GDP growth of 6.3% might vanish into thin air

May 2, 2009
Singapore Democrats

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William Pesek
Bloomberg

Jared Diamond’s obsession with the number 32 should worry Asia.

The Pulitzer Prize-winning geographer last month lit up the blogosphere anew with his contention that rich nations use 32 times more water, fuel and food than developing countries and produce that much more greenhouse gases and plastics, too.

“The world has serious consumption problems, but we can solve them if we choose to do so,” Diamond said at a conference in Lexington, Kentucky. “The time to begin is now.”

That’s truer than ever as Asian leaders converge on Bali for the Asian Development Bank’s annual meeting. No one believes Earth can withstand billions of Asians consuming the way the West does in the decades ahead. If the number 32 doesn’t jolt you, try 6.3 percent worth of lost gross domestic product.

The Manila-based lender says Singapore, Thailand, Indonesia, Vietnam and the Philippines may lose that much of their GDP annually by the end of the century if climate change isn’t stopped. Such numbers are a harbinger of trouble for Asia.

The GDP loss in Asia’s developing countries may be twice the global average, and the region can’t afford it. That gets at a key paradox: Asia is home to many of the world’s extreme poor, and yet executives around the globe are betting on its high growth rates and potential.

The effects of climate change, if unchecked, will limit Asia’s ability to grow at rates needed to reduce poverty, avoid runaway government borrowing and reach its promise as a market.

Secondary effects

About 93 million of Southeast Asia’s 563 million people live on less than $1.25 a day. The only way to boost their living standards is rapid and efficient growth. The financial crisis will set back Asia’s prosperity goals. Yet what about the secondary, longer-term effects of today’s turmoil?

Climate change is a big one. At the moment, governments are focused on shielding economies from market woes, global recession and the risk of a swine-flu pandemic. Less focus is on reducing carbon-dioxide emissions in the most populous and fastest-growing region. The more this issue is pushed onto the backburner, the more Asian markets will suffer.

This sounds unfair. In a perfect world, Chinese, Indians and Southeast Asians would be free to pollute as much as Europeans and Americans did as they industrialized. The effort also must be global. Southeast Asian initiatives to reduce greenhouse gases won’t amount to much if the U.S., Europe and other wealthy regions don’t do more. China, too.

Stretched planet

As observers such as Diamond say, though, our planet just couldn’t handle that.

It’s hard to keep a straight face when investors argue that Hong Kong is the world’s freest economy. That would be fine if the right to breathe reasonably clean air were considered. The city’s outlook is being jeopardized by the tens of thousands of southern Chinese factories darkening the skies.

Southeast Asia’s risks rarely get as much attention as China’s, and that’s a mistake.

Singapore, Thailand, Indonesia, Vietnam and the Philippines are uniquely at risk from rising temperatures and sea levels because of their 173,000 kilometers (108,000 miles) of coastlines. Their economies rely on farming and forestry, which need stable rain and temperatures for maximum production. Asia is seeing increasingly extreme weather, water shortages and forest fires linked to climate change.

Indonesian locale

It’s apropos that the 67-member ADB is meeting in Indonesia in the days ahead. Rising sea levels will force the largest archipelagic state to redraw its boundaries. Southeast Asia’s biggest economy also is its biggest emitter of greenhouse gases.

Reducing emissions is a tough sell. Many are betting that if President Susilo Bambang Yudhoyono is re-elected in July, he will add to the fastest growth since the 1997 Asian crisis. Environmental policy needs work, too. Not only because it’s good for Asia, but also for Indonesia’s economy.

The global crisis offers a rare opportunity to move toward a low-carbon economy in Southeast Asia. The process will help create jobs, cut poverty and leave nations better prepared to handle the worst effects of climate change. Investing in green industries means providing new opportunities away from the sweat shops that should be about Asia’s past, not its future.

Forestry and land use are the largest contributors to emissions and deserve immediate attention. The ADB says energy- related carbon-dioxide emissions can be mitigated as much as 40 percent by 2020 through efficiency improvement, while an additional 40 percent can be eased by switching from coal to natural gas and using renewable sources to generate power.

Officials in Washington often tell developing nations that if you champion free-market economics and good governance, you can be rich, too. That’s becoming a fantasy. It’s one thing with a world population of 6.7 billion or so. It’s quite another when it approaches 9 billion and pollution surges accordingly. U.S.- style consumption on that scale isn’t environmentally sustainable, either.

Addressing climate change is no longer a choice, but a necessity. Failure to get serious could put more than a few Southeast Asians underwater — literally and figuratively.

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