Vinod Thomas, Straits Times 7 Dec 07;
ECONOMIC growth has been the source of rapidly rising living standards in much of the world. Yet experience tells us that what matters for people's well-being is not just how much an economy expands, but also how.
The drive for growth at the expense of the environment can set back human well-being, and ultimately obstruct growth itself.
Nowhere is this threat more evident than with climate change, entrenched in decades of environmental disregard. But the mounting scientific consensus on its perils stands in sharp contrast with continuing policy inaction over it. Underlying this bewildering gap is the view of most policy leaders and economic advisers that it's environmental protection, not environmental degradation, that impedes growth.
This inverted view has been costly. The world economy expanded sevenfold in the past 100 years. Meanwhile, the global population rose from 1.6 billion to 6.5 billion, the world lost half of its tropical forests and carbon dioxide levels rose to 380 parts per million (from the pre-industrial 280 ppm). The 0.74 deg C increase in average temperatures in the past century is causing sea levels to rise, melting glaciers and destroying species.
Local trends too are of concern. The health and productivity losses from particulate air pollution alone amount to 2 per cent to 3 per cent of GNP in China, India and elsewhere.
The relentless destruction of forests in Asia and other regions is not only devastating precious biodiversity, but also affecting local ecological conditions - bad for crops and people. Deforestation and soil erosion are compounding the damage of natural disasters such as flooding.
Estimates of these environmental losses vary substantially. But regardless of the exact numbers, prevention - experience tells us - is far cheaper than cure: whether it's in curbing industrial pollution or reinforcing structures in disaster-prone areas. The question then is why more governments and businesses don't take protective steps rather than waiting for disasters to strike.
One reason is that few countries, rich or poor, large or small, are motivated enough to tackle these global problems alone. That's because only a part of the benefits accrue to those taking action while others can have a free ride, a dilemma compounded by competitive pressures on everyone to keep costs down. Even when the gains are local, they are often spread beyond the time frame of most politicians.
Recognising the differences between what is good for society and what drives the private interest, policy leaders would need to insert environmental concerns in growth policies and in measures of economic success. For business and individuals to align with such a philosophy, environmental policies need to be more efficient, transparent and predictable.
Such a more environmentally friendly approach to growth should lead to deep cuts in carbon emissions. Measured per person, the United States, Japan, and European nations make by far the biggest contribution to global emissions. So their policy must lead the way.
But in total amount, middle-income countries - including China, India, Brazil, Mexico, Russia and Indonesia - now account for half of the emissions. So they too must participate in the solution.
Another area involves deforestation, as the loss of forests accounts for a fifth of all greenhouse gas emissions, more than from all modes of transportation. It is also a source of local damage, especially affecting the poor. One approach would be to open markets for permits for emissions that can be traded to avert deforestation, in turn bestowing financial benefits on countries for conserving forests.
Finally, there will be huge gains from stopping subsidies that encourage waste, politically hard as it is. The world spends a quarter of a trillion US dollars a year on energy subsidies, draining the public purse, promoting energy waste and locking in polluting infrastructure for decades.
As the world's leaders discuss global warming at the ongoing Bali summit, it's time to realise that growth without environmental care will in the end be impoverishing. As such, the lasting contribution of the deliberations will come from a change in the mindset of policy leaders in giving the environment high precedence in the growth agenda.
The writer is director-general of the Independent Evaluation Group at the World Bank. The views expressed are personal.
