OECD Green Growth Studies OECD Green Growth Studies Towards Green Growth in Southeast Asia Contents OECD Green Growth Studies Chapter 1. The case for green growth in Southeast Asia Chapter 2. Mainstreaming green growth into national development planning Chapter 3. Founding green growth on sustainable resource use Towards Green Growth Chapter 4. National policy options for managing the impact of urbanisation on green growth in Southeast Asia Towards GreenTowards Growth in Southeast Asia Consult this publication on line at http://dx.doi.org/10.1787/9789264224100-en. This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. Visit www.oecd-ilibrary.org for more information. ISBN 978-92-64-22407-0 43 2014 09 1 P OECD Green Growth Studies Towards Green Growth in Southeast Asia This work is published on the responsibility of the Secretary-General of the OECD. 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Foreword – 3 Foreword Southeast Asia is at a crossroads. The region has enjoyed strong economic growth, but – as elsewhere in the world – this growth model has relied on unsustainable natural resource exploitation, resulting in environmental degradation. The region’s leaders face a choice: continue to pursue a short-sighted, grow-now-clean-up-later model that has proven disastrous, or adopt a far-sighted green growth strategy that can sustain long-term growth without hampering the wellbeing of future generations. This report argues that green growth is the way to go for Southeast Asia: it will be more beneficial and less costly, while at the same time it will help lay the foundation for stronger, cleaner and fairer economies and societies. The experience of many OECD and other emerging countries shows that growth strategies that ignore environmental performance eventually result in expensive clean-up and mitigation measures, as well as large welfare losses. The report highlights that Southeast Asia has a golden opportunity to leapfrog over the low-performing, polluting, resource-inefficient technologies of more developed countries, given that large swathes of the region’s infrastructure and industrial models are still being developed. Moreover, it points out that the structural changes necessary to achieve long-term economic growth, reduce poverty, protect the environment and attain high levels of well-being will require tying environmental performance to economic growth. Carried out in consultation with officials and researchers from across the region, Towards Green Growth in Southeast Asia provides a framework for regional leaders to design their own solutions to move their countries towards green growth. While recognising the pressures that Southeast Asian economies face to increase growth, fight poverty and enhance well-being, the report acknowledges the links between all these dimensions. It underscores the window of opportunity that the region has now to sustain its wealth of natural resources, lock-in resource-efficient and resilient infrastructure, attract investment, and create employment in the increasingly dynamic and competitive sectors of green technology and renewable energy. Some key policy recommendations are that these challenges can be met by scaling up existing attempts to strengthen governance and reform countries’ economic structure; by mainstreaming green growth into national development plans and government processes; by accounting for the essential ecosystem services provided by natural capital and ending mindless natural-resource exploitation; and by guiding the sustainable growth of cities to ensure well-being and prosperity. The OECD has strengthened its engagement with Southeast Asia in recent years, as a strategic priority. We recently launched a Southeast Asia Regional Programme in order to articulate better this collaboration and support domestic priorities, policy reform and regional integration. The Programme aims to foster the exchange of good practices and mutual learning among policy makers. Towards Green Growth in Southeast Asia offers good illustrations of how this co-operation can be advanced. The OECD will work towards TOWARDS GREEN GROWTH IN SOUTHEAST ASIA – © OECD 2014 4 – Foreword mainstreaming the report’s recommendations in areas such as governance, investment, and public-private partnerships for infrastructure. Setting Southeast Asian economies on a green growth path will require policy and institutional reforms, but most of all it will require leadership. The OECD stands ready to support the region in seizing the opportunities that green growth offers to advance sustainable, inclusive development. Angel Gurría OECD Secretary-General TOWARDS GREEN GROWTH IN SOUTHEAST ASIA – © OECD 2014 ACKnowLedgements – 5 Acknowledgements This report was prepared by Mauro Pisu and Alexis Robert. Mauro Pisu was the project leader and co-author and Alexis Robert was editor and co-author, with contributions by Sáni Zou, Balázs Egert and Annabelle Mourougane. Balázs Egert and Annabelle Mourougane were previous project leaders. Jan Corfee-Morlot and Nathalie Girouard provided oversight as senior managers from the Development Co-operation Directorate and Environment Directorate, respectively, as part of the OECD horizontal work programme on green growth. The report received financial support from the Korea International Cooperation Agency (KOICA). Chapter 1 was drafted by Mauro Pisu, Balázs Egert and Annabelle Mourougane. Chapter 2 was drafted by Alexis Robert and Sáni Zou. Chapter 3 was drafted by Mauro Pisu. Chapter 4 was drafted by Alexis Robert. Annabelle Mourougane conducted the initial research for the project and produced the synthesis paper that provided the starting point for this report: OECD (2013), “What Have We Learned from Attempts to Introduce Green- Growth Policies?”, OECD Green Growth Papers, No. 2013/02, OECD Publishing. Government officials provided invaluable inputs during policy consultations conducted in March-April 2014 in Indonesia, Malaysia, the Philippines, Thailand and Vietnam. Officials representing Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore and Viet Nam provided extensive feedback on earlier drafts of the report during and after the regional workshop, “Towards Green Growth in Southeast Asia”, which took place in Jakarta on 11-12 June 2014 in collaboration with the Indonesian Ministry of Finance. The report also benefited from comments of external reviewers: Chris Baldock (National Capital Coalition), Jingmin Huang (ADB), Abhas Jha (World Bank), Amy Leung (ADB) and Saut Sagala (Institute of Technology Bandung); Rana Roy (author of the 2014 OECD report The Cost of Air Pollution: Health impacts of road transport) and Nils Axel Braathen provided guidance on the calculations of the cost of outdoor air pollution in Chapter 4; Julia Kete conducted the analysis of climate aid in urban areas referred to in Chapter 4. The authors wish to thank the Members of the OECD Development Assistance Committee (DAC) and the OECD Environmental Policy Committee (EPOC) who commented on the report, and colleagues from the OECD and IEA Secretariats: Juan Casado Asensio, Anna Drutschinin and Stephanie Ockenden (Development Cooperation Directorate); Loïc Daudey, Tadashi Matsumoto and William Tompson (Public Governance and Territorial Development Directorate); Justine Garrett and Ziga Zarnic (Environment Directorate); Martin Wermelinger (Development Centre); Roger Martini and Carl Christian Schmidt (Trade and Agriculture Directorate); Eleonora Antar, Shigetoshi Ikeyama, Florian Kitt and Simone Targetti Ferri (International Energy Agency). Fiona Hinchcliffe, Christine Graves, Beth Del Bourgo and Amy Larkin provided editorial support. Claude-Annie Manga Collard and Marielle Guillaud provided administrative