Finding Funds for Asia's Environmental Needs

Article excerpt

OF the seven cities with the worst air pollution in the world, five - Beijing, Calcutta, Jakarta, Shenyang, and New Delhi - are in Asia. Levels of dissolved mercury in some Asian rivers greatly exceed recommended levels, while deforestation is wiping away nearly 2 million hectares a year.

With half the worldwide demand for new electrical generating capacity coming from Asia in the next 10 years, new environmental safeguards will be required to meet international standards for greenhouse-gas and acid-rain emissions. Not surprisingly, East Asia is expected to account for a greater increase in carbon dioxide and sulphur dioxide emissions in the 1990s than all other regions in the world combined.

There are hopeful signs, however, that ecological concerns are being accorded a higher policy priority. Both Taiwan and South Korea are pouring billions of dollars into pollution cleanup programs. Green expenditure in China's eighth five-year plan (1991-1995) has increased 50 percent over the previous five-year plan. The Association of Southeast Asian Nations has designated 1995 as the Year of the Environment and has initiated a regional environmental action plan. In a recent survey by the Far Eastern Economic Review, the leading business and news magazine in Asia, 70 percent of readers responded that a better environment would most improve their quality of life.

But despite increasing public concern and governmental attention, there is still a large gap between environmental problems and the financial resources of governments and international donors to resolve them. The World Bank estimates that Asia will need $38 billion a year by 2000, or 2 percent to 3 percent of the region's gross domestic product, to address environmental problems. Where is this money going to come from? Here are three suggestions.

Greater investment

First, improve the investment climate in the public infrastructure sectors, including power, transport, and sanitation. There is a mismatch between the largest markets for power plants and sulphur oxide control equipment and at the same time one of the worst overall climates for such investments. It will require billions of dollars for China to boost its electrical-power generation and purchase pollution-abatement technologies, but it isn't certain if or when the urgent need for green investments will translate into a viable market for environmental products and services. …