Economic growth in Asia

 Project Report
 (Submitted for the degree of B.Com Honors in Accounting & Finance

Under the University of Calcutta)

 Title of the Project

Economic Growth in Asia

Submitted By:

 Name of the Candidate: Vaibhav Gupta

Registration Number: 017-1111-2905-17

Roll Number: 171017-21-1741          

Name of the College: THE BHAWANIPORE EDUCATION SOCIETY COLLEGE

 Supervised By:

 Name of the Supervisor: Joyeeta Bhaduri

Name of the College: THE BHAWANIPORE EDUCATION SOCIETY COLLEGE

Month and Year of Submission: 

 June-2020
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 ACKNOWLEDGEMENT

I would like to thank all the people involved, directly and indirectly
who contributed their time and effort for the completion of this
project, “Economic growth and Environment in Asia”.

Furthermore I would like to thank my college, THE BHAWANIPUR

EDUCATION SOCIETY to present me with this opportunity to conduct
a project at my discretion and also my supervisor, Mr. Sayan Basu to
provide me with essential aids and insights.

I would also like to express my gratitude towards all the faculty

members for providing guidance throughout my study.

VAIBHAV GUPTA

B.COM (H)

 
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 INDEX
CHAPTERS                                                                          PAGE

1. Introduction 4-5

-1.1 Literature Review                                                       6            

-1.2 Objectives of the study                                             7             

-1.3 Research Methodology                                             8              

2. National and International Scenario. 9-18

-Primary Environmental Issues affecting the Economies Across

Asia                     

  -2.1 Water Management                                               9               

  -2.2 Deforestation and Land Degradation                 10             

  -2.3 Air Pollution                                                             11            

  -2.4 Climate Change                                                        13          

  -2.5 Problem Formulation and Interdependency     14          

  -2.6 Overfishing                                                                18         

3. Presentation of Data, Analysis and Findings

-Ground report of specific issues        

  -3.1 Regional Management of Hydropower Development On the
Mekong River                                                           19

  -3.2 Groundwater Depletion in India                          20             

  -3.4 Afforestation and Land restoration in PRC        22            

  -3.5 Climate change mitigation in PRC                        23       

-3.6

4. Conclusion and Recommendations. 26

-4.1 Recommendations                                                    26            

  -4.1.1 Scientific Research                                              27                 

  -4.1.2 Planning and Pricing                                            27            

  -4.1.3 Cooperative Management and International

   Cooperation                                                                    29     

-4.2 Conclusion                                                                  30           

5. References                                                                     31            

6. Annexures                                                                     32-33         

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 1. INTRODUCTION
Asia is the world’s largest continent, encompassing about 30% of the surface area. It has
both the highest and lowest points on the surface of the earth along with longest
coastline with climatic extremities. It also produces the most varied forms of vegetation
and animal life on earth; one could witness the broadest variety of human adaptation in
Asia as compared to any of the other continents.

 Despite of the most staggering features of the continent, the entire region is facing
environmental crisis at the expense of development. This outcome had already been
foreseen as the world approached the end of 20 th century. The economic discipline
followed by most western and first world countries was based on the sole principle of
evolving first and worrying about the environment later. It is now widely accepted that
long term economic growth requires not just accumulation of technology and other
forms of capital and labour but also the preservation of the natural capital base.

 Environmental degradation and economic growth are directly related as most factors of
production may be replaceable or substitutable but are still finite. Once damaged, they
might be unusable for long periods and fixing the problem is an expensive and
protracted process. As these natural systems are the primary sources of food and clean
water, their degradation through various forms of pollution and overuse has raised
concerns in academics and policy-makers around the globe.

 The most important message for this region, an economic powerhouse, would be to not
undermine the damage being done to the environment at the expense of their rapid
growth and instead make sure that the damage is accounted for. Even so, a whole new
scenario arises as urbanization reaches the remote corners of this region, and the
demand for commodities produced by the prospect of consuming environmental capital
becomes a necessity. Meeting these demands of numerous, wealthier and urbanized
people becomes a cause as well.

 Clean and ample supply of water, arable land and clean air are the vital ecosystem
necessities for sustaining life and thus ensuring Asia’s emergence as the engine of the
global economy. However, in recent times the strategies for economic expansions come
at the cost of the environment and if continues to proceed on this trajectory, will
progressively hinder future development.

 
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Environmental damage not only affects the sustainability of growth but also puts future
welfare at risk and might even extract welfare costs to deal with the current conditions.
Sections of people residing in rural areas with low income mostly depend on
environmental sources/ the primary sources. Their financial condition compels them to
live under harsh conditions as it is and finding alternatives to a contaminated water
source or compromised cooking fuels amidst this crisis affects their livelihoods on a
huge scale. Apart from this problems such as their capacity to earn, receive education
and several health problems arise.

 According to several environmentalists, the environmental degradation faced by Asia

today will continue to be a cause of fundamental development issue for as long as 2030.
With rising concerns and emphasis on these issues several policy-makers of business
tycoons and MNCs throughout Asia are recognizing these risks and coming up with
environment protection policies. The economic imperative for environmental protection
is now a principal policy issue. The PRC’s 12 th Five Year Plan (2011-2015) places “green
growth” at the center of the country’s development path along with targets for
renewable energy, carbon intensity, water and energy efficiency of production,
emissions of major pollutants among many such initiatives. The Government of India has
identical goals and views water security specifically as a step towards economic
development whereas ASEAN members recognize the necessity of environmentally
sustainable growth.

 Even though progress might not be easy it would still be a step towards sustainability of
environment with respect to economic growth. This study will illustrate the complexity
of these problems, showcase how difficult it would be to lessen them and why
persistence, if not worsening, seems like the only feasible reality to construct and base
social policies upon.

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 1.1 LITERATURE REVIEW
Extant Literature provides us with valuable insights into issues we are seeking to
uncover and analyze.

For instance a paper published under the forum of ECOLOGICAL ECONOMICS 15 (1995)
91- 95 states that 1) National and international policy has usually ignored the
environment. 2) There’s a general proposition that economic growth is good for the
environment and it has been justified by the claim that an empirical relation exists
between per capita income and some measures of environmental quality. It has been
observed that as income increases there is an increase in environmental degradation as
well, but up to a certain point, after which environment quality improves.

Arrow et al. 1995, Dasgupta 1996 states that towards the end of the 20 th century, the
economic discipline began to seriously acknowledge the central importance of
environmental sustainability to the process of economic development.

According to (Brock and Taylor 2005, OECD 2011) it is now widely accepted that long
term economic growth not only requires the accumulation of technology, physical
capital and labour but also the preservation of natural resources.

In 1987 the United Nations Report on sustainable development foresaw the need for “a
new era of economic growth, one that must be based on policies that sustain and
expand the environmental resource base” (WCED 1987).

Nobel Laureate- Michael Spence, chairing the Commission of Growth and Development
( and one of the senior developing-country economic policymakers (including from the
People’s Republic of China, India and Indonesia) said:

 It is only a slight exaggeration to say that most developing countries decide to grow first
and worry about the environment later. This is a costly mistake… The poor suffer the
most from many kinds of pollution… Early attention to environmental standards serves
the interests of equity as well as growth.

 
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 1.2 OBJECTIVES OF THE STUDY
-          To have a complete idea about the major environmental problems in Asia

-          Importance of Asia’s natural resource base to economic development

-          Impact on the economic development as these problems escalate

-          Explore the implications and present some general management strategies to

minimize economic and social damages.

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 1.3 REASEARCH  METHODOLOGY

 
AREA OF STUDY:
With the economic growth of countries, environment has been seen to take the toll. Asia,
which is home to various developing countries like India, Bangladesh, and Global superpower
country like China, what are the repercussions on the environment. The economy of any
nation operates under its social paradigms embedded within the natural world, and thus to
meet its demands it might affect the environment and vice versa.

 TYPE OF STUDY:
This study is qualitative as well as descriptive and analytical.

TOOLS OF DATA COLLECTION:

In this research both primary and secondary data were used.

The primary data has been collected through analyzing the influence of economy on
environment and vice-versa. The secondary data has been collected through communication
with peers and scholars involved in the specified field.

METHOD OF ANALYSIS:
Different types of analysis are used for the study. The analyses are informal investigation,
Internal Analysis and External analysis.

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 2. NATIONAL AND INTERNATIONAL SCENARIO

 Primary Environmental Issues affecting the Economies Across Asia

2.1 Water Management: Fresh Water is essential to agricultural and industrial

production. It is essential for human life as well as several other creatures and biological
processes. Over time, condition of water in several places has been compromised and
due to inadequate management, has resulted in its over-exploitation and degradation.
As a result it not only directly increases the cost of an input material in production but
also extracts huge economic costs by affecting environmental system and human health.
It isn’t just an environmental issue but also a major challenge to economic development.

Excessive groundwater extraction, pollution due to human wastes and industries and
Hydropower projects are among the factors that are causing this. Although Major
improvements have occurred in water access and sanitation in Asia over the last two
decades, it is still a long way from showing adequate number of facilities. Several supply
issues are set to be compounded by altered rainfall pattern which is a result of climate
change. It is estimated that within the next 30 years increasing glacial meltdown dry
season will transform Himalayan originating rivers such as Brahmaputra, Ganges and
Yangtze into seasonal rivers. According to United Nations projections to 2030 estimation
believes that the population of ASEAN, the PRC and India (46% of the global population)
will increase by 462 million (2010 UN). Thus, rises in agricultural, industrial and urban
usage will take an even greater toll on these dwindling supplies. The challenge could be
as great as water demand exceeding the supply by 25% in PRC and 50% in India (WRG
2009).

Even though accessibility to clean and ample supply of freshwater will be a common
challenge shared by most countries across Asia, the nature of this issue will vary across
different settings. While demand maybe a large role in some locations, supply-side
concerns such as polluted water or lower dry season rainfall maybe some of the issues
as well. In most locations a somewhat combination of these two such as efficiency of
water usage, degradation of water resources through overuse or pollution, allocation of
the resource according to agricultural, industrial and livelihood usage and even flood
control may turn out to be a disaster. The welfare implications of degraded water
resources in Asia are substantial. As 70% of water is currently used in agriculture (ADB
2007), water shortages undercut food security and the incomes of rural farmers.

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 There’s also the matter of hazards to health caused due to the intake of contaminated
water which ultimately reduces productivity and raises other health affiliated costs for
these people, already striving to make a living famers. Without improved management
of pollution, expansion of industrial water usage and other uses, particularly in the PRC,
the water may diminish to levels as low as unavailability for human consumption and
other uses. Conflicts may arise between states over the scarcity of water (Asia Society),
already plans for several PRC dams on the Tsangpo-Brahmaputra River upstream of the
Indian border are perceived as ‘a threat to the stability of bilateral relations between
the two countries'.

2.2 Deforestation and Land Degradation: Widespread deforestation and

land degradation are the prime examples of natural resources in Asia. These issues are
closely linked with one another. Practices such as unsustainable tree removal, clear-
felling, prompt erosion and soil salinity as well as disturbance of the groundwater table.
Deforestation in already dry lands results in the transformation of fertile areas into
barren land, this process is known as desertification. (Other drivers for desertification
include climate change, natural weather variability and unsustainable farming practices
such as intensive cropping and excessive irrigation in lands with poor drainage) Once a
particular area is degraded to this extent, it might be impossible to support forest
growth again. It has been seen that even agricultural use drives deforestation in the first
place.

The causes for several of these deforestation and land degradation problems in Asia are
caused by: demand for timber products, palm oil, intensive farming and urban sprawl.
Some cases have showcased, poor regulations and corruptions to be the root cause of
allowing such unsustainable practices. With time it has become apparent throughout
the region that enduring economic costs from unsustainable land use ultimately
overwhelm the more immediate gains. Once the soil and land has been harmed enough,
it requires a large amount of time and expenses to recover. This eliminates the prospect
of gaining future sources of wood and causes other problems that curb the productivity
of the natural resource base. Over-cultivation of agricultural land is increasingly leading
to declining soil productivity and as a result, lowers output and food insecurity in some
regions. At the regional level l, the situation with regards to deforestation is clearly
improving. One of the main causes is due to the concerted afforestation and forest
protection efforts in the PRC, and also, to a lesser extent, in India and Vietnam.

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The PRC has shown admirable ambition in this area and now has the largest area of
planted forest in the world. Even so in several other countries in Asia, such as Indonesia,
Malaysia, Myanmar, and Cambodia, deforestation continues on a massive scale.

The economic stature of some states like the PRC, Indonesia Malaysia and India depends
largely on commodities exported which are produced at the expense of land
degradation and deforestation. Indonesia and Malaysia by itself produce over 85% of
global palm oil exports. The PRC and India account for 45% of global imports (FAO
2011b). Limits to expansion of agricultural land in the latter are, to some degree,
“exporting” former deforestation problems. Similar trends in the Asian timber trade
have also emerged from recent analysis. Land degradation is a major environmental
issue like water shortage because like sufficient water, productive land is a necessary
determinant of food security. Food security in turn supports labour participation, well-
being and hence development and economic growth, but also other factors such as
political stability. The quality and quantity of arable land across Asia is continuing to
deteriorate, affecting large swathes of the population. According the Govt. of India it is
estimated that nearly half of the country’s land is degraded. Poor Management
practices in agricultural fields have caused huge problems such as soil erosion, rising
salinity, contamination by pesticides amongst various other issues. In the PRC, despite
extensive land restoration projects, the area of arable land continues to fall as erosion
and pollution spread. South East Asia witnesses draining of swampy peatland, usually
intended for agricultural purposes, has caused land to subside, become highly acidic,
and, hence, be unfit for any use (ASEAN 2011). According to the Food and Agriculture
Organization, an estimated two-thirds of ASEAN nations (excluding Singapore) have 40%
of their lands suffering severe degradation due to human activities. Intensive farming,
has contributed to high rates of decline in agricultural soil quality, particularly in Viet
Nam and Thailand.   

2.3 Air Pollution: Accessibility to clean air is a principal determinant of human

health as oxygen is a basic necessity for the overall condition of other organisms and
environmental processes. Ever since the Industrial Revolution, the outdoor air pollution
has been a common by-product of global economic growth over the last century or so.
While on the other hand indoor air pollution is often associated with a lack of
development. The absence of affordable alternatives encourages the burning of solid
fuels such as dung and timber for energy in spite of their disastrous effects on the

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environment. Consequently, air pollution is now a primary cause of illness and death in
both the growing cities and the poor rural areas of Asia. This problem has now grown to
such extents that its widespread nature is causing problems to productivity and income
of the labor force and thus exacting a heavy economic toll. A recent study has estimated
that in 2005 the annual welfare loss associated with air pollution in the PRC amounted
to US$ 151 billion (2010 dollars). Former 1997 dollars report shows this cost to be at an
estimation of 111.5 billion US dollars.

                                         Currently it is a common issue in Asia for pollution levels to

exceed safe levels across the cities of most developing countries. According to the HEO
2010 report, the increase in regional burden of respiratory illness and cancer has been
due to increased emissions of noxious gases and particulate matter from motor vehicles,
industry and other causes as the entire urban population is exposed to it. On a global
basis, it is estimated that 65% the urban air pollution mortality occurs in Asia. At an
aggregate level there have been significant improvements in recent times, but without
renewed mitigation efforts, such as tighter emissions standards and stronger monitoring
programs, the situation across the region could deteriorate substantially. According to
UN 2009 the urban population of the PRC, India and ASEAN is set to increase by 50%
between 2010 and 2030. This rapid urbanization and the growth in the section of middle
class people have caused an explosion in motor vehicle ownership in Asia which is
estimated to cause a rise of vehicles on the PRC’s roads of 130 to 413 million between
2008 and 2035, and a corresponding increase of 64 to 372 million in India. With higher
incomes will come higher demand energy intensive consumer goods such as air
conditioner. Banking schemes such as Easy Monthly Installments for such goods, both
vehicles and energy intensive goods enables many middle class people to afford them
prior to the time it would’ve taken in their absence. Recent BS6 initiative has put the
emission norms on check, and with such tighter norms a difference can be expected,
however small, in these countries that constitute 46% of the global population. Urban
air pollution in large cities is not simply a localized or a health issue. Air transport of
urban pollutants causes problems further afield. For example, acid rain originating from
sulfur dioxide emissions in cities degrades farm land in regional areas, as well as
contaminating groundwater. Air pollution problems in one city may be compounded by
activities in others. Major incidents of air pollution in Hong Kong, China over the last two
decades have coincided with northerly winds transporting pollutants from the major
industrial areas on the mainland. Other activities or events outside cities, such as forest
fires, can add to urban problems.

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At a regional level, air pollution from cities has mixed with that from other sources
(including indoor air pollution) to form atmospheric brown clouds (ABCs) over Asia.
These combinations of aerosols and partially combusted (or black) carbon have been
shown to affect regional and global climate, crop production, as well as health. ABCs and
indoor air pollution both are a significant regional health risk even though the latter is a
symptom of under-development.

Particulate matter, CO, CO2 and other airborne substances damage the lungs of
householders, causing a variety of illnesses including cancer. Exposure to particulate
matter has been estimated to be 8 to over 100 times daily World Health Organization
(WHO) safe levels. According to WHO estimated 1million deaths occur in PRC, India and
ASEAN.          

2.4 Climate Change:

Asia is highly vulnerable to the effects of climate change. With a large population in low-
lying and coastal areas, widespread water insecurity, and around two thirds of the
world’s poorest people, the region is likely to suffer extensive damages in the future.
Even though the full force of development impacts might not be realized for many
decades, climate change adaptation is already a contemporary issue. Still various State
Leaders and sections of people continue to undermine the gravity of this issue while
some outright deny its existence.

Rising maximum temperatures and changing rainfall patterns are affecting agriculture
and food security today, and the effect of these changes will keep escalating until 2030.
It is estimated that yields of important crops will decline in parts of Asia by 2.5% to 10%
by the 2020s and a greater intensity of extreme weather events, incidence of flooding
and tropical disease, and decline of marine ecosystems are also concerns for the
proximate future.

The Climate change will only continue to worsen the ill effects of Asia’s current
environmental problems, such as water insecurity. But there’s something more to it.
Water shortage and Deforestation and black carbon emissions in Asia are important
drivers of global warming, both in terms of contribution and also because their
mitigation could be a low-cost option with short-term benefits. Continuing on its current
trajectory, energy demand in Asia is expected to explode with ongoing economic
expansion and, accordingly, so will coal use and greenhouse gas emissions. Asia is set

13
out to be the most dominant source of expansion in global emissions. In respect to
current projections, it is estimated that the PRC’s share of global fossil fuel emissions
will be 34% by 2030, and the figure for developing Asia as a whole will be 51.9%.

 Whilst the scale of climate change damages to 2030 alone may not warrant the
substantial mitigation investment required in Asia over the next two decades, they will
be in the long run. At a regional level, Asia is both highly vulnerable to climate change
and will play a decisive role in its limitation. Therefore, extensive climate change
mitigation activities are a matter of self-interest. It is clear today that the process of
lifting the standard of living throughout Asia cannot follow the carbon-intensive
trajectory laid out by today’s high-income economies: the limits of the climate system
render such repetition infeasible. Switching to a “green growth” development pathway
will reduce the impact of potentially major stumbling blocks arising from climate
change, such as food and water insecurity, environmental refugees and conflict, among
others. Not only does avoidance of major climate damages provide a firmer base for
growth beyond 2030, but there are significant economic opportunities in the short-term
from leading the way in, for example, renewable energy generation, and also increasing
energy security. Indeed, the PRC and, to a lesser extent, India and ASEAN countries are
moving towards exploiting these opportunities.

2.5 Problem Formulation and Interdependency:

Problem Formulation: To begin with, most problems evade definitive

formulations. The complexity inherent to these issues necessitates that “the information
needed to understand the problem depends upon one’s idea for solving it” (Rittel and
Webber). For instance, a policymaker working on agriculture in India might believe that
excessive groundwater depletion is caused by inefficient water usage in agriculture. She
therefore requires information about irrigation infrastructure and cropping practices,
and must ascertain how existing systems can be improved. However, there could be
another perspective by another policy maker working under the energy sector. The
particular individual might focus on subsidized power pricing for farmers. On the other
hand, a bureaucrat in the water sector might look at non-compliance with existing
regulations, and therefore the much broader issue of institutional capacity and its
components must be considered. Even though all the policy makers seek to work
towards fixing the environmental problems, the process of defining it is framed by their

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individual conception of underlying drivers. Looking closely at the major environmental
challenges in Asia, it is evident that they evade precise definition as such. Certain issues
arise due to a complex network of already underlying problems.

Some of the common causes include: weak environmental regulation due to the
absence of laws or the institutional capacity to enforce them; economic growth in
sectors that use or pollute environmental resources; a burgeoning and more urbanized
population; and substantial underlying poverty. Even so there are specific factors
prominent for certain issues, such as poor infrastructure obstructing urban water
management or corruption encouraging deforestation. The lists of such underlying
causes are potentially endless. Overall assessment of a problem requires subjective
assessment of this myriad of causes and how they interact with each other at every
level. Defining a problem at a single location is difficult; from a regional perspective
harder still. The exact composition of the same broad problem is location specific; poor
transmission infrastructure may be a defining water management issue in Delhi, but it
may be negligible to a community living downstream from a manufacturing plant in the
PRC.

Formulating such problems is difficult due to their dynamic nature. That is, these
problems do not stand still. Some or many of the components of these scales of
problems change over time and eventually so does the nature of the problem itself. For
example, considering the groundwater depletion example, factors such as population
growth and climate change will likely increase pressure for over-exploitation over time.
Other factors may also change in conjunction with their market-based or political
determinants, such as standard of irrigation infrastructure, enforcement of regulations,
energy subsidies, and the cost of drilling deeper wells. More generally, variation in
incomes, energy use, population, and other underlying drivers of Asia’s broader
environmental challenges ensures that both the broader problems and their localized
manifestations will also be subject to continual change. Moreover, any attempted
solution will change the importance of such underlying factors and, hence, the problem
itself. There is no stopping rule when taking these issues into account. In the event of
more efficient management or development of alternative sources, there will always
remain incentives for over-exploitation. Successful policies may only improve the
situation temporarily, as, in many cases, prevailing conditions inexorably make these
problems worse, further complex, or more difficult to address.

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Interdependency: The interdependent characteristics of such problems extend
beyond the causal linkages discussed in the context of problem formulation. As they
encompass numerous issues, these problems involve a multitude of different interest
groups. Let us take the example of dam construction on the Mekong River. The
expansion of regional energy supply could benefit urban and rural households, workers
in industry, company shareholders and, to some measure, the welfare of all that profit
from industrial expansion and regional economic growth without a doubt. The
recipients of dam-funded government projects in Laos and Cambodia could also hope
for prospective gains.

On the other hand, obstruction to the environmental services provided by the river
would harm fishermen, riparian farmers, and, to some measure, the welfare of the
regional population that is exposed to food insecurity. There’s a risk of tourist operators
also being negatively affected. Any solution will impact or involve all these groups, and,
for a single group, potentially in counteracting ways. For example, a fishing community
may receive better houses, healthcare, and electricity supply as part of a resettlement
package, but at a cost of the diminished viability of their major income activity.

Asia’s broader environmental challenges, are intrinsically linked to not only many
causes, but bear impacts across a range of social and economic activities. Many of these
are related to development and human welfare. Adequate water, clean air, arable land
and natural ecosystems (such as those associated with rivers and forests) have great
bearing on food security, human health and, more generally, poverty and incomes. But
often these outcomes affect the environmental issues themselves. Food insecurity may
prompt expansion of cropland into forested areas, thus increases agricultural water
demand. Low incomes increase incentives to adopt fire-clearing methods or use
biomass fuels, thus causing air pollution and respiratory illness. Poor health reduces
income potential, and so on and so forth. A complex web of interdependent factors
involving many groups is therefore involved. This combination of competing interests
and the multi-faceted linkages between them places a concerned policymaker in an
unenviable position. Environmental issue and policies to address it affect a wide variety
of stakeholders, and formulating a solution demands judgement upon an extensive
series of welfare trade-offs. Yet even these trade-offs are indeterminable and
subjectively assessed. Considering the dam example again, what is good for the
industrial worker in Viet Nam might be bad for his compatriot farming in the Mekong
Delta, but to which extent is unknown. Short-term reductions to fishing incomes in a
Lao village may eventually be offset in the long-term if dam revenues are

16
used to increase educational attainment. The development impacts of dam construction
would not only be widespread, they would also not be uniform across different groups
or across time. What’s more, the cyclical relationship between components of such a
problem means that any attempted solution is likely to have feedback effects. Hence the
policymaker is not even able to discern the true impact of a solution after
implementation because its effects cycle back and forth through the components of the
problem, altering the welfare and activities of stakeholders in a variable and obscure
process.

The presence of numerous and diverse stakeholders, in addition to the complex links
between their welfare and the problem, entails that solutions are neither right or
wrong, but rather better or worse. The merits of a particular solution depend on
personal judgements about the expected outcome, rather than on the basis of objective
evidence from, say, a scientific experiment, or an identical problem in the past. Indeed,
wicked problems are distinguished by a unique nature that defies simple application of a
conventional or recycled methodology. Furthermore, a clear and definable set of
solutions requires the complete, and unachievable, grasp of the dense web of
underlying processes. In any event, if this complete knowledge was achievable, the
preferred methods for navigating this web would be determined by formulation of the
problem. This presents a perverse situation. From earlier, one cannot define the
problem without some preconceived notion of the solution, yet a viable solution is
determined by how one views the problem.

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2.6 Overfishing: Fish is a key source of food for virtually all Asian states, providing
one of the largest sources of animal protein to the world’s fastest growing commodity
market. The world’s largest Tuna fishery crosses the jurisdiction of at least 21 countries-
as well as extensive high seas areas of the Pacific Ocean- and involves harvesting by
fishing vessels from 26 different nations.

Across the Pacific Ocean and in many coastal and riparian parts of Asia, fishing is a
significant part of the economic base, providing food, employment, revenue and foreign
exchange earnings. World fisheries are being overfished as marine catches increased
from 17 million metric tons (MMT) in 1950 to a peak of 87.1 MMT in 1996. As a result
there has been a steady increase in the frequency of clashes and incidents at sea caused by
foreign fishing trawlers illegally encroaching into Exclusive Economic Zones and
territorial seas.

Aquaculture production is a growing part of the fisheries sector. In 1996 20% of all
global fisheries production was from aquaculture. Asia dominates world aquaculture for
fish, shrimp and shellfish, with China producing 68% of the global total. If done in an
environmentally friendly manner aquaculture can be a positive contributor to the world
food supply.

For example, giant tiger prawn production in Thailand has exploded from 900tonnes to
277000 tons in the last decade. However, reckless pumping of seawater into shrimp
ponds can damage neighbouring fields and hurt coastal marine life.

To protect fisheries and ensure sustainability, cooperative resource management schemes

such as fishing quotas need to be established and enforced. Militaries, coast guards, law
enforcement and courts should cooperate to reduce the possibility of disputes, collisions
and pollution such as negligent oil spills which can take months to subside and devastates
marine life in a vast area for months.

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 Ground Report of Specific Cases

3.1 Regional Management of Hydropower Development On the

Mekong River
The Mekong is one of the world’s few major rivers whose
hydropower potential remains largely unexploited. This relative
absence of dams is set to change at a rapid pace. Eleven mainstream
dams are planned in the Lower Mekong Basin (LMB), an area
encompassing Laos, Thailand, Cambodia, and Viet Nam. The
environmental and social impacts of the proposed dams will endure
for decades, yet, due to the complex processes involved, any prior
assessment of costs and benefits is riddled with great uncertainty.
Dam construction on the Mekong addresses two important economic
issues in the LMB: the need for an abundant and cheap supply of
electricity to meet the burgeoning demands of the Thailand and Viet
Nam economies and, enduring poverty in Laos and Cambodia.
Proponents claim that the dams represent a major opportunity for the
host countries: the 9 mainstream projects in Laos and 2 in Cambodia
are expected to increase annual state revenues by 18% and 4% above
2009 levels respectively. In fact, the national government of Laos
aims to become the “battery of ASEAN” and views hydropower as the
key driver of poverty alleviation in the country. In the context of
climate change, hydropower is often presented as a clean alternative
to fossil-fuel intensive energy generation, and this attribute is also
commonly invoked by the Laos government. On the other hand, dams
also threaten major environmental degradation that would have a
disproportionate impact upon low-income rural communities (MRC
2010). Whilst benefits will be distributed between countries in the
Lower Mekong Basin (LMB), the transboundary course of the river
ensures that the costs will be as well. Among the most prominent of
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these is the barrier created for upstream migration of species
belonging to what is presently the world’s largest inland fishery. The
MRC commissioned a strategic environmental assessment (SEA) of
all mainstream proposals that estimated an annual loss of 340,000

tonnes of fish by 2030, equating to US$ 476 million per year. As fish
account for 47–80% of animal protein consumed within the LMB
(Hortle 2007), and are a major source of rural income (Dugan et al.
2010), this factor alone could have a major impact on food security
and poverty (MRC 2010). In addition, substantial blockage of
sediment transfer would cause significant downstream erosion and
undermine the productivity of riverside and flood plain agriculture.
Although prior assessment of the damages caused by LMB
mainstream dams are unavoidably estimates, disastrous experiences in
the PRC (Economy 2010) and on Mekong tributaries indicate their
potential scale.
3.2 Groundwater Depletion in India : The impending water crisis in
India is widely acknowledged as one of the major environmental and
economic issues facing the country. A principal component of this
problem is the unsustainable depletion of the nation’s groundwater
aquifers. Groundwater is a crucial resource in India, accounting for
over 65% of irrigation water and 85% of drinking water supplies.
However, on current trends it is estimated that 60% of groundwater
sources will be in a critical state within the next twenty years. In the
most seriously affected north-western states, the nation’s centre of
irrigated agriculture and site of economic hubs such as Delhi, recent
satellite measurements indicate an average decline of 33 cm per year
from 2002 to 2008. At a more localized level, observations of annual
water table decline exceeding 4 metres are common throughout India;
even exceeding 10 metres in some cases Groundwater depletion is
driven by a diverse range of demand-side factors.
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Utilization of this resource facilitates irrigated agriculture in areas far
from rivers; groundwater was a key component of the “green
revolution” that occurred from the mid 1960s. In regions where
surface water is available but unsafe for drinking or farming—over
70% of India’s surface water resources are polluted by human waste
or toxic chemicals, rendering many of them unfit for consumption.
Groundwater has often been seen as a safe alternative. Water supply
infrastructure in urban areas is commonly poor and unreliable,
therefore rendering well drilling the most economical means of
obtaining household water; the local government estimates that 40%
of the water transmitted through Delhi’s mains system is lost through
leakages. In rural areas, the electricity subsidies allowing farmers to
pump groundwater cheaply have become entrenched in the political
landscape, and are likely to become more so as energy requirements
increase to extract water from greater depths. Low cost encourages
excess water withdrawal, an inefficient pattern of usage commonly
exacerbated by ineffective application to crops and the wastage of
agricultural produce between farm and market. In order to feed a
growing and wealthier population, it is projected that by 2030, and
under current usage patterns, agricultural water demand will double,
comprising of 80% demand. The state of groundwater quality in India
is a major health issue from both a contemporary and long-term
perspective. As wells are drilled deeper in pursuit of the falling water
table, the water which is extracted frequently displays higher levels of
arsenic, fluoride and other harmful chemicals. The attendant health
effects have been well documented throughout India, particularly in
poorer rural communities where there is no alternative for drinking
water. Geological contamination is often compounded by the broader
hydrological effects of a falling water table. Over-depletion of a
freshwater aquifer can induce leakage from a contaminated external
source such as saline water in coastal areas or surface water polluted
by sewage, agricultural fertilizers, or industry. It follows that
depletion of groundwater is not simply a case of drawing down a
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replenishable resource, but one of lasting and proximate degradation.
The impact of climate change in India adds a further dimension to this
issue. Greater incidence of drought in some regions and an eventual
reduction in dry season river flow (once glacial melt decreases) will
position groundwater as a crucial buffer stock of water. A deficiency
in alternative water sources will increase the pressures for exploitation
in the future, thus rendering sustainable management under present
conditions even more important.

3.4 Afforestation and Land restoration in PRC: Although

deforestation and land degradation have been common throughout the
PRC’s history, the unsustainable use of the country’s land-based
resources has become most apparent in the last two decades of rapid
economic growth. By the late 1990s, soil erosion was degrading 20%
of the country’s landmass, the area of cropland and forested land per
person had declined to one half and one-sixth of the global average,
and desertification affected 25% of the PRC. In addition to the
pressures of population growth and urban development, these
problems were symptomatic of the national government’s earlier
willingness to pursue economic expansion at the expense of the
environment. However, multiple factors prompted the government to
initiate urgent action during the late 1990s, including: major flooding;
dust storms affecting urban areas, particularly Beijing; and concerns
over food security, as well as the future of the nation’s forest
resources. The government response was to design and implement
several land-based ecological restoration programs (ERPs) which
have, since 2000, entailed an unprecedented financial investment in
the PRC’s forestry resources of approximately US$ 100 billion. 11
Key focus areas include: forest conservation (including wholesale
logging bans in many areas), prevention of slope erosion and
desertification, afforestation of degraded land, and re-vegetation of
agricultural land.
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The primary mechanism of these programs has been an extraordinary
rise in afforestation activities12. The official statistics are impressive
to say the least. PRC government figures indicate that forest coverage
has been increasing at 1.6% per year since 2000, or approximately 3
million ha annually. It has been estimated that within the first eight
years of the ERPs: 8.8 million ha of cropland was converted to forest;
soil erosion and desertification of land had been reversed, and were
declining annually by 4.1% and 1283 km2. Aside from the finances
dedicated to the ERPs, contributing factors to their success have
included: payments to local communities, particularly for farmers
through the Sloping Land Conversion Program (SLCP); ownership
and tax reform at a state level that has encouraged the growth of
commercial plantations; and national government programs that have
resettled or retrained workers previously engaged in logging
respectively; and 98 million ha of natural forest were placed under
effective protection. There are however a number of caveats to this
success story. The term “forest” in the PRC has changed over the last
decade, and can now describe scrub and grass land, as well as
orchards and other types of “economic forests”. Thus, definitional
alterations may account for some of the statistical expansion.
Monitoring and assessment is a major challenge; the political system
ensures that regional governments and the bureaucracy at all levels
have a strong incentive to state that central government targets are
being met, even if that is not the case. A field study of afforestation
programs in a small township of Sichuan province demonstrated this
problem, finding that local government statistics had grossly
misrepresented reports of success.
3.4 Climate Change Mitigation in the PRC: The PRC is now the largest
emitter of CO2 (from fossil fuels), with 25% of the global total in 2009,
considerably ahead of the second largest annual emitter, the US with 17%.T he
PRC has been responsible for 72% of the world’s growth in CO2 Of course, in per
capita or cumulative terms, the PRC’s emissions still greatly lag those of the
United States. However, one can safely say that there can be no satisfactory
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global response to climate change without the active participation of the PRC
emissions (from fossil fuels) between 2000 and 2009, a period during which the
PRC’s emissions grew at an annual average rate of 9.4%, and the rest of the
world’s at 0.8%. In 2009, the PRC announced that it would, for the first time,
subject itself to an emissions constraint. Its aim is to reduce CO2. The PRC
already has a large range of instruments in place to achieve its new emissions
target.
There are already a number of policies to improve energy efficiency. Then there
are a number of feed-in tariffs and special tax and tariff concessions to promote
renewable energy. UNDP summarizes the situation as follows: “There are few, if
any, developing economies that have promulgated as many laws, policies and
other measures to support low carbon development as the PRC.” This is probably
true not only in relation to developing economies. emissions intensity in 2020 by
40–45% compared to 2005. This is an ambitious target which will not be met
without considerable policy effort. What we have not seen so far in the PRC is the
introduction of a carbon price. However, the Twelfth Five Year Plan for 2011–
2015 commits to “start a pilot carbon emissions trading project, and gradually set
up a carbon emissions market”. Carbon pricing would certainly seem to be a
critical part of the mitigation challenge compares the PRC (and Taipei, China; and
Korea) to two sets of developed economies: the US and Canada on the one hand,
and the EU and Japan on the other. The US and Canada have cheap energy (low
electricity and petroleum prices) and a high energy/gross domestic product (GDP)
ratio. By comparison, the EU and Japan have expensive energy and a low
energy/GDP ratio. The PRC, with relatively low energy prices and high energy
intensity, currently looks much more similar to the US and Canada than it does
Europe and Japan. But the PRC’s mitigation objective requires that it ends up
looking more like the Europe and Japan in terms of its energy to GDP ratio. It will
not get there without higher energy prices. One key problem is that cost pass-
through mechanisms in the electricity and petroleum fuel sectors need further
strengthening. Coal is the dominant fuel for electricity in the PRC. In recent years,
the price of coal in the PRC has risen sharply. Through a series of electricity tariff
increases, the PRC greatly reduced electricity subsidies over the 1990s. However,
the PRC has found it difficult to pass on the increase in coal costs it has recently
experienced. the PRC has a formula in place for adjusting the electricity price
every six months if the coal price changes by more than 5%. However, since the
end of 2004, when the formula was introduced, although this condition has been
met 10 out of 12 times (in relation to coal market prices), the price of electricity
has only been changed thrice, and by much less than the formula mandated.
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In nominal terms, coal prices rose 40% between the first half of 2006 and 2010,
but electricity prices only by about 15%. In fact, over the last few years,
electricity selling prices have not even kept pace with inflation. Effective carbon
pricing requires pricing reform comes from attempts already made to try to
influence the fuel mix, or dispatch order, in the electricity sector. Under the
Energy Saving and Emissions Reduction in Power Generation or ESERD pilot
introduced into 5 provinces, provinces have been instructed to dispatch
generators, not on an across-the-board basis as in the past, but rather according to
a mix of economic and environmental criteria. To simplify, the dispatch order is:
renewable, nuclear, gas, and then coal, with coal plants ordered by their thermal
efficiency, from highest to lowest. Note that this is roughly the order that one
would expect with a high-enough carbon price, and, indeed, simulations show
implementing ESERD would cut emissions by 10%. However, the pilot provinces
have only been able to partially implement this reform, because of the negative
financial implications full implementation would have for less-efficient coal-fired
units. These units are still valuable as reserve capacity, but, under the PRC on-
grid tariff system, plants only receive a payment if they are dispatched, and so
have no incentive to provide stand-by capacity. Instead, if not regularly
dispatched, they would simply shut down, thereby depriving the system of
valuable spare capacity, in case of an emergency or a spike in demand. Or, put
differently, the policy-induced lack of flexibility in dispatch has undermined the
impact of the introduction of a carbon price (or, in this case, a carbon price
equivalent).
As with energy reform, rebalancing will not be undertaken to reduce emissions.
Its primary motivation will be economic. But emissions reductions efforts will be
more successful if rebalancing occurs. Of course, the measures already in place,
such as support for research and development, and other regulatory and
technology-specific-promotion measures, are also important. But these are already
at the heart of the PRC’s mitigation efforts. What is now needed is a broader
response to the mitigation challenge, one which embraces pricing reform, energy
sector reform, and structural economy-wide reforms. Neither the importance nor
the difficulty of the path ahead should be underestimated.

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4. Recommendations and Conclusions

4.1 Recommendations
According to the present analysis of the current situation that Asia is facing when
it comes to environmental factors, they are going to be very difficult to manage.
However they can still be addressed. Environmental resources are albeit play an
important role in human welfare as well as economic activity, and, consequently,
the depletion of such resources will compel people to take action at some stage.
Pre-emptive measures might help in avoiding the far greater economic burden
associated with emergency responses, such as migration from areas of extreme
water scarcity. This ensures lesser economic burden during times of crisis and
emergency.
The degree to which these problems act as a brake on regional economic
development to 2030 will be calculated on the basis of the precautionary steps
taken towards controlling them firsthand. An useful goal would be to suggest a set
of general policy objectives that will serve as a platform for voicing opinions and
objectives regarding the problem, at both regional as well as local level.
Below are listed 3 areas where the main focus should be implemented which will
facilitate management of Asia’s environmental problems 10 years into the future
and beyond, referring directly to case studies.
One of the fundamental characteristics of the environmental issues is that there
are many problems, which makes it difficult but also provides numerous
opportunities. The links between Asia’s environmental problems, as well as to
development and other issues, allows a single measure to address more than one
negative outcome, or achieve co-benefits, which provides for plenty advantages.
For example, the value for money in terms of welfare and economic benefits
dedicated to prospective solutions is likely to be higher.
Furthermore, even if one goal is not achieved satisfactorily by one of these multi-
objective solutions, there are always more prospects at hand because finance and
resources available for one issue can be used to address another. Opportunities to
evaluate these co-benefits are most beneficial where climate change is involved.
For example, manufacture and distribution of improved cooking stoves in the
interest of climate change mitigation also take he health impacts of indoor air
pollution on low-income communities into consideration. Another example is
how in the energy sector, transferring to renewable technology can be pursued in
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the joint benefit of energy security and sustainable economic growth, in addition
climate change diminution. Indeed, the development co-benefits of climate
change diminution has been the primary focus for climate policy not only in Asia
but in several other developing countries as well.

4.1.1 Scientific Research:

A deeper understanding of the various dynamics and impacts of problems and
potential solutions are essential for efficient management of environmental issues.
Certain measures have to be prioritised from within an infinite solution set. For
example, a crucial determinant of the welfare impacts of Mekong dams will be the
effectiveness of installing fish ladders for migratory species. Without investing
time and money into research about this issue beforehand, final decisions on
construction are impossible.
Likewise, if scientific assessment had been done prior to the establishment of
large-scale plantations in the drylands of northern PRC, the gravely deteriorating
impact that it had on soil hydrology as an aftermath could have been avoided. In
recent years, there has been a rise in support of scientific research, especially with
cooperation from various scientific research laboratories working together in
Asia, because it facilitates adaptive management as problems evolve and solutions
are attempted.
4.1.2 Planning:
It has been established so far that effective planning is more important than just
reaction in crisis management. Which is to say that, measures addressing air
pollution in major cities must account for continuing urban sprawl and a richer
population in the future and, consequently, rising demand in the economy for
vehicles. Planning for rising water demand owing to depletion of water resources
will also be very important over the next two decades or so.
However it is to be noted that policies that only address the current state of an
environmental issue will likely to be ineffective and fail when the problem
invariably expands in the future. Hence the importance of planning ahead is
particularly significant to climate change. Steps taken towards a low-carbon
economy in Asia for the future will have a positive effect on the future extent of
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climate change globally. Measures in the near-future, such as energy pricing
reform, will reduce the level of restructuring required once these economies have
expanded. Moreover, climate change will make water security a much bigger
issue in the future, particularly in India and
the PRC. Planning for such events ahead of time and addressing issues before
they get worse will help to avoid at least some of the major negative impacts.

Pricing:
It should be taken into view that many environmental problems are directly or
indirectly affected by “market failure”. This failure usually pertains to
environmental costs being absent in the price of goods, services, and access to
certain resources. Raising the price to reflect these costs might lead to lesser
damage when it comes to environmental depletion. In the case studies, the link
was particularly clear in the case of excessive ground-water degradation in India.
In fact, when it comes to energy and water, the prices fail to reflect economic or
environmental costs. Of course, one of the reasons for Asia’s environmental
issues being problematic is because the pricing reforms they need to deal with
them are extremely hard to implement. Energy pricing reform can be one of the
most difficult changes which any government can attempt to undertake.
Nevertheless, if one is looking for solutions, opportunities to rectify the major
economical gap between private and social cost need to be strictly put into action.
The cons of this particular argument is that environmentally beneficial activities
should be actually supported through subsidies and other price-based
mechanisms. Governments all around the world are in fact already investing
heavily in renewable energy. The negative impacts of deforestation and the
importance of preservation of the ecosystem is given more importance now and
more economic mechanisms are employed to sustain them. This will only increase
with international and regional support in the provision of funds, technology, and
other valuable resources.

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4.1.3 Cooperative management, regional institutions, and
international:
Cooperative management mechanisms need to be prevalent in order to avoid any
conflict over use of common or shared resources, particularly between states.
Forums such as the Mekong River Commission and many other similar
organisations like it in the region must serve as an important meeting place for
states to not only exchange critical information but also to negotiate. Agreements
regarding shared aspects and resources, if done beforehand, will help in the
materialization of potential flashpoints in the upcoming future, such as the
changing hydrology of rivers originating in Tibet and the Himalayas, will assist
adaptive and mutually beneficial management. At a lower community level,
cooperative management of say, groundwater, could help to break “public good”
characteristics wherein individual users have no self-interest in personally
pursuing sustainable usage patterns. Hence cooperative management in the pursuit
of such co-benefits will be critical to the results of a multi-objective reach.
An important component of cooperative management would be the main role for
regional institutions. Such institutions act as a conduit between scientific
researchers and policymakers, resource managers, as well as the public. In the
Asian Development Bank (ADB), the region already has a major institution that
caters to this particular role. As Asia’s environmental problems grow day by day,
the ADB can choose to expand its activities to further engage with alternative
management strategies. Political as well as economic institutions such as ASEAN
and APEC will increasingly have to include environmental issues within their
chosen agenda, and take action in order to convey the significance of these
problems to ensure regional growth and stability.
Here, international cooperation also has a demanding role to play. Asia needs
considerable assistance in order to find the resources and expertise required to
effectively eradicate its environmental problems. This is particularly true for the
poorer countries of Asia in per capita terms, such as India. The more
economically developed countries of the world also have a crucial leadership role
to play on such global issues. Although immediate action is being taken by OECD
countries to reduce green house emissions, amongst other preventive measures,
Asia can not handle it by herself, the situation demands for international
assistance and cooperation.

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4.2 Conclusion:
It is clear that the current trajectory of environmental degradation in Asia is
unsustainable. Policy makers around the region acknowledge the importance of
environmentally sustainable development and growth and are already acting but
still a lot more needs to be done.
A prosperous, growing and safe Asia needs water, clean air, forests and arable
land. Under the prevalent trends, these components of the natural resource base
threaten to decline substantially as population and per capita income rises. Food
security, human health, and regional cooperation are all likely to weaken if natural
resources are not protected. Action on climate change mitigation in the region
over the next two decades will, by and large, shape the scale of damages from
global warming.
Both the region and the globe cannot afford for Asia as a whole to retain any
vestiges of a “development first-environment later” mindset. At the same time,
there are no easy answers. We have argued that Asia’s diverse environmental
problems share the characteristic of being “wicked”. That is, they are dynamic
and complex, they encompass many issues and stakeholders, and they evade
straightforward, lasting solutions. The six case-studies presented here serve both
to illustrate the breadth of problems Asia is facing on the environmental front, and
their wicked nature. These are not problems that will be solved by growth alone.
Growth will help make resources available to direct towards solutions, but they
will also deepen the impact of the divergence between social and private cost
which underlies so many of these problems. Prescriptive, simplistic solutions will
not be effective, and may make matters worse. The best one can hope to articulate
at a general level is a set of principles that may be useful in dealing with a number
of these problems.
The above list of strategies is certainly not exhaustive and the relative importance
of each will vary across different settings and problems; large investments in
scientific research will not substitute for an inherently corrupt bureaucracy. The
essential point is to avoid simplistic approaches. It is unquestionable that the
challenge is vast and the urgency mounting. Asia’s continued economic
expansion and rising standard of living are being increasingly exposed to
declining environmental conditions. The degree to which considered, pre-emptive
action takes primacy over forced reaction will determine the burden of
environmental degradation on Asian economic development to 2030.
30

5. References:
www.google.com
www.oppapers.com
www.wikipedia.com
http://www.lead-journal.org/content/08075.pdf
http://www.asean.org/21060.htm.
http://www.adb.org/Documents/Reports/Energy-Efficiency-Transport/energy-
efficiency.pdf.
Adler, T. 2010. Better Burning, Better Breathing: Improving Health with Cleaner
Cook Stoves.
Environmental Health Perspectives.
Several other publications were used for information.
 31

ANNEXURE-I

This is to certify that Mr Vaibhav Gupta student of B.Com Honours in

Accounting and Finance of The Bhawanipur Education Society College under
the University of Calcutta has worked under my supervision and guidance for his
Project Work and has prepay a Project Report with the title “Economic Growth
in Asia” which he is submitting is his genuine and original work to the best of my
knowledge.

Place: Kolkata
Date: 25/06/2020
Signature:

Name: Joyeeta Bhaduri

Designation:
 College: The Bhawanipur Education Society

32

ANNEXURE-II
I hereby declare that the project work with the title, “Economic Growth in Asia”
submitted by me for the partial fulfilment of the degree of B.Com Honours in
Accounting and Finance under the University of Calcutta is my original work and
has not been submitted earlier to any University/ Institution for the fulfilment of
the requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or by me.
However extracts for any literature which has been used in this report has been
duly acknowledged, providing details of the literature in the references.

Place: Kolkata
Date: 25/06/2020
Signature:
 Name: Vaibhav Gupta
Address: 244 A.P.C. Road, Kolkata: 700006
Registration number: 017-1111-2905-17

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