Regional Cooperation in Strengthening the Low-Carbon Green Growth: Challenges, Prospects & Policy Framework
Abstract
Following the enduring changes in climate system, along with
it’s universal and irreversible impacts for the people and
ecosystems, an explicit paradigm shift from the traditional
growth policy towards the ‘low-carbon green growth’ (LCGG)
perspective is extolled in recent time. Since environmental
pollution and CO2 emission has become a cross-boundary issue,
actions taken by one nation have affected the development path
of others, especially for the neighboring countries. Therefore,
countries should strategize the comprehensive regional or
sub-regional cooperation frameworks so that they can mutually
overcome the impacts of such environmental degradation and
emission-related issues. This thesis attempts to develop
comprehensive economic analysis to elucidate how best the
regional cooperation (RC) can boost the LCGG implications in the
countries.
It reveals that negotiation on environmental issues are often
challenged by the socio-political interests and power-domination
factors while lacked adequate economic analysis. The thesis
introduces a plausible solution in form of Geo-Environmental
Importance index by which a country can quantify the potential
risk and benefit resulted from the emission or environmental
degradation of all negotiating countries. Once the background
information on the emission and its impacts are precisely
available, it would be easier for the countries to negotiate and
make a better decision. For empirical analysis, 20
South-through-East Asian countries: 10 ASEAN, seven SAARC, China,
Japan, and Korea are chosen. In short, the regional bloc is
termed as StEA. Results reveal that eight countries are
identified as predominantly geoenvironmental risk assimilator,
one risk neutral while rest of the countries are identified as
predominantly risk disseminator. The top-5 geoenvironmental
risk disseminating countries are China, India, Singapore,
Japan, and Indonesia. Conversely, Bhutan, Nepal, Laos, Cambodia,
and Myanmar are the top-5 countries most susceptible to the
regional geoenvironmental risk.
The thesis subsequently analyzes the potential role of an RC in
strengthening the countries’ LCGG in four key areas: energy,
agriculture, trade, and natural resources management. For the
energy analysis, this study empirically evaluates the existing
demand-supply gaps of energy in StEA countries and explains how
the gaps can be minimized most efficiently through
intraregional trade while making the transition towards the
low-carbon system. Stochastic Frontier (SF) models are used to
estimate the country-specific intraregional trade efficiencies in
the primary energy and the Renewable Energy Goods (REG). The
result implies that for most of the countries, intraregional
export of primary energy, as well as REG, are positively
influenced by GDP of the exporting and importing countries.
Tariff and distance adversely affect the exports while the
implication of cross exchange ratio seems minimal in both cases.
RTA is also found to have notable positive impact. China and
Malaysia are the most-efficient in this intraregional primary
energy exports, while Bangladesh and Myanmar remain the
least-efficient. China and Japan are the most-efficient in REG
exports, while Myanmar remains the least-efficient. On average,
the whole region has the weighted export efficiency of 58.4% in
intraregional primary energy trade and 65.4% in REG trade.
Institutional quality, better infrastructure, goods market
efficiency, and technological readiness have reasonable impacts
to enhance the countries’ intraregional energy trade
efficiencies.
It also examines the underlying factors which can explain the
energy usage efficiency of the countries both in aggregate and
sectoral level. DEA Malmquist index model is used for the
sectoral level analysis. On average, the region’s energy use
efficiency in agriculture is declined by 19% while technology
level is advanced by 42% during 1995-2013. Energy use efficiency
in industry sector is dropped by 24% while technology level is
improved by 26% during this time. For electricity sector, energy
use efficiency is improved by 4% while the technology level is
dropped by 19%. Energy use efficiency in the transportation
sector is declined by 12% while technology is level improved by
4% during 1995-2013.
For agriculture, both the production efficiency and emission
management efficiency are estimated both at country-level and
regional level by using the SF models. Result implies that land,
capital, energy, and FDI have positive impacts while labor and
fertilizer have negative impact on the region’s agriculture
production. It also estimates that under regional cooperation
(RC) framework, on average, StEA region can add an untapped
potential production of 16.3% without deploying any additional
resources. Forming an RC could have, on average, 34% added
impact (synergy effect) in improving the production closer to the
potential. Analysis for emission management reveals that more
use of land, labor, fertilizer, and energy will increase the
emission while capital, and FDI will reduce it. On average,
emission management efficiency under the RC framework would be
52.6%. Synergy effect analysis reveals that forming the
regional bloc can have 2.6% added impact for potential emission
level. According to the combined Green Growth Index in
Agriculture, China, Japan, and Korea have the highest overall
efficiency while Cambodia, Lao PDR, and Thailand, have the
lowest.
In following chapter, the thesis uses a two-stage analysis for an
in-depth understanding of the factors affecting the sustainable
natural resources management in the StEA region. The first stage
uses the extended Kaya identity approach to decompose the
underlying factors for resource consumption. The result implies
that population growth has a positive but little contribution
to resource consumption growth in the StEA countries. GDP per
capita has a higher positive contribution to resource
consumption growth for all countries. Emission intensity also
plays a substantial role to decline the resource consumption
while the impact of the resource intensity of emission remains
ambiguous. Results also reveal that in aggregate, 1% increase in
population, per capita income, emission intensity, and resource
per emission would lead to increase the resource consumption in
the StEA region by 0.20%, 0.71%, 0.03%, and 0.05% respectively.
The second stage analysis uses the non-parametric Data
Envelopment Analysis (DEA) method to examine the role of
technological change, efficiency change, and input
substitutability changes in resource productivity (RP)
estimation. Results show that Singapore, Korea, Malaysia, and the
Philippines have the highest improvement in RP while Laos,
Bhutan, and Vietnam experienced the declining RP according to all
three models. RP changes for economic growth and combined goals
are mostly influenced by the efficiency changes while input
substitutability factor dominates to the RP changes for limiting
emission. Japan, Korea, Singapore, and Malaysia remain the
top-performing economies in technological advancement in all
three models.
Subsequent chapter examines the intra-regional export potential
of the low-carbon goods (LCG) for the StEA region. The study also
investigates the implications of various determinants of trade in
the countries under three broad categories: core determinants,
trade environmental factors, and distributional efficiency
factors. Stochastic Frontier Gravity model estimates that
untapped intra-regional export potential of the LCG for the StEA
region is 34.8%. Korea has the highest intra-regional export
efficiency while Myanmar has the lowest. Among the core
components, GDP of both exporting and importing countries, and
trade agreement factor have found to have positive influences
on trade. Distance (between the exporting and importing
countries) and tariff rate are found to have an adverse impact on
trade while the role of exchange rate seems inconclusive. Trade
environment factors, such as institutional strength, quality
infrastructure, and market efficiencies are found to have
profound influences on export efficiency. Distributional factors,
conversely, seem to have reasonable influence on intra-regional
export efficiency.
Finally, the study provides some generalized guidelines and
frameworks on how the RC can be cohesively adopted to share the
best-practices, knowledge, technology, and other resources in
strengthening the performances of all countries towards attaining
the sustainable green growth in this StEA region.