CHAPTER EIGHT

WHY THE BRICS DREAM SHOULD BE GREEN

February 2007

Why the BRICs Dream Should Be Green

WHY THE BRICS DREAM SHOULD BE GREEN

Last Fall we discussed ‘why the BRICs dream won’t be green’, highlighting the challenges ahead as the BRICs seek to balance economic development with environmental protection. This month we argue that the BRICs dream should be green: these countries will need to play a key role in global efforts to combat , and it is in their own interest to do so.

Urbanisation, and intensive mean that environmental pressures in the BRICs are unlikely to abate for decades. In recent months, have come increasingly to the fore, thanks in large part to the publicity surrounding the Stern Review on climate change.

The BRICs will need to play a key role in global efforts to tackle climate change. While it is true that today’s industrialised economies are responsible for the vast majority of greenhouse gases (GHG) already in the atmosphere, developing countries are expected to account for 75% of GHG emissions over the next 25 years—with China alone responsible for one-third of the global total. China is already the world’s second-largest emitter of , and is expected to overtake the US within a decade.

Critically, we think it is in the BRICs’ own interest to reduce their emissions and , and to pursue a cleaner path of development. The BRICs already face a host of environmental problems, including air and pollution, rising strains on water supplies and depletion.

The BRICs are particularly vulnerable to the effects of global warming. Many of the major cities—Shanghai, Mumbai, St. Petersburg, Rio de Janeiro—are low-lying coastal cities. Rising sea levels could affect significant economic activity, as well as some 600mn people living along the coasts (nearly one-quarter of the total BRICs population).

Climate change could hit other parts of the BRICs economies hard as well. Per capita levels of arable are well below the global average in China, India and especially Brazil. Higher global temperatures are expected to change rainfall patterns and growing seasons, accelerate glacial melting and create more extreme storms. Agriculture, which accounts for 5%-20% of GDP in these countries, would be especially vulnerable; the risk seems particularly high in India, where agriculture is highly reliant on the annual monsoon.

There are some hopeful signs. coverage has increased in China and India since the early 1990s; Brazil is the world leader, by far, in the use of renewable fuels; and India protects a large share of its in an effort to conserve .

Sandra Lawson, David Heacock and Anna Stupnytska February 13, 2007

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Why the BRICs Dream Should Be Green

Global ha/person Ecological Footprints and Biocapacity Unsustainable Resource Usage in China 12 2001 data and India Total Ecological Footprint ■ 10 The World Fund’s ‘ecological Total Biocapacity footprint’ (EF) measures a country’s natural 8 using prevailing 6 technology and resource management schemes. Comparing these demands on 4 nature with the country’s biocapacity gives a 2 sense of environmental .

0 ■ On latest estimates, ecological footprints are Brazil China India Russia High Middle Low World Inc ome Inc ome Inc ome twice as large as biocapacity in China and Source: Living Planet Report 2004 India. These are in line with high-income countries and above the world average, indicating that current resource consumption and exploitation are unsustainable. Brazil has one of the highest biocapacities in the world, almost five times its EF, with Russia relatively close behind.

% GNI Depletion Russia Is By Far the Most Reliant on 30 Energy depletion Energy Depletion 25 ■ The share of national income tied to natural World resource depletion is problematic, given that 20 natural are generally non-

15 renewable and cannot be relied upon for growth indefinitely. 10 ■ Among the BRICs, Russia is the most reliant 5 on energy resource depletion (crude oil, natural gas and coal). In 2004, Russia’s 0 Brazil China India Russia US Low Middle High energy depletion accounted for roughly 30% Inc ome Inc ome Inc ome Source: of its gross national income (GNI), more than 10 times the world average. Brazil is by far the biggest user of , at 1.1% of GNI. % Share of Population Living Within 100km of Coast Coastal Cities at Risk, Especially in India 100 90 and China 80 ■ Sea levels are expected to rise more rapidly 70 in coming decades. Some 600mn people— 60 nearly one-quarter of the total BRICs 50 40 population—live within 100km of the coast. 30 ■ Mumbai and Shanghai, with a combined 20 10 population of 32mn, are both situated on the 0 coast, while Brazil and Russia also have J U Ita ly Brazil US FranceIn Ch R G apan K d us erman major coastal cities, including Rio de Janeiro ia in si a a y and St. Petersburg. A disproportionate Source: Socioeconomic Data and Applications Center amount of the economic activity in these countries flows through these hubs and could be crippled if sea levels rise to critical levels.

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Hectares per person Limited Arable Land Underscores 0.9 Vulnerability Arable land 0.8 ■ Agriculture remains an important sector of World 0.7 the BRICs economies, accounting for an 0.6 0.5 average 11% of GDP in 2005. This is 0.4 especially true in India (19% of GDP) and 0.3 China (12% of GDP), where the majority of 0.2 the population in the countryside 0.1 (roughly 70% in India and 60% in China). 0 B R In Chin Fran GermanyIta Ja UK U ■ Arable land per capita is below the world ra uss di l S zil a y pan ia a ce average in all the BRICs except Russia. Source: World Bank Changing weather patterns could be devastating, especially for India, which is already reliant on the annual monsoon season.

US$ per liter Pump Price for Diesel Fuel Scope for Increases in Energy Taxes 1.8 ■ 1.6 Pump Price for Diesel Fuel As we have shown previously, the energy 1.4 World intensity (energy units per Dollar of GDP) of the 1.2 BRICs is high relative to both the G6 and the 1.0 world average. One reason is the below-average 0.8 tax rates on energy, shown here as the average 0.6 pump price of diesel fuel. 0.4 ■ India, which was one of the first countries to adopt 0.2 emission regulations, is the only BRICs country 0.0 B R In Chin Fran GermanyIta Ja UK U with a higher diesel fuel pump price than the US. ra uss di l S zil a y pan ia a ce China has the lowest pump price for diesel fuel Source: World Bank among the BRICs; increased fuel regulation there has been hotly contested.

% Share of Hydroelectricity and Other % Brazil Leads in Hydroelectric and Renewables in Total Energy Consumption 12 46 Renewables 11 EIA Reference Case Projections ■ By 2030, the share of and 44 10 renewables in total world energy 9 42 consumption is projected to increase by 8 1ppt, to 9%. Growth is likely to come from 7 40 large-scale hydroelectricity power projects, 6 38 5 particularly in China and India. At the 4 China India country level, renewables in China will Russia Total OECD 36 3 World Brazil (RHS) become slightly less important relative to 2 34 other sources. 1990 2003 2010 2015 2020 2025 2030 Source: International Energy Outlook 2006, EIA ■ Brazil’s already impressively high share is projected to rise from around 38% now to above 44% by 2030. As hydroelectricity already accounts for more than 80% of Brazil’s electricity consumption, most of the increase is expected to come from biofuels and other renewables.

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% Forest as a Percentage of on the Rise in Brazil and Total Land Area 70 Russia 1990 ■ Russia and Brazil are the most forest-rich 60 2000 countries in the world, with China and India also 2005 50 among the top ten. Overall, the BRICs account for 40 40% of the world’s total forest area. China is the

30 only BRIC with rising afforestation; from 2000 to 2005 it made a significant contribution to a net 20 gain of forests in Asia. 10 ■ The net change in the world’s total forest area 0 Brazil China India Russia UK US World from 2000 to 2005 was negative, estimated at - Source: Global Forest Resources Assessment 2005 7.3mn hectares per year. Brazil reported the highest (and rising) rate of deforestation, at -3.1mn ha per year, mainly due to conversion to agricultural land, particularly soy fields. Russia also showed a negative trend, losing forest on a net basis since 2000, having gained ground in the 1990s.

% Designated Functions of Forest China and Russia Use Forests Mainly for 100 Production Protection Production 90 Conservation Social Services 80 ■ Production remains the primary function of forests Multiple Purpose None/Unknown 70 in China and Russia, where almost 60% and 77% 60 of total forest area is used for this purpose, 50 respectively. In Brazil, just 5% of forests is used 40 for production, with the majority used for social 30 and multiple purposes. 20 10 ■ Conservation of biodiversity is relatively 0 Brazil China India Russia UK US World important in India, where 22% of total forest area Source: Global Forest Resources Assessment 2005 is used for this purpose. This is the highest in the BRICs and slightly higher than in the US. China and Russia report the lowest share of forest designated for conservation, although one-third of Chinese forests are under protection.

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