promote the involvement of other countries of the region, a SecondRegional Meeting has been planned by ESCAP in October 2000.

The major achievements of the project besides creation of awareness among decision makers on the use of ISD in Asia and thePacific have been the establishment of methodological approaches and identification of sets of indicators suitable to local conditionson the basis of the pilot study. However, the real success in ISD work will hinge upon the actual use of indicators in strategicplanning for environment and sustainable development in the countries of the region.

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Box 12.6 The Introduction of Economic Instruments is Working Better than Prosecutions in India

In accordance with the Act for control of water and air pollution, the Pollution Control Board can prosecute defaultingindustrial units. In the court, the Board are required to prove the violations of the Act. More often than not, it becomes difficult toestablish the nature and impact of violations causes. Hence, a good number of prosecutions launched by the Pollution ControlAuthorities are dismissed by the Judiciary on technical grounds. Moreover, the legal proceedings are often very long-drawn anddefaultees can delay the judicial proceedings and conviction for one reason or the other. Thus, justice is denied by sheer delay.

In order to get over the stalemate, the Board has successfully adopted an innovative method in requiring the defaulting units tofurnish time bound action plans for commissioning operational pollution control systems. The industry is also asked to furnish aBank Guarantee for a sum equivalent to the cost of the pollution treatment system. In cases where the industries do not comply withthe time-bound implementation targets, the amount of money assured through the Bank Guarantee is deposited in the account of thePollution Control Board.

Source: Government of India 2000

CONCLUSIONS

Policy structures and incentives forenvironmental improvements are gradually gainingground in the countries of the Asian and PacificRegion. The formulation of national strategies forintegrating environment and development,improvements in sectoral policies, pricing reforms,participatory management, efficiency of resource useand cost recovery, devolution of powers to localgovernments and empowerment of local communitiesare positive steps towards establishing appropriatemechanisms for pursing sustainable developmentgoals.

However, a rigid command and controlapproach still characterizes environmental policies inmost countries of the region. In attempting to controlair and water pollution, in particular, countries havefavoured emission or effluent standards over moreflexible instruments. This inflexible approach hasled to high compliance costs and widespread undercompliance. Use of market based instruments andprivatization is on the increase albeit rather slowly(see Box 12.6).

A new policy model based on a mix ofcommand and control and market based mechanismlinked to effective governmental management isshowing positive results in countries like Malaysiaand the Philippines, and is characterized by: therole of government as a facilitator rather thanprovider; by a prominent role played by the privatesector and civil society; and by pricing reform onenvironmental goods and services. This modelappears to have the greatest potential for developingcountries of the Asian and Pacific Region which aredeficit in financial resources.

It has been estimated that with such overallimproved policies, the region could meet itsenvironmental expenditure at less than 2 per cent ofGDP, with the public sector providing less than halfthis amount. As public expenditure on theenvironment in developing countries of the region iscurrently just under one per cent, this scenario willnot involve a substantial increase in publicexpenditures, but a significant redeployment ofexisting resources toward a more targeted andstrategic portfolio, and one that leverages additionalcapital from domestic and foreign private sources.

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CHAPTER TWELVE - ESCAP

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