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Levers to influence urbanization and urban structure

There is a striking contradiction between what governments say they wish to achieve in urban growth and structure, and the policies they put in place. Two general types of government policies with an urban bias have been identified. The first type includes those national economic policies which have the effect of changing relative prices in such a fashion as to shift the intersectoral terms of trade against agriculture, to widen the gap in rural-urban wage rates and to decrease investment and technological advancement in agriculture. This category includes such policies as tariffs intended to stimulate 'importsubstituting' industry, multiple exchange rates for the encouragement of industry, subsidization of urban food prices, establishment of minimum wages for industry, credit restrictions favouring urban dwellers and excessive government controls.

A common characteristic of such policies is that they are not adopted as 'urban policy' but for a variety of other reasons, yet they have powerful et~fects on urbanization; indeed, so powerful and influential that they tend to overwhelm the impact of policies specifically designed to influence urbanization and regional population redistribution (Lo and Kamal Salih, 1978: 117-18; Renaud, 1981: 101-7; W. C. Robinson, 1987). An international study focusing on mechanisms to stimulate the growth of small and intermediate urban centres found that most attention was required on 'modifying the social, economic and political forces which seem to be the major causes of existing spatial trends and not spatial mechanisms such as diverting investments to 'growth centres" or "new towns"' (Hardoy and Satterthwaite, 1986: 5-6).

In the Philippines, policies adopted during its import-substitution phase ( I 948-67) led to a heavy concentration of manufacturing industry and urban population growth in Metro Manila and its periphery. The swing towards export promotion and regional development that followed was incomplete, and failed to alter the heavy concentration of manufacturing activity in the metropolitan area (Pernia et al., 1983). Attempts to modify the locational patterns through setting up industrial estates and export processing zones had little impact.

In many countries, governments face a basic dilemma in the wish to avoid excessive metropolitan growth and yet the reluctance to permit effective decentralization. Sacrifice of too much power and control from the centre suits neither politicians nor bureaucrats, raising in some countries the spectre of political instability and in all the [need to delegate] regional planning to more poorly-trained technocrats in the regions, and [an implied] loss of power and control over resources (Jones, 1988: 144).

The second type of policy with an urban bias is the placement and availability of public services, including infrastructure (transport, electricity, water and sanitation, communication and others), military bases and services which build human capital (education and health). Some of these services require a degree of concentration in urban areas, but there is scope for giving greater consideration to regional and rural development objectives in locational decision-making. Cities such as Bangkok, Manila and Jakarta receive a much higher proportion of total investments in health and education services, electricity and piped water than their share in national population would warrant (Rondinelli, 1982). In Indonesia in 1980, 30 per cent of all households in Jakarta received piped water compared with 23 per cent in Bandung, capital of West Java, and little more than 10 per cent in other urban centres in West Java (UN/ESCAP, 1984).

Moreover, the pricing of urban services is open to question; in many large cities of the region, substantial subsidies are frequently given to social and physical services (for example, piped-water supplies, investments to ease traffic congestion) to which the poor do not have ready access. Firms and workers in larger centres are rarely taxed for the negative externalities such as the pollution and congestion they cause. 'It has been argued that governments' failure to structure prices to reflect real costs in larger urban centres has provided a strong stimulus to over-concentration of production and urban population there' (Hardoy and Satterthwaite, 1986: 374).

Thailand is an excellent example of matching performance with rhetoric. As already noted, growth-pole approaches have had little impact on diverting growth from the largest cities, nor has the policy adopted in the Fourth Plan of encouraging new industrial investment in provincial areas, and discouraging it in metropolitan Bangkok through regional differentials in tax incentives and minimum wages (Pakkasem, 1988: 27). Policies with more chances of success would be those stressing the elimination of 'metropolitan biases' in tariff structures favouring import-substitution industrialization and in other manufacturing development strategies, elimination of subsidization of rice prices for urban consumers, introduction of 'full-cost pricing' for public transport, electricity and other Bangkok services, and more generally, increasing the taxing power of the Bangkok government, and reducing the 'Bangkok bias' in the provision of higher education and other government facilities (Douglass, 1981; Krongkaew and Tonguthai, 1984; London, 1980; Tonguthai, 1987).

The interesting questions remain: To what extent is Bangkok's primacy due to geographic 'facts of life', particularly its nodal location and national port function? Would Bangkok's primacy be lessened if Thailand had a federal, rather than a unitary, form of government? Definite answers are impossible, but it could be argued that Bangkok would still display a 'high degree of primacy within Thailand, an argument that raises important issues about the limits of policy.

Provision of Urban Infrastructure and Services

A 1989 UN review of Asian megacities was based on their urban-service deficits and the programmes to address these deficits. Table 3.11 shows the findings of this study with respect to Seoul, Manila, Bangkok and Jakarta. Urban-service deficits in Seoul are moderate and the programmes are relatively strong; the other cities show very severe shortfalls in housing, sewerage, transport and the environment. Problems in providing adequate infrastructure in the expanding cities of South-East Asia are immense, given budgetary constraints. According to the data, the policy response is often highly inadequate with respect to the scale of the problem; for example, Manila 'has severe [traffic] congestion and slow speeds but a very limited policy response' (Brennan and Richardson, 1989: 125).

The issues of urban management in fields including housing, water, sewerage, transportation, power, the environment, and health and social services, and the issues of urban finance related to all of these, are immense and have generated a large body of literature. Key studies containing extensive bibliographies include Bahl, Holland and Linn (1983), Lea and Courtney (1985) and Linn (1979, 1987). One important point is that the standards and approaches adopted must be those appropriate to the particular setting, not simply those borrowed without question from the West. A good example is urban housing, which, especially in slums and squatter areas, often serves multiple functions including place of production and as market-place (Laquian, 1983: 85). The 'sites and services' approach to upgrading of housing- popularized by the World Bank after some early successes in Indonesia- recognizes that improvement can be gained for modest outlays of public funds once there is some upgrading of infrastructure.

TABLE 3.11 Qualitative Assessment of Urban-service Deficits and Programmes

Conclusion

High rates of economic growth and rapid urbanization in the 1970s and 198Os in South-East Asia are expected to continue as part of the AsiaPacific Rim's move to centre stage in the world economy. This will raise major challenges in devising appropriate strategies for environmentally sustainable development over the next 15 years. The challenges will stem from a number of interrelated trends: very rapid growth in industrial production, and in the raw materials, energy and transportation required to produce and market them: growth in the number of consumers in the region, and rapid growth in their purchasing power and, hence, their demand for goods and services, including access to recreational areas; and rapid growth of cities, requiring heavy investment in infrastructure, and raising problems of checking pollution and environmental degradation.

It would be short-sighted, however, to see only the negatives in this situation. A major advantage of economic growth is that it brings with it the wherewithal to deal with environmental problems, that is, provided priority is given to this goal. A major advantage of urbanization is that it reduces the environmental pressures caused by continued population growth in rural areas, which are in some ways more intractable, and certainly more widespread, than the different set of environmental issues faced in urban areas. Economic growth and urbanization, in combination, foster declines in fertility and hence slower population growth, thus promoting a move towards the stationary population situation which must be part of the longer-term strategy for environmentally sustainable development.

Singapore. which is not a commodities producer, experienced a negative growth rate of 1.8 per cent of GDP in 1985 as regional and global demand slackened and its construction boom ended.

1. This section is based heavily on Tyabji (1990: 37-9).
2. This section is based heavily on Jones (1988: 4-5).
3. Major export-oriented activities in this sector have focused on food canning and preservation, extending also to processing of vegetable oils in Malaysia and the Philippines, and sugar-refining in the Philippines and Thailand.
4. In Indonesia, only one-third of all manufacturing employment is in firms employing 20 or more workers. In the mid-1970s, value added per worker in these firms exceeded that in smallscale and cottage industries by a factor of more than 20 (Hugo et al., 1987: Table 8. 16).
5. Even with the revised, higher estimates for Thailand, its level of urbanization remains relatively low compared with the Phi)ippines or Indonesia, given Thailand's higher per capita income levels. Similarly, even Malaysia's adjusted estimate of urbanization remains relatively low given its advanced level of economic development: testimony, no doubt. to the heavy emphasis on rural development and land settlement in Malaysian development planning.
6. For a detailed discussion. see Jones ( 1991).

Development problems and the environment

KAMAL SALIH

THE South-East Asian region in the early 1990 is entering a period during which it will experience the fastest economic growth in the entire world. This will produce enormous problems for environmental sustainability. There will be conflicting choices to be made in the allocation of resources, with serious potential for destabilization. The three preceding chapters make it clear that policy management is almost out of the control of policy makers. The present rate of development has outpaced the ability (and even the development) of policy to control it.

Four of the issues raised are being addressed by governments in the region. These are population growth, pollution, the distribution of wealth and elimination of poverty, and the fact that growth is still being driven by the use of non-renewable resources while 'renewable' resources are being utilized at an excessive rate. The latter are not being properly costed in modern-day economic policies.

This rapid growth is adding new issues to old ones. In the 1960S, the central problems were seen as 'basic needs' and labour absorption. The main problems of the 1970s and 1980S were those of structural adjustment, finding niches in the world market, financing economic growth and urbanization, the maldistribution of wealth and the reduction of poverty. New issues of sustainability now confront policy makers. They can be grouped under four dimensions:

1. The question of scale underlies all others. Sustainable development has to be handled at scales ranging from the global, through regional, to the local. There is an urgent need for new arrangements of responsibility and jurisdiction, and new methods of resource allocation.
2. The role of the state needs to be reassessed. Rapid economic growth, capital investment and international movements of capital, and the world-wide trend against centralized control of economics' together with a search for more democratic systems, raise serious questions about the role of the state, and even of national territoriality. Though the state remains a major driving force, the private sector now has greater effective control of the economy than do many governments, and centralgovernment control is everywhere less than it used to be, and is becoming more difficult to apply and enforce, especially in environmental matters.
3. Technological change is of increasing significance. Previously, choices lay between intensive or extensive development and investment, but now they lie between sustainability and unsustainability. The development and application of new technologies to permit substitution of renewable for non-renewable resources is a matter of urgency. The present development paradigms are driven by economic considerations. New paradigms are required which will take into account rates of change in real per capita income, population growth, the exploitation and threatened exhaustion of non-renewable resources, and environmental degradation.
4. Last, but not least, there are important social dimensions; in particular, attention should be paid to the needs of disadvantaged groups and national minorities, which have not normally found much place in national agendas in the past. There is increasing interest in social forces such as the rise of the middle classes, the role of women, improved interaction between urban and rural areas, and the growing assertion of minority rights. Sustainable development must cover the economic, social, environmental and political dimensions.

Where are solutions to be found? Policy makers will have to confront questions of changing lifestyles and the continued entrenchment of poverty in the region. It is important that the poor not be penalized in resolving the problems of environmental conservation. Lifestyles will have to be changed, but South-East Asia should not mimic the lifestyles of the developed countries with, for example, their massive use of motor vehicles. Neither should the developing countries bear all the burden of reducing carbon dioxide and other emissions. The burdens of change must be shared, both between rich and poor countries, and within countries between their own rich and poor. Apportioning the load will not be easy, but so it must be.

A new balance between population and resources has to be defined; it should be based on growing Ricardian scarcity, rather than 'sudden death' Malthusian models. Prices, rather than actual physical limits of resources, are the problem; therefore, a new paradigm of development will not be able to avoid the problem of relating macroeconomic and micro-economic policies in decision-making. Price distortions must be removed, so that costs can be internalized and correct allocation decisions reached by both the public and private sectors.

Three points of particular importance may be made in conclusion:

1. The shift in the terms of trade against agriculture in developing countries has to be reversed. This is necessary in order to maximize the production of tradables, and reduce dependence on non-renewable resources. A change in the terms of trade would encourage greater emphasis on use of renewable resources. An example is the use of forest resources-presently treated as though they were nonrenewable-which should be considered renewable. South-East Asia should end its concentration on import replacement. Towards this end, price rationalization is required.
2. Wage differentials must be reduced, and wage structures must be changed if a more rational system of production and allocation is to arise. Similarly, there need to be changes in the price of capital for small- and medium-scale enterprises.
3. The private sector must give increased emphasis to research and development. The dominance of state finance in these areas should be corrected by adjusting price structures to promote the internalization of research and development by private enterprise at all scales. In particular, it is necessary to encourage and support research and development in the conservative use of resources.

4. Energy and mineral development: Environment and economics

Introduction
Global economic development: energy and minerals
Environment and resource attributes of south-east Asia
Energy and mineral demand in the Asia-pacific region
Assessing environmental costs
Non-conventional and alternative energy and minerals
Economic development, environment and the future
Summary and conclusions
Editorial comment

ALLEN L. CLARK

Introduction

ECONOMIC growth rates in the Asia-Pacific region during the 1980s and continuing into the 1990s-led by the 'four tigers' (Hong Kong, Taiwan, Singapore and South Korea) and the Association of South-East Asian Nations (ASEAN) have been substantially above those of the Organization for Economic Co-operation and Development (OECD) nations and the remainder of the world (Table 4.1). Similarly, population growth rates within the region in general, and the nations of South-East Asia specifically, have been significantly above the world average. Both the trends of economic growth and increasing population growth are projected to continue into the twenty-first century. Central to meeting the demands of continued economic growth and the needs of this constantly increasing population is an expanding supply of energy and minerals.

TABLE 4.1 Population and GDP Growth Rates, 1975-19R9 (per cent)

Source: ADB (1989b).
a ADB ( 1989a).
b Developing member countries of the Asian Development Bank.
c Average for 1970-9.
d Average for 1986-8.

Development models, different from those of the OECD countries, exist and have been successful, often with lower energy and mineral consumption and with less environmental impact. Therefore, although it can be, and is, debated whether the developing nations of South-East Asia need to replicate the development stages of the OECD nations, available data indicate that they are doing so, particularly with respect to ever-increasing energy and mineral demand. Several factors may impact and retard these needs: declining rates of economic and population growth, conservation, substitution, increased efficiency of use and alternative development paths. However, they will have the principal effect of lengthening the time frame of energy and mineral consumption and development. Over the long term, they will not decrease total demand in the nations of South-East Asia.

Alternatively, some authors have proposed (for example, Trainer, 1990) that totally different economic development paths should be followed or that 'no growth' or 'reduced growth' development should be considered. From many, but not all, nations' perspectives, none of these alternatives is either acceptable or appropriate; although, in most nations, more efficient growth is obviously desirable. The need for continued strong economic growth is particularly important in that population, poverty and development are linked, and only through continued and increasing economic development can a growing population escape the burden of poverty. Within this broader linkage are the interrelationships of economic development with increased energy and mineral use, and consequently an association with a growing intensity of environmental degradation.

Before proceeding further, it is necessary to clarify the use of the term 'environment' in this chapter. Herein, 'environment' refers only to the physical environment of air, land and water. The impact of energy and mineral development and use on social and cultural systems is recognized, but is beyond the scope of the present chapter, as are biological and botanical impacts.

To begin with, a global overview of the interrelationships of economic growth, energy and mineral demand and environmental impacts is provided. This is followed by a brief analysis of the more obvious aspects of the resources and environment of the nations of South-East Asia in order to provide a framework which encompasses the impacts and alternatives available. Subsequently, the present and projected rates of energy and mineral demand and development are discussed, as are the associated environmental impacts (nationally, regionally and globally) and economic costs. The chapter concludes with an assessment of alternative sources and policies and options that may mitigate the environmental impacts of increased economic growth and energy and mineral demand and development.

Global economic development: energy and minerals

The close universal relationship between economic and population growth, and energy and mineral demand is shown in Figure 4.1 and Table 4.2. Similar relations exist for energy use per capita and mineral demand as a function of gross domestic product (GDP). Although these data clearly show that a strong correlation exists, studies by Clark and Jeon (1989), Drucker (1986), Labys and Waddell (1989), Larson, Ross and Williams (1986) and Tilton (1988) have demonstrated that the intensity of energy and mineral use (quantity consumed per unit of output) varies with the stage of development of the nation and for individual commodities.

Different commodities are used by countries at different stages of development (Table 4.3). It can be seen that 'old' energy and mineral commodities are those most commonly consumed during initial development when principal uses are for industrial development and infrastructure. 'Young' commodities are associated with a combination of industrial development, specialized demand and economic diversification. 'New' commodities are those related to highly specialized demand, broad economic diversification and strong technological development.

FIGURE 4.1 Energy Consumption as a Function of Gross Domestic Product, 1973-1987 (all scales logarithmic)

TABLE 4.2 Metal Use Per Capita, Total World, 1971-2000

Source Modified from Malenbaum (1978).
a Estimated.
b Average.

Nations experience an increase in energy and mineral demand during the economic transition from less developed country (LDC) through newly industrializing country (NIC) to a mature developed country (MDC) (Figure 4.2). Having reached mature development status, however, the intensity of use decreases; although overall demand may continue to increase. This dichotomy occurs because continued population growth requires that more energy and minerals be provided for more people, although the rate of growth has slowed. Therefore, it is the rate of demand, not total demand, that decreases during a nation's developed stage. As the nations of South-East Asia are all LDCs or NlCs, they can be expected to continue experiencing high rates of growth in energy and mineral demand; particularly for the 'old' and 'young' commodity categories.

TABLE 4.3 Age of Energy and Mineral Commodities in Development Life Cycles

FIGURE 4.2 Theoretical Life-cycle Curve of Energy and Mineral Consumation for Groups of Countries

The preceding analysis of global demand through the life cycles of metals and national development. Iinking economic and population growth with increased demand for energy and minerals, leads to the clear conclusion that energy and mineral use in the AsiaPacific region will continue and, most likely, expand as economic development takes place. Similarly, one must conclude that this increased energy and mineral use and development will bring with it an exacerbation of existing environmental problems and create new and perhaps larger ones in the future.

Energy, Minerals and the Global Environment

Increasing demand for energy and minerals to sustain and support growth of the world economy is accompanied by environmental impacts. An analysis by Holdren ( 1990) clearly demonstrates, in terms of the world's atmosphere, the link between environmental impacts and increasing energy and mineral utilization (Table 4.4). Energy production and consumption are together the largest contributors to environmental disruption. In addition, energy production contributes a significant amount of metal waste to the environment. Two additional factors can be identified. First, energy utilization is the major producer of greenhouse gases which affect the global climate. Secondly, mineralrelated activities are the greatest producers of metals. Energy and mineral production and use are therefore the components of economic development which can wreak the greatest environmental damage.

TABLE 4.4 A Framework for Analysis of Environmental Impacts

It must be stressed that the data in Table 4.4 represent levels of annual contributions in the late 1980s. For most components, these levels will increase with economic development and perhaps at higher rates as present sources of energy and minerals are depleted. In the future, expanding rates of demand will require that lower-quality deposits be developed and utilized, resulting in the movement of larger quantities of material, increased processing and longer transport distances, all of which will substantially add to environmental disruption. In addition, it should not be overlooked that demand, particularly in the conversion and use stage, is highly energy-intensive, which will further increase demand. Equally if not more important is the need to recognize the growing magnitude of effluents from these activities, a by-product which must also be accommodated.

From a global perspective, there is a need, perhaps even an immediate need, for all nations to address the issues of economic development, mineral and energy demand and environmental impacts. The Asia-Pacific region, in general, and the rapidly developing nations of South-East Asia, in particular. are obviously Important components of this global system and, as such, must review their development, and its impact on the environment at both a national and global level-now and more so in the future. It is these issues of economic development, energy and mineral demand and environmental impacts in the Asia-Pacitic region, and South-East Asia specifically, which constitute the remainder of this chapter. However, all such issues ultimately must be viewed in the context of a global partnership.

Environment and resource attributes of south-east Asia

There are a number of basic attributes of the nations of South-East Asia which affect the scope and distribution of environmental impacts. First, most are archipelagos or have extensive shorelines. As such, environmental impacts have not only an on-land component but also an offshore effect. Indeed, many activities (oil and gas and mineralsand developments) are undertaken offshore. In both cases. there is a transfer of the environmental problem into the ocean environment where effects may be broader.

Secondly, new energy and mineral developments are taking place in two main areas, that is, in remote regions where the environment is virtually undisturbed and/or in and around densely populated urban centres where environmental problems are already serious. In the former case, environmental impacts are highly visible but, initially, hopefully less damaging because of reduced pollution from newer facilities and the higher absorptive capacity of the hitherto little-disturbed environment. In the latter case, the effects may be less visible, but are potentially more damaging as they add to an already-stressed system. Thirdly, the archipelagic nature of the region leads to many difficulties in communications which assume considerable importance in developing national environmental policies.

The above factors have added significance when considered in the context that energy and mineral resources have several characteristics which dictate where, how and when they may be developed and utilized. Among the most significant are:

1. World-wide-regionally or nationally-energy and mineral resources are not uniformly distributed in terms of quantity or quality. Therefore, their development will be concentrated in some areas and absent within others; as will be the economic and environmental impacts of development and exploitation.
2. The location of energy and mineral resources dictates how they will be developed and exploited; for example, large deposits of coal, copper and phosphate are economically recoverable only by large-scale, open-pit mining. Similarly, big offshore deposits of oil and gas require substantial drilling and production facilities. In both cases, the environmental consequences of development are substantial, as are the economic benefits.
3. Large amounts of energy are required for production in these industries. Developments are, therefore, often juxtaposed so that each industry has access to sources of supply of the other's product. Clearly, this is more true of energy sources for the mining industry, but the great petrochemical complexes of the world are also major consumers of metals and minerals.
4. Past discoveries and subsequent use of domestic supplies have resulted in present and, by extrapolation, future exploration, development and exploitation of energy and minerals shifting to less developed nations such as those in South-East Asia. Similarly, the most easily recoverable deposits, particularly in the developed nations, have already been discovered, meaning that present and future exploration is concentrated in 'frontier areas'. These 'frontier areas' are often remote and inaccessible, with little previous environmental impact. They require massive infrastructural development and tend to result in large projects, needing substantial expenditures to prevent or mitigate environmental impacts.

Plainly, economic growth based on increased energy and mineral development carries with it both high economic and environmental costs. The nature of the resources, however, dictates that development must take place where the resources occur. Given this fact, the issues of sustainable environmental quality and sustainable economic development-to a considerable extent, a challenge of trade-offs and compromises-must be balanced.

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