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South and Austral Zone: Eco-Region Development

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South and Austral Zone: Eco-Region Development 19 SOUTH AND AUSTRAL ZONE: ECO-REGION DEVELOPMENT 19.1 Characteristics of South and Austral Zone a. Abundant natural resources The South and Austral zones are endowed with much natural beauty and natural resources, including fertile lands, mountains, lakes, rivers, forests, mines, and marine resources. They can be used for a wide range of economic activities, such as, agriculture, forestry, fisheries, mining, and tourism. These not only bring about products for direct export but also provide raw materials to manufacturing industries for export. In fact, the zone’s economy is very much “export-oriented”, i.e. having a larger share of the country’s total exports compared with the share of GDP. The investments, likewise, are influenced by the availability of such natural resources and are concentrated in these sectors. b. Higher value added and diversification The exports of these natural resource based products are expected to remain competitive in the respective international markets for some time in the future. However, as presented in the previous section, it is necessary for the South Zone's major exporting industries to develop products with higher value added and improved quality so to compete with cheaper products exporting competitors. At the same time, diversification of export products deems necessary. This is because such high dependence on a limited number of natural-resource-based products for export implies vulnerability to external shock as exemplified by the Asian economic crisis of 1997- 1998. In order to achieve these goals, innovative capacities in technology, product development and marketing strategies become necessary. c. Mounting environmental problems At the same time, zones are beginning to encounter environmental problems that, in the near future, may have great impact on their economies. The environmental factor would affect the zones in different manners. First, indiscriminate use of natural resources causes depletion and scarcity, which may raise the cost of production for natural resource based products in the near future. Second, due to changing consumer preferences toward environmentally sound products in developed countries, the products could have difficulty in penetrating the international market without clearing environmental standard. Thirdly, indiscriminate use of natural resources by the agro- industrial sector will have negative effects on tourism development. It is clear that the zones’ international competitiveness will continue to rely on natural resources. Hence, the use of such resources in the region must be decided upon with caution, keeping a long-term perspective in mind. Furthermore, with a rise in environmental awareness at the global level, environmentally friendly products are sold at a higher price and are more acceptable in the market, especially for the developed countries. This means that through producing environmentally friendly products, Chile may be able to differentiate its products from those of its competitors and gain higher value added. Taking these conditions into account, producers must consider and explore more efficient, superior, high-return use of natural resources. d. Strategy of Eco-Region In such a context, the idea of the Eco-region strategy emerged as a means to consider 19 - 1 new ways to manage environmental resources, looking at future development potentials. By placing “environment” at the center stage, the idea will also bring about an opportunity to differentiate the products so as to gain competitiveness in the market. This also serves to consolidate the image of region or zone that can be utilized for investment promotion as well as export promotion. In this sense, the Eco-region development strategy is not limited to the conservation of the environment, but aims at the economic development of the region through achieving the “right” balance between environment and growth in the long term. 19.2 Eco-region Concept and Strategy 19.2.1 Eco-Region Concept The Eco-region concept hopes to achieve a sustainable region by improving the standard of living for the citizens, not only through the conservation of natural resources, but also through the activation of the regional economy by attracting investment and promoting exports. CONSERVATION OF ENVIRONMENT ECO-PROCESS CREATION OF NEW PRODUCTION OF ECO- TYPE OF TOURISM PRODUCTS Provide markets ECO-TOURISM ECO-PRODUCT Provide products ATTRACT VITALIZE WORLD REGIONAL MARKET AND ECONOMY Figure 19.2.1 Concept of Eco-region Source: JICA Study Team. Figure 19.2.1 illustrates mutual relationships between the three main factors of the eco region concept: eco-product, 1 eco-tourism2 and eco-process.3 This figure illustrates the relationships between these three factors. Eco-product provides eco-tourism products to be sold or those products that promote the image of tourism. At the same time, eco-tourism provides the market for eco-products. This indicates the possibility of combining and forming an alliance between the two advantageous economic activities of the region; tourism and natural resource based industries. The eco-process contributes to the creation of eco-products and eco- tourism by introducing environmentally sustainable processes such as better treatment of waste and clean production. 1 Eco-product is broadly defined as products that attempt to improve environmental damages or those products, which do not cause any environmental damages in whole life cycle. This includes products made from natural ingredients, support clean production, product based on recycled or waste materials. 2 Eco-tourism is defined as “travel in the responsible ways toward natural areas, conservation of environment and improvement of welfare of the local community.” Detailed differentiation will be discussed in the following section. 3 Eco-process is broadly defined as a production process entailing less environmental impact. There are mainly three types of eco-process: end of pipe, clean production and zero emission. Here, the clean production and zero emission are considered as eco-process. 19 - 2 In this process, there is the possibility of forming another alliance among the public sector, the private sector and non-governmental organizations since many initiatives such as clean production require a wide range of participation in its implementation process. Each factor for the eco-region achieves three important goals: conservation of the environment, attraction of world and domestic markets and its people and the activation of the regional economy respectively. This concept questions the efficiency of the current use of environmental resources in order to achieve better management. For instance, Panayotou4 mentions 10 conflicting ways to manage natural resources (Box 19.2.1). It also places particular importance on regional perspectives, considering local communities as being the most cost-effective manager of resources due to their “special knowledge” of the area (Panayotou, 1992). Box 19.2.1 Ten Economic Manifestation of Environmental Degradation • Overuse, waste and inefficiency coexist with growing resource scarcity. • An increasingly scarce resource is put to inferior, low return and unsustainable uses, when superior, high return and sustainable uses exist. • A renewable resource capable of sustainable management is exploited as an extractive resource. • A resource is put to a single use when multiple uses would generate a larger net benefit. • Investments in the protection and enhancement of the resource base are not increasing productivity and enhancing sustainability. • A larger amount of effort and cost is incurred when a smaller amount of effort and cost would have generated a higher level of output, more profit and less damage to the resource. • Local communities, tribes and other groups such as women are displaced and deprived of their customary rights of access to resources regardless of the fact that by their very presence or specialised knowledge, tradition and self-interest, they may be the most cost-effective managers of the resource. • Public projects are undertaken that do not make adequate provisions or generate sufficient benefits to compensate all those affected to a level that they are decidedly better off with than without the project. • Failure to recycle resources and by products that would otherwise generate economic and environmental benefits. • Unique sites and habitat are lost and animal and plant species become extinct without compelling economic reasons. This reduces levels of uniqueness, diversity and signifies great costs of irreversible loss. Source: Panayotou, 1992. 19.2.2 Eco-Region Development Srategy The Eco-region will be realized through the short-term promotion of the production and sales of “eco-products”, the medium-term promotion of “eco process” and finally, the achievement of “eco-life”, or a better quality of life as shown in Figure 19.2.2. In implementing the Eco-region development strategy, the concept of industrial cluster deems appropriate. The term cluster is generally defined as “geographic concentration of interconnected companies and institutions in particular field”.5 The cluster is viewed as the emerging source for competitiveness since it utilizes the innovative inter- firm relationship with particular emphasis on potentials of small-firms.6 In addition to that, it is considered important for activation of local economies where presence of small and medium industries is dominant. As globalization of economy and 4 Panayotou, T “The Economics of Environmental
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