Cleaning Up

Asians are starting to demand action on pollution -- and the region's governments are responding

Asia's environmental problems are legendary. A staggering 1.9 billion people in developing Asia are without proper toilets, and even wealthy Hong Kong has raw sewage bobbing in its harbor. Air pollution is so thick in the Chinese city of Chongqing that residents rarely see the sun. Southeast Asia lost at least 23 million hectares of forest during the 1990s -- an area the size of Britain -- to logging and burning. The island of Borneo was the site of some of the largest fires in human history in 1997-98, as dry weather fanned the flames after rapacious logging companies burned jungle undergrowth so that they could cut tall trees more easily. The cost of the fires: Some $3 billion in lost timber and an incalculable toll in human health. And the impact crosses borders. Deforestation in China leads to massive sandstorms, blotting out skies and disrupting air traffic as far away as Korea and Japan. Dams on the Mekong River in China wreak havoc with rice farmers hundreds of kilometers downstream in Indochina. And those fires in Indonesia leave its neighbors in Malaysia and Singapore literally gasping for breath.

Until recently, rapid industrialization was such a high priority in almost every Asian country that resulting environmental damage was regarded as a minor inconvenience. But something is happening in the region's capitals. Governments are finally seeing that, in the long run, massive pollution and deforestation hurt their economies and discourage foreign investment. Increasingly prosperous Asian citizens are demanding clean air and water. New technology and new financing vehicles are helping turn the tide. The Kyoto Protocol, which gives incentives to all countries to cut their greenhouse gas emissions, looks set to give a big push to Asian cleanup efforts. "Advocacy groups have been trying for years to use moralistic arguments to address environmental and social issues," notes International Finance Corp. Managing Director Peter L. Woicke. But it's market-based solutions, he says, that are having the biggest impact.

So Asian governments are beginning to take action. China, pushed in part by its commitment to clean up Beijing for the 2008 Olympics, has launched a nationwide campaign to improve air and water, with a high priority on replacing dirty coal with cleaner-burning natural gas. Japan is rapidly shedding its reputation as the "dioxin nation" by converting the incinerators that burn most of its trash into cleaner waste-to-energy facilities. One of Indonesia's largest timber companies is haltingly trying to curb the clear-cutting of the country's forests -- motivated in part by a growing boycott of Indonesian wood. In South Korea, the government has replaced a fifth of the country's diesel-fueled buses with vehicles that run on compressed natural gas.

MARKET INCENTIVES

In some cases the best action amounts to no action. Earlier this year, some of the world's largest banks -- including Citibank, hsbc, and the Netherlands' Rabobank -- adopted a set of voluntary guidelines called the Equator principles, which commit banks to refuse lending to environmentally destructive projects. That will put more pressure on countries such as Indonesia and China to clean up in order to get international funding.

Perhaps the most promising antipollution measures are those that use market incentives to force change. So-called pollution trading, for instance, will be stimulated by the Kyoto Protocol. Though not ratified by the U.S., the initiative is moving ahead in many countries. Under Kyoto, industrial plants and power producers in developed countries will be required to reduce emissions. But they can put off the day when they have to rebuild their facilities by buying pollution "credits" from developing nations, which will use the money to rebuild their own plants. Because developing countries typically use older technology that pollutes more, the investment can yield a bigger benefit in cleaner air. The two sides of the trade split the savings. In hopes of jump-starting an Asian pollution trading market, the World Bank is negotiating to buy emission credits from factories in Indonesia, Vietnam, the Philippines, and China. They will then be sold to polluters in developed countries. "During the past year, there has been a significant increase in the interest of Asian countries," says World Bank senior environment specialist Charles Cormier.

Pollution trading, and other market-driven projects now under way, aren't the whole answer to Asia's pollution problems. The region still needs stronger laws, real sanctions imposed on chronic offenders, and a stronger push from sometimes indifferent government officials. But sentiment is changing: In an increasingly prosperous region, many more Asians are seeing a clean environment as a right they can demand, not a forlorn hope to be dashed.

By Mark L. Clifford in Hong Kong, with bureau reports

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