Notes from the Field

Protecting Asia’s Water Wealth

March 19, 2008

Current funding and project trends to improve environmental governance in Asia focus on activism, increased enforcement of environmental regulations, public participation, and intergovernmental efforts to address transboundary environmental issues. Yet, an environmental protection model of activism and enforcement often ignores too many realities of developing economies. During more than 50 years of program work in developing Asian economies on governance and law, economic development, and the environment, The Asia Foundation has found that the existing governance systems and policy instruments often support polluting and environmentally destructive practices.

The Foundation’s Environment Program integrates and supports activist and enforcement approaches, but it also adds a third way: emphasizing a realignment of political and economic incentives and collaborative public policy. The fundamental problem is that, by its very nature, the status quo approach to environmental protection slows growth. Pollution control and cleanup drains resources away from short-term productivity and places resources into long-term investments like protected lands and forests, clean water, and clean air.

These investments are crucial but difficult to monetize, and consequently are often cut from budgets. In addition, local enforcement is deeply conflicted and generally ineffective. Local authorities are more easily rewarded for economic growth, or, in the case of regulatory authorities, for not creating barriers to growth. Regulatory agency staff may have ownership positions in entities they regulate, and independent oversight is rare and episodic. Resources for regulatory activity are difficult to secure and never sufficient for achieving complete coverage. Finally, environmental progress is hard to sustain. Pollution control and remediation, the default mechanisms, are bottom-line costs for the regulated entities and are usually either evaded entirely or delayed indefinitely by the payment of fines too small to change behavior.

On the basis of this analysis, The Asia Foundation concentrates its resources toward development and support for innovative approaches to achieving economic growth without sacrificing environmental progress. The goal is to stimulate the reform of environmental governance in developing Asian economies by emphasizing the following principles:

- Effective and efficient environmental governance flows from good data, transparency, and public participation.
- Prevention of degradation is preferred to policing regulations and end-of-tailpipe treatment.
- Behavior is changed more quickly and flexibly by markets than by mandates.
- Innovation (in clean technology and improved policies) is a better long-term investment than inspection (for regulatory compliance).

In developing environmental governance projects, the Foundation seeks to understand who influences and who benefits from the current model, who has the willingness and ability to make changes, and what is needed for those changes to occur. Simply put, status quo environmental governance is a good deal for enterprises and government and a bad deal for the public and the natural environment. Because the public and the natural environment have little power, change will be motivated by an acceptance by the powerful that a new approach can provide important benefits beyond awards and professional satisfaction. For systemic reform to occur, this model must out-compete the status quo. The following are some of the benefits that a data-driven, market-oriented model can provide:

- Measurable environmental progress,
- Replication that does not require a heavy burden of public support,
- Business improvement for enterprises,
- The possibility of reducing social unrest caused by pollution,
- Optimized public expenditures for regulatory enforcement,
- Collaborative relationships with enterprises.

These benefits are closely aligned with sustainable development itself. The stakeholders whose relationships the Asia Foundation needs to map and understand include those at the intersection of economic growth and environmental progress. Business and government would welcome market-driven approaches to achieving the former without imperiling the latter. The Foundation uses a multi-stakeholder approach to realign political, economic, and social incentives to reduce reliance in pollution control and support pollution prevention.

To demonstrate the success of this new model for improved environmental governance, the Foundation has had to work with not just the willing but also the doubting. The Foundation also needs to work on not just the obvious issues, but also on those that lie hidden behind old attitudes or incomplete analysis. The Foundation’s core principles state a preference for interventions that are data driven and market driven and that have a clear path to replication and policy reform.

In China, those principles have been applied to develop two projects that are now under way. When looking at water issues in China, The Asia Foundation saw problems that were diffuse and poorly addressed. This presented an opportunity for creating a path to long-term reform of environmental governance through capacity building and transparent data. In particular, the Foundation saw rivers, and the industrial and agricultural enterprises polluting them, as good targets. The Foundation now has in place two pilot projects in China looking at very different approaches to the question of reducing heavy metal pollution in China’s rivers. One is taking a focused approach, looking at a single type of enterprise (electroplating) in a short reach of river in Nanhai, Guangdong Province, and incorporating suppliers and government agencies. The other is quite experimental: it looks at all enterprises and stakeholders in a specific reach of river in Hada township, Liaoning Province, seeking the critical project design elements that lead to measurable success.

Terry Foecke is Senior Environmental Consultant at The Asia Foundation; Chris Plante is The Asia Foundation’s Environment Programs Director, and can be reached at cplante@asiafound.org.

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