Environmental Management in ASEAN: Perspectives on Critical Regional Issues 9789814345873

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Environmental Management inASEAN

The Institute of Southeast Asian Studies (ISEAS) was established as an autonomous organization in 1968. It is a regional research centre for scholars and other specialists concerned with modern Southeast Asia, particularly the many-faceted problems of stability and security, economic development, and political and social change. The Institute is governed by a twenty-two-member Board of Trustees comprising nominees from the Singapore Government, the National University of Singapore, the various Chambers of Commerce, and professional and civic organizations. A ten-man Executive Committee oversees day-to-day operations; it is chaired by the Director, the Institute's chief academic and administrative officer. The Social Issues in Southeast Asia (SISEA) programme was established at the Institute in 1986. It addresses itself to the study of the nature and dynamics of ethnicity, urbanism, and population change in Southeast Asia. These issues are examined with particular attention to the implications for, and relevance to, an understanding of problems of development and of societal conflict and co-operation. SISEA is guided by a Regional Advisory Board comprising senior scholars from the various Southeast Asian countries. At the Institute, SISEA comes under the overall charge of the Director, who is guided by an advisory committee comprising senior regional scholars.

ISEAS Environment and Development Series

Environmental Management inASEAN Perspectives on Critical Regional Issues edited by MARIASEDA

Social Issues in Southeast Asia

INSTITUTE OF SOUTHEAST ASIAN STUDIES

Published by Institute of Southeast Asian Studies Heng Mui Keng Terrace Pasir Panjang Singapore 0511 Cover photograph by Chew Yen Fook, Visual Connections All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies. © 1993 Institute of Southeast Asian Studies

The responsibility for facts and opinions expressed in this publication rests exclusively with the author and his interpretations do not necessarily reflect the views or the policy of the Institute or its supporters.

Cataloguing in Publication Data

Environmental management in ASEAN: Perspectives on critical regional issues I edited by Maria Seda. (Environment and development series) 1. Environmental policy-ASEAN countries. 2. Natural resources-Asia, Southeastern. 3. Fishery policy-Indonesia. 4. Forest policy-ASEAN countries. 5. Deforesration-Malaysia-Sabah. I. Seda, Maria. II. Series HC79 E5E62 1993 ISBN 981-3016-44-2 ISBN 981-3016-45-0 ISSN 0129-3486

1993

sls9 3-1 0466

Printed in Singapore by Prime Packaging Industries Pte Ltd

Dedicated to the memory of Professor K S. Sandhu Director of!SEAS, 1972-1992

CONTENTS

LIST OF TABLES

v111

LIST OF FIGURES

x

INTRODUCTION

Xl

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES Implications for ASEAN

1

Maria Seda RIGHTS OVER NATURAL RESOURCES IN SOUTHEAST ASIA Managing Fisheries in Indonesia

55

Mochtar Kusuma-Atmad.fa URBAN ENVIRONMENT IN ASEAN Changing Concerns and Approaches

83

Sham Sani MANAGING ASEAN'S FORESTS Deforestation in Sabah

111

Murtedza Mohamed and Ti Teow Chuan BIBLIOGRAPHY

141

CONTRIBUTORS

177

LIST OF TABLES

1.1

Some Basic Indicators in Selected Southeast Asian Countries

1.2 Financial Support for the Tropical Forest Action Plan for the Period 1987-91 1.3 Annual Rates of Deforestation 1.4 Imports ofTropical Hardwood by Country and Region as a Percentage Share ofWorld Timber Imports, 1986 1.5 2.1

Imports and Exports of Sawn Timber for Singapore, 1980-90 Urban Population in Large Coastal Cities, 1990

3 25 31

34 35 56

2.2 Average Annual Marine Catch in the Southeast Asian Countries

56

2.3

57

Consumption of Fish in the ASEAN Countries

2.4 Estimated Coastline Length of the Southeast Asian Countries

60

Catch and Landings of Pelagic Species of Indonesian Marine Fisheries, 1983-88

61

2.6

Production of Main Species in Indonesia

61

2.7

Fishing Fleet in Indonesia, 1968-72

62

2.8

Foreign Fishing Vessels, as of February 1990

63

2.9

Foreign Fishing Vessels, as of March 1990

64

2.5

2.10 Indonesian Flagged Vessels, as of February 1990 3.1 Population Trends in Selected Southeast Asian States

64 84

3.2 Urban Population as a Percentage ofTotal Population in Selected Southeast Asian Countries Range of Annual Average Concentration of Sulfur Dioxide in Selected Southeast Asian Cities, 1980-84 3.4 Range of Annual Average Concentration of Suspended Particulate Matter in Selected Southeast Asian Cities, 1980-84

85

3.3

3.5

Selected Southeast Asian Cities that have Exceeded the 98 Percentile Guideline Values for Suspended Particulate Matter, 1980-84

3.6 Mean Monthly Ventilation Volumes for Selected Cities in Southeast Asia, 1977-81 3.7 Estimates of Solar Radiation Received by Selected Southeast Asian Cities 3.8 Some Pollution Indicators for Selected Rivers in ASEAN 3.9

Hazardous Waste Generation in Selected ASEAN Countries

3.10 Taxonomy of Policy Instruments 4.1 Mean Annual Rate of Deforestation for Selected ASIAN Countries 4.2 Categories of Permanent Forest Reserves in Sabah 4.3 Malaysia's Production, Export and Price of Sawlogs

88

89

89 91 93 98 101 105 112 114 116

4.4

Sabah State Revenue, 1980-89

118

4.5

Sediment Loads of Five Major Rivers in Sabah Compared with Those of Selected Rivers in Peninsular Malaysia

121

4.6 Mean Values of Conventional Water Quality Parameters for Selected Rivers in Sabah and the Water Classification

124

4.7 State Parks of Sabah

131

LIST OF FIGURES

2.1

Location of Indonesia

59

3.1

Overall Air Pollution Levels in Singapore

90

3.2

Changing Forms and Intensity of Nocturnal Heat Island in Kuala Lumpur, 1972-8 5

94

3.3a Air Layer Modified by a City with Steady Regional Air Flow

95

3.3b Air Layer Modified by a City in Calm Conditions

96

3.4

Framework for an Ecosystem

103

4.1

Commercial and Protected Forest Reserve in Sabah

115

4.2

Suspended Solids Yields of Selected Rivers in Malaysia

123

4.3

Sediment Rating Curves for Mengalong River for the Periods 1978-83 and 1985-89

126

INTRODUCTION

The majority of the papers in this volume were originally presented at a Workshop on The Environme nt and Economic Developme nt in Southeast Asia, organized by the Institute of Southeast Asian Studies and held in Singapore in September 1990 with financial assistance from the Konrad Adenauer Foundation. While the papers have been considerably revised and edited for this volume, the original logic of the meeting still unites the collection. Essentially, the workshop addressed two major questions. What are the current environmental problems and underlying issues in the Southeast Asian region? What are the main conceptualinstitutional issues hampering current research efforts on the problem of environmental degradation in Southeast Asia? In the vast and increasing literature on environmen t and development, relatively little attention has so far been paid to the links between social and environmental phenomena in Southeast Asia. All too often, even where the importance of the social dimension of environmental degradation is recognized, the real focus of concern is on the physical or biological effects of human activity on small natural units (such as plants, animals or specific natural habitats) on the one hand, or the global biosphere on the other hand. More recently, in focusing on the links between sound developmen t managemen t, social developmen t and environmental management, many authors have focused narrowly on the techno-economic aspects of environmental degradation, ignoring the socio-political and cultural dimensions of these linkages. Yet, the absence of theoretical research and detailed empirical studies on these social linkages no doubt undermines the current search for innovative

xii

INTRODUCTION

approaches that will foster an environmental ly sound and socially meaningful form of development. The structure of this volume responds to two major concerns. First, in presenting papers on environment and development in Southeast Asia, we highlight some of the common environmental issues or "pressure points" (such as waste disposal, fishery management, rain forest conservation, and industrial air pollution) faced by Southeast Asian countries. Second, since we present a wide swath of the different perspectives that emerged from the workshop, we have chosen to publish papers with themes that address different environmental concerns at different levels: international, regional, national, and local. Most papers, however, follow a common format - they outline the environmental and social problems raised by a given human activity, analyse relevant environmental policy, discuss the scope and nature of current research efforts, and provide a conclusion that suggests future prospects and policy proposals. Seda outlines how growing concerns about alarming environmental problems of global dimension such as ozone depletion and the greenhouse effect, as well the growing political importance of environmental lobbies and non-governme ntal groups have raised fears that the Southeast Asian countries may find themselves in some sense "hostage" to environmental controversies and programmes in other countries, particularly the United States and Europe. Environmental groups in the United States and Europe already appear to wield some influence over development assistance policy and procedure at the World Bank and the regional multilateral development banks via the donor-nation contribution process. It is also apparent that trade and investment practices are increasingly at the centre of environmental campaigns, particularly in Europe. In short, Southeast Asia can expect to be drawn into an increasingly complicated, intractable and urgent set of questions about what constitutes "acceptable risk" and "prudent" environmental action - particularly in relation to energy policy, agricultural and forestry practices, and urbanization and industrialization trends. Drawing on Indonesia's experience, Mochtar Kusuma-Atma dja identifies certain aspects of contemporary fishery development and management that have undesired consequences. Fishery management in

INTRODUCTION

xiii

Indonesia, he argues, has not been sufficiently sensitive to the social and cultural contexts in which fishing occurs. Improvements in the national capability for policy development, institutional structures, administrative competence, and ability to train management, monitoring and enforcement personnel, are also needed if Indonesia is to achieve its fishery development goals. And, at a multilateral and bilateral level, still wanting are fishing agreements that are well-adapted to the new challenge of environmental management. Sham Sani, on the other hand, provides an overview of the main urban environmental problems, caused by the affluence and poverty that ASEAN shares as a region. While the last two decades have witnessed a rapid increase in the urbanization process in the ASEAN region, infrastructure and public services remain inadequate; problems such as slums, congestion, inadequate sanitation services, and pollution beset most major cities in the region. Weak environmental controls and poor land use planning have, moreover, the greatest direct effect on the poor who often live in areas exposed to industrial pollution or natural hazards. The need for regionally-based research or efforts to find sustainable approaches to urbanization is one of the major underlying themes of this paper. This is not to say that prefabricated models can be applied to the variety of urban ecosystems in ASEAN, but that it is possible to identify those elements and methods common to all poorly and well-designed urban management decision-matrices or approaches in the region. The need to adopt "holistic", cross-disciplinary methods that view urban management as a comprehensive process of human and physical resource management, informed by urban ecosystemic knowledge, and integrated with economic development planning is a second underlying theme. Finally, in their paper on forestry management practices in Sabah, Malaysia, Murtedza Mohamed and Ti Teow Chuan demonstrate the need to increase the level and accuracy of information on deforestation and its effects in Sabah. Research so directed can help us pinpoint spaces where policy intervention may be possible. Having outlined Malaysia's legislative approach to forestry management and discussed problems relating to inadequate technical know-how and managerial capabilities,

xiv INTRODUCTION

pncmg and subsidy policies, they conclude that new institutional arrangements and policies which address legal, research, financial, economic and ecological concerns are needed for improved forest management. While by no means comprehensive or exhaustive, the present collection points to gaps in our current approach to research on the dynamics of environmental degradation, and paints in broad strokes a picture of some of the common and main environmental problems and underlying issues of the region. We need to move, however, to research which explores in greater depth the institutional, political, economic, technological and cultural causes of environmental degradation. This research task is immense. It will demand an unprecedented meshing of expertise from the natural and social sciences.

ONE

Global Environmental Concerns and Priorities IMPLICATIONS FOR ASEAN Maria Seda

Over the past few years, as public attention has turned to such issues as nuclear hazards, exports of hazardous waste, ozone depletion, and global warming, environmental issues have begun to move into the political mainstream. 1 Global environmental issues such as the reality of ozone depletion and the prospect of global warming, moreover, have led to the recognition that the biosphere is a fragile ecosystem and the international community has a common interest in concerted action on the environment. Increased awareness of, and sensitivity to, global environmental problems has not only been reflected in the proliferation of bilateral, regional and multilateral conventions dealing with environmental problems, but in greater efforts to address global environmental issues in regional and international forums such as the General Agreement on Tariffs and Trade (GATT) and the European Community (EC), and the Group of Seven's annual summit meetings. 2 Environmental groups in North America and Europe have, moreover, generated much debate about the impact of development assistance and other economic policies and practices on the global environment. This recent welter of activity and debate on global environmental issues should be of particular interest to Southeast Asian states as they may be drawn into international controversies about natural resource use and the priority of environmental concerns within their development programmes. Already a number of environmental groups in Europe and

2 MARIA SEOA

the United States are pressing for new policies and reforms which impinge directly on the economic interests of Southeast Asian states. Concern over the destruction of tropical forests in Southeast Asia, for example, has led environmental groups in Europe and the United States to attempt to organize consumer boycotts on tropical timber and to propose restrictions on tropical timber imports. A world-wide import ban on tropical forestry products could lead to a substantial loss in foreign exchange earnings for various Southeast Asian states. Attempts to change tropical forest use practices through trade restrictions would also impose all or most of the costs of environmental protection on the respective Southeast Asian states, while conferring to non-tropical countries the ecological benefits of tropical forest conservation. Similarly, in recent years there has been a gradual expansion and tightening of the regulatory framework in which bilateral and multilateral development assistance activities are initiated and undertaken. The U.S. Congress has, for example, passed a number of laws that require environmental analyses of foreign assistance programmes and which seek environmental reforms in the practices of multilateral development banks. It is also clear that the recent focus on global environmental problems has important implications for traditional assertions of sovereignty. Attempts to leverage changes in resource use or environmental reforms through foreign aid or trade restrictions, for example, effectively place limits on a state's assertion of an absolute right to regulate activities within national borders as it sees fit, or to determine the priority of environmental factors within its own national development agenda. This is not to suggest, however, that current trends in environmental activism only imply economic and political difficulties for Southeast Asia. It would be disingenuous for Southeast Asian states to deny that they might benefit from efforts to improve resource use and environmental practices, and to promote broad, integrated and sustainable approaches to such international activities as trade and multilateral aid. Renewable stocks of natural resources are a key source of revenues and employment for most countries in Southeast Asia. Agriculture, for example, is still the largest employer in Thailand, Indonesia, Malaysia and the Philippines (Table 1.1). Agribusiness and tourism are important sources of foreign earnings and employment in Thailand, Malaysia, and the Philippines. 3 All of these sectors are vulnerable to environmental

TABLE 1.1 Some Basic Indicators in Selected Southeast Asian Countries GOP growth (% per annum} 1981-90 Singapore Indonesia Laos Malaysia Philippines Thailand Vietnam Myanmar

--

6.3 5.5 2.7•

5.2 1.2

7.8 4.3b 0.4

Per capita GNP (USSJ 1989

Share of agric. in GOP(%} 1990

Share of indust. in GOP(%} 1986

Share of manuf. in GOP(%} 1986

Share of agric. in employ. (%} 1988

Urban pop. (% of total pop.} 1990

Pop. growth rate (% per annum} 1980-88

10,450 490 180 2,130 700 1,160 200 200

0 20 55 19 27 14 50 50

38 32 20' 35' 32 30 41' 13'

27 14

1 56 31 46 66

100 29 19 42 42 23 22 25

1.1 2.1 2.6 2.6 2.5 1.9 2.4 2.1

7'

27' 25 21

-

9'

66

a. Figure for 1984-88 b. Figure for 1980-88 L Figure for 1988 Sources: Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries (Manila: ADB, July 1990); United Notions Economic and Social Commission for Asia and the Pacific, Statistical Yearbook for Asia and the Pacific (Bangkok: ESCAP, 19B9); World Bonk, Trends in Developing Economies 1990 (Washington, DC: World Bank, 1990); World Bank, World Development Report 1990 (Washington, DC: World Bank, 1990); World Bonk, Worlrl Development Report 1988 (Washington, DC: World Bonk, 1988); Myo Than, "ASEAN, Indo-China and Myanmar: Towards Economic Co-operation?" ASEAN Economic Bulletin 8, no. 2 (November 1991}.

4 MARIA SEDA

degradation, particularly from excessive use. Thus, poor resource management in these countries not only contributes to global environmental problems, but threatens the physical basis of many important economic activities. At the same time, among members of the Association of Southeast Asian Nations (ASEAN), high rates of economic growth and rapidly expanding populations are placing additional pressures on natural systems and diminishing the margin for error in decisions that can inflict irreversible changes on the environment and the resource base. Already Thailand, Malaysia and Indonesia, with their high growth rates, confront many of the problems of high consumption societies, including worsening urban congestion and planning problems, worsening air and water pollution problems caused by automobiles and industry, and increasingly complex solid waste and hazardous waste management problems. 4 The less developed Indochinese states and Myanmar, on the other hand, no doubt will have to face increasingly difficult and complex resource use and environmental quality issues as they attempt to attract foreign investment and restructure their economies. 5 The abundance of natural resources in these countries, coupled with the domestic pressures these countries face, may well encourage the transfer of unsustainable resource practices from ASEAN to these countries. Such a transfer has already taken place between Thailand and Myanmar within the context of forest resource use. Soon after Thailand banned logging in 1989, Thai timber companies were allowed to operate in Myanmar. Recent reports indicate that Myanmar has no policy in place to control the activities of Thai timber companies in the country, and that Thai companies are engaging in clear felling. Politicians, in turn, are reportedly only concerned with ensuring an adequate supply of timber and keeping its prices down. 6 At the same time, global environmental problems such as ozone depletion and global warming are likely to have serious implications for the way of life in the region, including patterns of human habitation, food availability and transportation. Some of the likely effects of global warming of immediate concern to the region, for example, are a likely rise in the mean sea levels and changes in precipitation patterns, growing seasons, and the availability of fresh water. Higher ocean tides could cause havoc in low-lying coastal areas and weather changes could result in an increased likelihood of storms such as tropical cyclones. 7

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

5

This paper highlights the possible effects of recent trends in North American and European environme ntal activism on ASEAN by examining the campaign to ban tropical timber imports in Europe and attempts within the United States to oblige the World Bank to pay more sustained attention to the environme ntal impact of their development projects. Particular attention is given to developme nts involving the World Bank since it is a leading source of internation al developme nt funding and its policies are quite influential with other developme nt institutions. The paper begins with a brief outline of congressional and non-gover nmental organizati on (NGO) pressures on the World Bank and the World Bank's response to those pressures. The campaign to ban tropical timber imports is then reviewed. Finally, a brief summary is offered. By way of caveat, it should be noted that there is no attempt here to provide a comprehensive survey of transnatio nal issues or internation al environme ntal controversies, and very little is said about legal and political issues arising from the principle of sustainable development. While a full-blooded examinatio n of the social dimension of ecological sustainability in Southeast Asia is not attempted , some interesting trends and issues with possible social and economic implications for Southeast Asia, and ASEAN in particular, are highlighted.

MULTILATERAL BANK REFORMS Since the early 1980s, the multilateral development banks, led by the World Bank, have shown themselves more willing to reform the development loan process, to make it more sensitive to environme ntal considerations and less prone to environme ntal disasters. In the last decade, the World Bank has greatly increased its environme ntal staff, introduced new environme ntal policies and action plans, and created several environmental units. Other multilateral developme nt banks have also begun 8 to improve their environme ntal planning and assessment capabilities. In 1987, for instance, the World Bank not only created an Environmental Departme nt in Washingto n, DC, but environme ntal units in each of the Bank's four regional departmen ts. The Environm ental Departme nt is in charge of research and long-term planning as well as environme ntal manageme nt. Significantly, its work includes revamping

6 MARIA SEOA

the Bank's cost-benefit analyses, and quantifYing and incorporating environmental concerns more systematically and comprehensively in the project cycle. The four regional environmental units, on the other hand, have been assigned quality control duties. In 1988, the Bank also decided to add a senior adviser for science and technology in the office of the Vice President for Sector Policy and Research, and to hire environmental specialists for on-site country reports. According to a World Bank report, by 1989 the Bank had a central Environmental Department and environmental divisions in each of the Bank's four regional offices; and nearly 10 per cent of the Bank's staff consisted of individuals trained in environmental sciences. The Bank's goal at the time was to have 4,000 staff members trained in environmental sciences. 9 It is also worth noting that the World Bank updated its environmental guidelines and Operations ManuaU 0 Since 1987, the World Bank has funded an increasing number of environmental projects and programmes, and prepared a whole series of papers and action plans which focus on environmental problems in developing countries. In 1989, for example, the World Bank announced plans for a new technical assistance grant programme to accelerate the preparation of innovative environmental projects put into effect by the World Bank. The programme emphasizes strengthening environmental policies, institutions, information systems, and education via investment and adjustment operations, land management, including land and resource surveys, forestry projects which have afforestation and prevention of deforestation as major objectives, conservation and protection of natural heritage, biodiversity and cultural heritage, and, urban and industrial pollution control and waste disposal projects. 11 Against this backdrop of changes, the Bank has also explicitly acknowledged the importance of NGOs in development planning, and initiated various efforts to establish closer communications with environmental NGOs, including the establishment of a formal World Bank-NGO Committee to institutionalize communication. In August 1988, the World Bank also issued an Operational statement titled, "Collaboration with Non-governmental Organizations", which defines the Bank's policy toward NGOs and provides guidance to staff. 12 Finally, and no less significantly, there also have been some improvements in the World Bank's approach to structural adjustment. The

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

7

World Bank, for example, initiated research in its environmental department on more environmentally sound structural lending conditions. Furthermore, in its background paper for the April 1987 meeting of the World Bank-IMF Committee, the Bank also acknowledged that the macro-economic considerations of adjustment, trade balances, poverty and growth were integrally related to pressures and incentives to conserve or destroy the environment and natural resource base. Although the outright failure of some bank projects due to inadequate consideration of environmental factors no doubt contributed to the recognition of the need for multilateral bank reforms, donor-nation pressures have been more influential in this respect. Significant environmental reforms were initiated in 1984 soon after Western donor nations, and the United States in particular, began to actively investigate the environmental performance of the multilateral development banks and to consider adopting legislation or administrative measures that would require consideration of the environmental effects of bank projects or programmes when approving multilateral development bank lending decisions.

Reform Pressures from U.S. Congress The U.S. Congress began to focus its attention on environmental issues arising from U.S. participation in multilateral lending institutions in 1983. In 1983 and 1984 alone, the link between multilateral bank development projects and serious environmental problems was brought into sharp focus at 10 congressional hearings held by six different subcommittees. 13 In 1985, Congress moved to strengthen the U.S. executive directors' statutory obligation to apply pressure on multilateral bank lending decisions by enacting legislation which called on the Treasury Department to instruct U.S. executive directors of the banks to "vigorously promote" the thorough evaluation of the potential environmental problems associated with all proposed loans for projects involving large impoundments of rivers in tropical countries, penetration roads into undeveloped areas and agricultural and rural development programmes. 14 Acting on this legislative mandate, the U.S. director of the World Bank fought to suspend a loan for the massive Polonoroeste road building and colonization project in Northwestern Brazil until the

8 MARIA SEDA

environmental consequences of the project were more thoroughly evaluated. These efforts resulted in the temporary suspension of the 15 US$250 million Polonoroeste project loan to Brazil. Similarly, in January 1985, the U.S. Executive Director of the Inter-American Development Bank vetoed the use of US$14.5 million for a project in the Northwest Brazilian state of Acre that would have extended the highway built under the Polonoroeste project because of the project's adverse impact on the rain forest and indigenous population. The veto sparked a good deal of interest as it marked the first time in the 27 -year history of the Inter-American Development Bank that the United States had vetoed a loan for Brazil. Congressional attempts to link environmental issues and development funding through riders on the annual bill appropriating money for the World Bank have continued over the last several fiscal years. For instance, in 1986, the appropriations rider required the Treasury Department to instruct the executive directors of the banks to, among other things, promote the commitment of their institutions to add experienced staff trained in environmental subjects, and to promote consultations in the countries receiving bank loans with NGOs that may be adversely affected by the banks' projects. The U.S. executive directors, moreover, are to be instructed by the Treasury Department to seek whatever changes are necessary to eliminate or mitigate those adverse environmental effects. Another provision also instructs the U.S. executive directors to promote the formulation of bank policies similar to those governing pesticides for application to other industrial chemicals. In addition, the rider directs the U.S. Agency for International Development (AID) to prepare lists of proposed multilateral bank projects which are likely to have adverse effects on the environment, 16 natural resources, or indigenous peoples. Similarly, in 1987 the International Financial Institutions Act was amended to direct the Secretary of the Treasury to instruct the U.S. 17 Executive to promote improved environmental impact assessments. In order to enable NGOs to become more involved in the project planning and assessment process, the U.S. executive directors at the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) are also required to initiate discussions with the other directors to propose the establishment of a Grassroots

GLOBAL ENVIRONMENTAL CONCERNS ANO PRIORITIES

9

Collaboration Program. The legislation suggests that US$50 million from the World Bank's net income be set aside to facilitate communications with the NGOs, and requires an annual report from the Treasury Secretary on the success of this initiative. As non-project structural adjustment lending has increased at the World Bank, Congress has also paid closer attention to the role the World Bank and other multilateral institutions can play in debt for nature swaps. In 1989 alone, at least seven bills with a debt for nature 18 or debt for development component were introduced in Congress. Ultimately, the International Lending Supervisory Act, the International Financial Institutions Act and the Foreign Assistance Act were amended in 1989 to encourage the banks to "promote, coordinate and facilitate" debt for nature swaps. 19 Among other things, the Act notes that the banks should assist the heavily indebted countries reduce and restructure private commercial debt by using a portion of project or policy-based environmental loans to enable these countries to buy back their private commercial debt at a discount in the secondary market. 20 The Act also asks that bank staffs work to ensure that the debtor countries collaborate with local and international NGOs in implementing debt for nature swaps.

Environmental NGO Pressures Congress' interest in the reform of multilateral development bank policies and procedures in the 1980s was mainly fuelled by an international coalition of environmental organizations. The coalition was, by and large, led by a number of American environmental groups with considerable legal and political expertise, namely, the Environmental Policy Institute, the Environmental Defense Fund, the National Wildlife Federation, the Sierra Club, the National Resources Defense Council, and the Rainforest Action Nerwork. Throughout the 1970s, many of these organizations were involved in political and legal initiatives concerning the environment, including attempts to reform U.S. policies on foreign assistance. In the early 1970s, for example, the Environmental Defense Fund initiated a lawsuit in the Federal District Court for the District of

10 MARIA SEDA

Columbia asserting that the National Environmental Policy Act of 1970 required AID to prepare an Environmental Impact Statement for its financing of pesticide sales to developing countries. A settlement was reached in December 1975, requiring AID to prepare an Environmental Impact Statement for its pesticide sales and to institute pesticide regulations. Continued litigation and debate in the late 1970s concerning the applicability of federal environmental laws to the effects of U.S. government activities abroad ultimately led President Carter to issue an Executive Order (Executive Order Number 12,114, Environmental Effects Abroad of Major Federal Actions) requiring that 14 agencies, including AID, the Export-Import Bank, the Overseas Private Investment Corporation (OPIC), and the Departments of State and Defense to prepare environmental regulations. 21 Other environmental groups participating in the coalition included a number of NGOs from less developed nations. These organizations primarily helped to compile factual records on various bank projects and lent legitimacy to the coalition's claim to represent the concerns of grassroots groups in the developing countries. In addition, the British branches of Friends of the Earth and Survival International, and the Canadian Probe International and West German Rainforest Information organizations played important roles in getting Western European governments, namely the United Kingdom, The Netherlands, and the Scandinavian countries, to adopt policies or measures similar to those introduced by the U.S. Congress. Support from these Western governments was important for the overall success of the coalition's reform efforts since the United States lacks a sufficient vote in the World Bank to block loans on its own. It needs the votes of other member countries, and the Western European donor nations in particular, to garner a sufficient majority to stop loans of which it disapproves or leverage significant changes in the World Bank. Because of their impact on the development process, multilateral development bank lending programmes have been a prime target of international environmental reform effortsY The coalition's reform strategy hinged largely on the recognition that reform pressures could most effectively be brought to bear on the banks through their funding mechanisms. 23 Moreover, the coalition directed its criticisms primarily at the World Bank since it was the largest and most influential of the banks

GlOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

11

and had been more responsive in the past to environmental group pressures and criticisms. 24 In particular, the coalition hoped that because of its leading role in the international development community, policy changes at the World Bank would encourage similar improvements in the regional development banks and other development institutions. While both the U.S. Treasury and Congress play essential roles in overseeing and formulating U.S. policy on the multilateral development banks, efforts to reform the banks within the United States were primarily directed at Congress. 25 In order to persuade Congress of the need to pressure the World Bank to reform its substantive and procedural approach to project lending, the coalition sought to focus congressional attention on a number of World Bank projects with grave environmental effects. Two of the most heavily publicized examples of the disastrous environmental consequences of World Bank lending operations were the Polonoroeste project in Brazil and the transmigration project in Indonesia, which not only had performed poorly from an economic standpoint, but had resulted in massive deforestation, depleted soil fertility, and caused adverse social effects. The Polonoroeste project, a road-building and colonization project in Northwest Brazil, was supported by World Bank loans totalling US$434.4 million. As a result of government offers of free land, more than half a million of Brazil's landless poor had settled in an area half the size of California, with soils that could not sustain continuous agriculture. It was generally found that after one or two years of working the poor tropical forest soil, settlers abandoned their land to cattle ranchers. Similarly, the transmigration programme in Indonesia involved the relocation of families from densely-populated islands (mainly Java) to the heavily-forested Outer Islands. The World Bank supported this project with a series of loans totalling about US$600 million in 1984. As in the Polonoroeste project, critics point out that the soils in the Outer islands have proven to be poor, and that settlers have by and large completely exhausted the soil in the project area, effectively leaving it useless for future agricultural uses. The programme has also been criticized for leading to the destruction of about 270,000 hectares of primary tropical rain forest every year by initial clearance alone. 26 The coalition, moreover, appears to have been concerned about framing its criticisms in a way that would not alienate Congress or

12 MARIA SEDA

expose it to charges that it was essentially an upper middle-class movement, dedicated to preserving exotic recreational activities like backpacking and mountain climbing in remote areas of the Third World at the expense of Third World communities. In assessing World Bank projects, for example, the coalition stressed the negative impact that environmentally unsound projects had on the quality of life and standards of living of large numbers of people in the recipient country as well as on the economic viability of the project itself.27 In addition, as has been frequently noted, the coalition emphasized that its aim, as a constituency for greater public accountability on the part of the multilateral development banks, was solely to induce the World Bank to honour its mandate to promote sustainable development, not to abolish it. Accordingly, in 1987 a number of environmental organizations within the coalition supported the administration's World Bank appropriations request, against congressional attempts to reduce funding. Citing the World Bank's announced environmental reforms, these groups argued in favour of the administration's funding request and suggested that any funding cuts should be aimed at the Inter-American Development Bank since it had shown itself less willing to commit resources to improve its environmental measures. Ultimately, Congress approved nearly the full amount requested for the World Bank and cut Inter-American Development Bank funding by 75 per cent. While the coalition has no doubt been effective in raising Congress' level of awareness of the environmental harm associated with multilateral bank activities, it is worth noting that U.S. legislators may have been receptive to the coalition's criticisms for a variety of reasons that often have little to do with the environmental performance of the banks. Conservative legislators, for example, may have seized upon the coalition's criticism to bolster their arguments against U.S. participation in multilateral aid institutions and in favour of bilateral aid institutions in which the United States is able to exercise greater control. Still others may have found in its criticisms tangible support for the market-based argument that foreign aid to developing countries has a counterproductive effect on the donor nation and the foreign policy interests of the United States. Liberal legislators, on the other hand, are more likely to have been drawn to the coalition's attempt to link the Bank's poor environmental record with productivity, growth and poverty problems

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

13

in the reCipient nations. 28 Beyond these reasons, legislators may also have been receptive to bank reform arguments because they saw in the coalition an important source of electoral support and publicity. Polls of the American public, for example, suggest growing public concern over the environme nt and considerable support for increasing expenditures on environme ntal protection . 29 While it is not clear how far Congress will respond to environme ntal NGO pressures, congressional interest in the environme ntal performan ce of the banks is likely to continue. Multilatera l developme nt bank activities not only involve large U.S. financial commitme nts, but are linked to salient internatio nal developm ent and environme nt issues. Concerns about the impact that multilateral developme nt projects have on deforestation, world climate, and genetic diversity, for example, will likely demand continued congressional scrutiny of multilateral developme nt activities. It would be a mistake to assume, however, that Congress' interest in such internation al environme ntal issues will lead it to invest more resources in the multilateral developme nt bank system. The need to simultane ously follow Gramm-R udman budget guidelines and maintain large military or security aid commitme nts as well as other bilateral and multilateral assistance commitme nts could well encourage attempts to decrease U.S. commitme nts to the banks on environme ntal grounds. Scenarios involving moves to decrease U.S. commitme nts to the banks are also possible given the fiscal constraints imposed by the cost of bailing out U.S. savings and loans and clearing up U.S. nuclear weapons productio n plants and toxic waste dumps, and the greater governmen t expenditures that may also be necessary in the years ahead to combat drug abuse, expand research and developm ent, improve education, and build a modern infrastruct ure. Environm ental groups, moreover, will not likely allow congressional interest to lapse given their ongoing concerns about the operations and policies of the multilateral banks. Recent criticisms of multilateral bank policies continue to centre on much the same issues as the environme ntal reform campaigns of the 1980s, namely the low operationa l priority given to environme ntal concerns, the lack of public participati on in all stages of project developme nt as well as local access to informatio n at the planned project site, the need for a continuing dialogue between

14 MARIA SEDA

the World Bank and NGOs, and the adverse environmental impact of structural adjustment policies. One well-known environmental reform advocate recently noted, for example, that most of the World Bank projects with "significant environmental components" approved in 1989 were projects with severe environmental effects that the Bank felt compelled to modify with some mitigating environmental measures, or hastily designed projects with dubious or destructive environmental consequences. 30 Similarly, some environmental groups have stressed that changes in the organizational structure for assessing environmental aspects of development projects have done little to address the lack of co-ordination between the Bank's operation staff, who identify and prepare loans, and its policy, planning and research divisions. They have noted, in particular, that a lack of co-ordination between the Environmental Department and the Operations Department undermines the effectiveness of the former since the Operations Department is responsible for preparing economic planning documents which set the main parameters of Bank country lending. Along these lines, some environmentalists have also argued that the effectiveness of the Environmental Department has been undermined at times by the Bank's senior management who have overruled on various occasions the recommendations of the environmental staff. They note, for example, that in 1989 the World Bank's Asia region vice president overruled objections of the environmental staff and authorized a US$250 million loan to India for the construction of the Subernekha dam. A previous loan for the dam project had been officially suspended because the project had complied so poorly with environmental and resettlement requirements. 31 Environmental groups have also continued to press for thoroughgoing reforms of multilateral development bank priorities and the adoption of a comprehensive environmental impact assessment process, reviewable within the multilateral bank and by external observers. Traditionally, there has been little effort to apply environmental impact assessment procedures to the activities of the multilateral development banks. Prior to 1987, environmental assessment was not conducted from the project's conception, but after projects had been chosen and bank and borrower officials had outlined project objectives and timetables, and studied technical, institutional and economic and financial

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

15

conditions essential to achieving project goals. 32 Furthermore, one of the major problems that environmentalists continue to see in the multilateral banks' approach to development assistance is the policy bias towards large-scale, export-ori~nted projects. This policy bias, they stress, has often led project planners to ignore small-scale, environmentally desirable alternative methods of meeting project objectives such as smaller projects aimed at increasing self-sufficiency in agriculture. 33 Environmental organizations, moreover, have continued to express concerns about the lack of donor-country access to documents prepared by the multilateral development banks. In the United States, for example, environmentalists have been critical of the lack of information available to executive directors 34 and have argued that the Environmental Protection Agency staff needs to get involved in the review of project documents. Furthermore, some of these organizations have attempted to persuade the banks to permit them to review internal bank documents submitted by borrower countries so that they can better monitor the environmental and social impact of bank projects. 35 These attempts, however, have largely been unsuccessful. 36 In 1988, for example, the World Bank refused to release project documents for a loan to Botswana for nearly a year, even after the Sierra Club and the Natural Resources Defense Council produced a letter from the Botswana Government stating that it did not object to the release of information. Congress, however, has recently introduced some incentives for the World Bank and other interested parties to arrange a satisfactory resolution of the information access problem. The House and Senate Conferees of the 1989 foreign aid appropriations bill directed the Treasury Secretary to make World Bank internal documents available to the public, beginning one year after enactment of the directive, unless the Bank instituted its own procedures to make 'them public. 37

Structural Adjustment Lending Conditions Finally, many environmental groups remain critical of the World Bank's structural adjustment lending policies. Among other things, some of these groups have continued to urge the World Bank to promote debt for nature swaps and to integrate incentives for the conservation of

16 MARIA SEDA

resources and management of the environment into its structural adjustment lending conditions. Debt for nature swap advocates argue that the banks could participate in debt for nature swaps by donating their own debt. A multilateral development bank, for example, could permit the debtor government to service its debt obligations with local currency payments. Such payments to the multilateral banks, however, would be used to finance in-country conservation programmes agreed upon by the multilateral development bank, local NGOs and the debtor government.38 Such proposals, however, have been rejected by the banks on the grounds that their charters prohibit them from rescheduling or selling their developing country debts. The World Bank, moreover, has stressed that it expects its own loans to be fully paid in time, in cash, and has pointed out that its AAA credit rating, on which it depends to borrow funds, could be hurt if it used its own debt for swaps. 39 Debt for nature swap advocates have also proposed that the multilateral development banks facilitate or co-ordinate debt for nature swaps using donated bilateral or private commercial debt. The Nature Conservancy group, for example, has proposed the creation of an international conservation and sustainable development trust fund for such purposes. Under their proposal, AID and/or other bilateral debt holders could supply debt notes and a multilateral development institution, such as the World Bank, would serve as trustee. 40 A study commissioned by the United Nations Development Programme similarly proposes the creation of a global environmental fund or facility, Ecovest, to encourage more private investment in environmentally sustainable enterprises in the developing world and the use of bilateral debt forgiveness by industrial-country governments as a means for enlarging the scale of debt for nature swaps. 41 Along these lines, various organizations have already initiated environmental funds that will invest in enterprises that promote environmentally sound activities, including sustainable agriculture, forest management, ecotourism, renewable and alternative energy production, and pollution prevention. The Nordic Investment Bank, for example, has already created an environmental investment fund, the Nordic Environmental Finance Corporation (NEFCO), to back joint ventures between Nordic and Eastern European partners that will solve environmental problems in Eastern Europe. NEFCO was slated to begin

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

17

making investments in Czechoslovakia, East Germany, Hungary, Poland and the U.S.S.R. in 1990. The Nordic governments' initial share capital in the fund is US$47 million. Among other things, NEFCO plans to invest in ventures that will take advantage of lower production costs in Eastern Europe to produce the equipment needed to clean up pollution within Eastern Europe. Mter a six-year probation period, the Nordic Investment Bank will decide whether it wants to make NEFCO into a permanent institution. The U.S. Overseas Private Investment Corporation has also launched a US$1 00 million Environmental Investment Fund that was expected to be fully capitalized by 1991. It will be privately owned and managed, and will invest in environmentally sustainable enterprises in the developing world and Eastern Europe. It will be required to undertake environmentally sustainable and economically profitable activities and to have significant business ties with U.S. enterprises. Even the World Bank has begun to discuss the creation of a Global Environment Fund. In May 1990, the Bank publicly proposed creating such a fund as a three-year pilot project that would lend from US$300 to US$400 million a year to support environmental projects in the developing world and Eastern Europe. Under the World Bank proposal, donor countries would contribute the initial capital and the fund would be managed by the World Bank, the United Nations Development Programme and the United Nations Environment Programme. The Fund would allow middle-income countries to borrow at low-interest rates and would target global environmental problems instead of national resource management or environmental degradation problems. It would give priority to projects that address the problems of ozone layer depletion, the greenhouse effect, deforestation and desertification. The U.S. Government, however, has not endorsed the proposal since it believes that World Bank funds should be reprogrammed toward environmental projects instead. It is not likely that the proposal will go far without U.S. support. Attempts to reform the World Bank's conditionality approach, on the other hand, have focused largely on the Bank's failure to recognize the pressure it places on the agricultural sector and on the sustainable management of natural resources in general, via its agricultural, national exports and commodity pricing adjustment policies. Critics have noted,

18 MARIA SEDA

for example, that in 1989 only five of the Bank's 45 adjustment loans explicitly addressed environmental concernsY Some groups have also criticized the relief-only approach of the United States to the debt problem, which advocates that creditor banks and governments should not forgive debt as part of a solution to Third World debt problems. They note that many European states and Japan have adopted a more moderate partial forgiveness approach to the debt problem. Concerns about the environmental impact of the World Bank's structural adjustment programmes have, moreover, focused greater scrutiny on the International Monetary Fund's activities. During the World Bank-IMF annual meeting in September 1987, for example, 28 environmental and indigenous peoples' organizations from nine donor countries issued a booklet titled, "Financing Ecological Destruction: The World Bank and the IMF", which examined the adverse environmental impact of IMF and World Bank structural adjustment activities. More recently, in November 1989, the U.S. Congress enacted legislation drafted and promoted by U.S. environmental groups that requires the Secretary of the Treasury to promote the creation of an environmental analysis unit in the International Monetary Fund and the introduction of a process whereby the fund will review prospective lending programmes for their impact on the environment and natural resources. The International Monetary Fund has responded to this legislation by indicating its willingness to implement the legislation. It has also recently begun to list debt for nature swaps as a possible debt reduction mechanism. 43

Implications of Bank Reforms for ASEAN While there is no question that issues of trade are generally more important to the ASEAN states than development assistance issues, it is quite another matter to conclude that moves to oblige the banks to reorient their policies and practices to promote a broad, integrated and sustainable approach to development hold no implications for the ASEAN countries. Both the Asian Development Bank (ADB) and World Bank are of some significance to the larger ASEAN states as a source of loans, technical assistance and policy input. The World Bank has also played an important role in helping the larger ASEAN states develop

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

19

credit worthiness. By providing loans or funding research, training, technology transfers, planning and other forms of institutional support, these banks can encourage or re-enforce patterns and practices of development that degrade the environment, hamper long-term growth and destroy the resource base within ASEAN or, alternatively, help solve some of the region's environmental and resource management problems. Throughout the 1980s, efforts to reform multilateral bank policies and practices have largely concentrated on containing and preventing the environmental damage caused by large-scale development projects such as dams and resettlement projects. Both the World Bank and ADB have played important roles by providing technical and financial assistance for large-scale projects in Thailand, Indonesia and the Philippines. While these banks have, to a lesser extent, funded largescale development projects in Malaysia, they have mainly been of some significance to Malaysia as a source of technical assistance and other forms of institutional support. Furthermore, as in other regions, bank-funded projects have significantly altered the ecological balance in the project area, drawing attention to the need to reform bank policies and practices. In view of the large catalogue of potential and existing problems associated with such development projects, measures to force the banks to question more fully the value of large-scale development projects are essential to the long-term health of the region's environment and natural resource base. It would appear that congressional and other political pressures on the World Bank have already had some impact on the assessment of the ecological soundness or sustainability of large-scale projects, as evidenced by the World Bank's refusal to finance certain large-scale projects in the region due to their potentially serious environmental and social impact. A case in point is the World Bank's 1987 decision to designate future loans to Indonesia's controversial transmigration programme only for the rehabilitation and consolidation of existing sites, not for expansion. That same year, the World Bank also withdrew the Nam Choan Development project in Thailand from consideration for funding due to its potentially serious impact on one of Thailand's last remaining tropical forests and on six rare animal species. 44 In view of the World Bank's lending record in recent years, however, the Bank's funding of large-scale, capital intensive development projects is one area of bank activity in which

20 MARIA SEDA

environmental controversies will likely continue to surface. As noted previously, environmentalists have continued to question the World Bank's level of commitment to environmental reform. Aside from changes in the assessment of large-scale projects, multilateral bank reform pressures might also encourage greater bank participation in debt for nature swaps and changes in the definition of conditionality. To date, growth of debt for nature swap transactions has been limited since the funding for many nature swaps comes from foundations with limited resources. There has only been one debt for nature swap in the ASEAN region, involving the Philippines. If the multilateral development banks donated or restructured the Third World debt they currently hold or contributed funds to the NGOs to purchase commercial debt, the scope for debt for nature swaps would be greatly expanded. As has been frequently noted, debt for nature swaps could offer debtor states like the Philippines the opportunity to retire long-term debt, and to reduce their ongoing interest payments. 45 Moreover, debt for nature swap funds could be used to develop ecotourism in parks and preserves. 46 So-called ecotourism or nature tourism is an area of tourism which has scope for expansion. It has been estimated that in 1987, over US$25 billion was transferred from the North to the South through nature tourismY However, ecotourism if poorly conceived and managed offers the possibility of adverse environmental and social impact. It may, for example, generate conflicts where landless peasants prohibited from gathering firewood or living in parks or preserves feel the government is depriving them of their resources for the benefit of foreign tourists. Governments undertaking debt for nature swaps will therefore need to consider, among other things, measures to educate the local population about the benefits of the swaps and to encourage local participation in designing conservation programmes and projects that have a positive impact on the local population. In particular, governments undertaking swaps will need to consider ways of creating employment and tourist opportunities that will benefit the local people. Governments will also need to ensure that the carrying capacity of ecotourism destinations is not exceeded and that sufficient revenues from ecotourism are earmarked for the maintenance of the natural resource attractions. 48 In addition, debt for nature swaps could also provide significant benefits for local NGOs chosen to plan and manage swap-funded

GLOBAl ENVIRONMENTAl CONCERNS AND PRIORITIES

21

conservation programmes. Typically, developing state NGOs have been unable to undertake large projects because of a lack of resources and uncertainty over the continued availability of resources. Funding provided by debt for nature swaps and supported by the institutional expertise of an international organization could enable NGOs in the region to strengthen and expand their programmes. 49 Conversely, funding and other forms of support or intervention could also weaken NGOs that are not deeply rooted in society. Finally, though debt for nature swaps have been limited primarily to the creation and improved management of wildlife parks and preserves, they could be expanded to encompass agricultural reform, to combat soil degradation, and to address a host of other conservation and environmental problems. Thus, for a variety of reasons, governments in the region, and central bank representatives, in particular, have an interest in World Bank initiatives which may result in more debt for nature swaps and increased foreign exchange earnings from ecotourism. By reforming its approach to macro-economic and structural reforms in the debtor countries, the World Bank could also make a significant contribution to the promotion of sustainable development in the region. In particular, the World Bank could undertake to consider more carefully the adverse environmental effects of its structural adjustment austerity measures and to link sector policy reform to resource conservation provisions and sustainable development policy reforms. It has been suggested, for example, that structural adjustment conditions and priorities might aim to eliminate tax incentives, credit subsidies, land tenure rules and other government policies which contribute to deforestation and soil erosion. It is also clear that the ASEAN countries have a compelling interest in World Bank projects that build the recipient nation's ability to solve its own environmental problems. The larger ASEAN states by and large have not implemented and enforced environmental policies in a sustained and systematic manner due to various domestic constraints, including inadequate financial, technological and administrative resources, corrupt practices, and the relative lack of public consciousness and leverage of environmental groups. The banks could help push back these constraints by funding, among other things, programmes within ASEAN which increase the recipient nation's capability for policy development

22 MARIA SEOA

and risk assessment as well as its ability to train management, monitoring and enforcement personnel in the environmental or natural resource management areas. Along these lines, the region stands to benefit from recent World Bank efforts to prepare studies on environmental and resource problems in the Asia-Pacific region. Environmental issues papers were prepared for about 70 borrowing countries in 1989 alone. In the 1980s, the World Bank also started to perform country-specific environmental analyses with the assistance of the United Nations Development Programme and bilateral funding organizations, focusing on selected environmental issues raised by developing countries themselves. These analyses discuss major environmental issues such as watershed erosion, upland degradation, deforestation, loss of biological diversity, soil and land management, air and water pollution, urban sanitation, waste disposal, environmental health, protection of cultural property, marine and coastal zone protection, and water resource management issues in general. Several regional studies are also under preparation, including a study on the process of environmental degradation in major cities in Asia and a study on the economic and environmental issues related to forestry in Asia. In addition, the World Bank's Economic Development Institute has published training materials for seminars on natural resource management organized in conjunction with the United Nations Environment Programme (UNEP). 50 Considerable resources have also been directed toward the integration of more effective environmental impact assessment procedures in the lending process. The World Bank, for example, introduced an Environmental Assessment Operational directive to encourage the formalization and standardization of environmental assessment in borrowing countries. Moreover, the Asian Region Environment Division is compiling a database on East Asian regulations, institutional arrangements and issues in borrowing countries in order to understand the nature of the interface between the borrower's environmental assessment procedures and the Bank's environmental assessment Operational Directive. This project also aims to provide a menu of institutional options and analyses of what has and has not been effective for those seeking to impose environmental assessment. At the same time, the International Finance Corporation (IFC) has

GlOBAl ENVIRONMENTAl CONCERNS AND PRIORITIES 23

also initiated projects which seek to increase the private sector's role in environmental projects in the developing world. Toward this end, the IFC has initiated a nine-country case study of the potential market for environmental goods and services in the private sector. More specifically, the study will consider possible projects and roles for the IFC in Chile, Czechoslovakia, Indonesia, Malaysia, Mexico, Pakistan, Poland, Thailand and Turkey. The initial focus will be on the treatment of industrial waste and provision of related services. Examples of projects under consideration include: collection, treatment and disposal of hazardous and toxic wastes; treatment and disposal of industrial and municipal waste water; treatment and supply of potable water; manufacture of pollution control equipment; manufacture of monitoring instrumentation; and the provision of consulting, engineering and laboratory services. It can be expected that the provision of environmental goods and services will become increasingly important in ASEAN, as it has in Europe and the United StatesY Indeed, Japanese companies are already reaping significant benefits from the need for such technology. Mitsubishi Heavy Industry and Hitachi Zosen, for example, reportedly have already clinched 12.5 billion yen (US$1 00 million) worth of waste management and waste-to-energy conversion projects in Taiwan, Singapore and South Korea. 52 Along these lines, it should also be noted that "Green consumerism" may well become a significant commercial force in the region. 53 Yet, from the standpoint of the ASEAN countries, perhaps no single change in bank activity could have a greater immediate impact than the increased emphasis the World Bank is placing on forestry projects. Deforestation, no doubt, is one of the fundamental problems of environmental degradation in the region. 54 It has been estimated that, in crude terms, annual forest loss amounts to 100,000 hectares in the Philippines, 23,000 hectares in Malaysia, 325,000 hectares in Thailand and 550,000 hectares in Indonesia. 55 In proportional terms, it has been estimated that deforestation has resulted in a decline of Malaysia's forested area from three-quarters of the nation in 1958 to well under half of the nation in 198 5; and in a decline in Thailand's forested area from 53 per cent of the nation in 1961 to 29 per cent in 1985. 56 Deforestation already has had widespread secondary effects, including severe negative effects on agriculture and energy production.

24 MARIA SEDA

The destruction of steep-sloped, upland forests in Thailand, for example, has triggered soil erosion so severe that it is damaging agricultural land. Deforestation, moreover, has already had a significant negative impact on the role of timber as a foreign exchange earner in several ASEAN countries. By 1984, for example, raw log exports from Thailand and the Philippines were eight per cent and 15 per cent respectively of their 1963 peaks. 57 In the face of dwindling forest reserves and deforestation-related social and ecological problems, Thailand and the Philippines banned logging in early 1989. 58 Although timber extraction is still largely seen as an integral component of economic growth plans in Indonesia and Malaysia, it has been estimated that at current rates of depletion the economic value of the forests in the region will be exhausted by the year 2000. 59 Since the late 1980s, the World Bank has not only initiated a whole series of research and conservation projects dealing with forest management issues, but has sought to address tropical rain forest deforestation problems through an unprecedented increase in forestry lending. In May 1987, for example, the Bank announced a 15 per cent increase in its forestry lending. More importantly, in September 1987, it announced a further tripling of forestry lending through the early 1990s, from US$138 million in 1987 to as much as US$800 million annually by 1992. As part of the Tropical Forest Action Plan task force, the World Bank has also called for US$8 billion to implement rain forest conservation and forestry development projects on a country-by-country basis. 60 One of the first Tropical Forest Action Plan projects funded by the World Bank is a US$23 million forestry and fisheries scheme for Guinea. The project has been strongly criticized by environmental groups because the Bank's funds will help finance the construction of 45 miles of roads in two forest reserves totalling 150,000 hectares and two-thirds of some 100,000 hectares of primary forest will be opened for timber production. The World Bank has justified its funding of the project on the basis that the programme at least introduces some rational management considerations where previously no forestry policies were in place. More generally, environmentalists have questioned whether the Plan as a whole will, in practice, increase deforestation and degradation in the less developed countries. One of the more controversial aspects of the Plan is its promotion of managed forests and plantation areas, while

25

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

methods of sustained yield management and sustained forestry are being developed. Environmentalists have also criticized the Plan's nominal funding commitment to the conservation of tropical moist forest ecosystems. Most funding has been allocated for fuel wood and agro-forestry 61 as well as forest management for industrial purposes (Table 1.2). Within ASEAN, Indonesia in particular has been at the centre of World Bank attempts to address tropical deforestation problems. Although Indonesia has large untapped reserves of timber, current rates of deforestation in the country have raised considerable global concern. Estimates place the overall rate of forest loss at over one million hectares per year. Not surprisingly, Indonesia's forestry management practices have been the focus of considerable criticism. Critics have variously argued that: Indonesia's short concession leases to private entrepreneurs

TABLE 1.2 Financial Support for the Tropical Forest Action Plan for the Period 1987-91 (In US$ millions)

Land use in upland watershed Forest management for industrial uses Fuel wood and ogro-forestry Conservation of tropical forest ecosystems Strengthening institutions Total

Latin America

Total

Africa

Asia

139

682

95

916

167

565

584

1,316

439

747

390

1,576

105

148

195

448

188 1,038

557 2,699

319 1,583

1,064 5,320

Source: World Resources Institute, Tropical Forests: A (a/1 for Action. Report of an International Task Force convened by the World Resources Institute, The World Bank, and the United Nations Development Programme. (Washington, 0(: 1985).

26

MARIA SEDA

encourage deforestation; that the replanting levy is too low to finance replanting; that there is a poor level of supervision of concession areas; and that the overlap of timber interests and political-military circles makes any serious government attempt to strictly regulate timber extraction unlikely. 62 Partly in response to such concerns, the World Bank has proposed to help Indonesia employ a foreign company to oversee the activities of loggers, sawmills and plywood makers via remote sensory techniques, aerial photographs and field checks. About US$1 0 million has been earmarked to hire a foreign inspection company for a four-year contract period. The World Bank has estimated that overall, about US$33 million is needed to support conservation, forestry research and inspection of timber concession areas in Indonesia. It has proposed to cover twothirds of these costs through low-interest loans. In an attempt to minimize political opposition, the World Bank has limited the scope of the inspection project to Riau, East Kalimantan and the Moluccas. Accordingly, the scope of the project will only be extended if at the end of the four-year contract the foreign company has been successful. The World Bank has argued that a foreign company was needed since the Minister of Forestry has limited field staff who are poorly trained, underequipped and lacked motivation. Noting that Indonesia lost over US$2 billion in forest revenues from 1979 to 1982, and that royalties are collected on only about half of Indonesia's 32 million cubic metres of annual log production, the World Bank has also argued that a foreign company could collect more tax and royalty payments. Thus, the proposal also fits more generally into the World Bank's stress on economic rationalism and attempts to promote the privatization of government corporations and services. 63 Use of a foreign company to improve the collection of government revenues such as taxes is not altogether unprecedented. In 1986 the Indonesian Government handed over customs responsibility to a Swiss surveying company, with positive fiscal consequences. 64 Even if we assume that U.S. efforts to reform multilateral development bank policies and practices have not had any significant impact on bank priorities and practices, they have helped to put developing countries on notice of future donor-country and NGO pressures on multilateral lending activities. Legislation in the United States concerning the

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

27

environmental performance of the banks could serve as a frame of reference for bank reforms in other donor nation contexts. 65 The lawmaking process, moreover, has generated valuable policy discussions on several levels, encouraged multilateral development bank critics to inventory multilateral development bank problems and resources, and forced debates about the environmental responsibility of multilateral development banks and about the proper relationship between the banks and individual donor states to move upward into the public international arena, where they might generate new political pressures and norms of international law. Furthermore, environmental groups in less developed countries have begun to communicate directly with multilateral funding body representatives, and to insist that these bodies give attention to their "grass roots" concerns. Recently, for example, representatives of NGOs, environmentalists, human rights and student activists in Indonesia met with the chairman of the InterGovernmental Group on Indonesia to voice their concerns. 66 At the same time, the success of the multilateral bank reform campaign, even if limited, has encouraged the development of working partnerships between the developed and developing country NGOs. Links with developed country NGOs have offered the opportunity to share resources, information and international attention, and thereby expanded the potential for successful environmental action. Some opportunities have also been created for NGOs in the less developed countries to form networks. La Red Americana del Medio Arnbiente (RAMA-American Network for the Environment), for example, was formed in 1987 after environmental groups from 15 developing countries attended a conference sponsored by the Inter-American Development Bank. It promotes joint efforts by NGOs in developing countries in Latin America to influence the multilateral development banks. RAMA also has a link to the political process in the United States through the Washington-based National Wildlife Federation. Perhaps more significantly, the multilateral bank reform campaign provides a reference model for attempts to direct congressional scrutiny to other government activities that affect the environment in foreign countries or the global commons, and to other activities such as trade and investment, in which U.S. policies and practices have direct environmental consequences elsewhere. While the ASEAN states would no

28 MARIA SEDA

doubt benefit in the long term from attempts to force the developed states to consider the environmental impact of their activities on the less developed countries, there is a risk that environmental concerns may be used in Congress and other developed country parliamentary contexts to advance unrelated political and economic goals. Political factions that are opposed to aid or U.S. foreign policy objectives, for example, might use environmental concerns to generate opposition to particular multilateral bank projects or other aid activities in given countries. Congressmen, sensitive to the fact that differing environmental regulations affect the competitiveness of U.S. goods and services, could also 67 manipulate environmental concerns to impose trade restrictions. Bald trade and investment interests could also be advanced by making use of growing public concern over the transnational impact that activities in less environmentally strict states may have in the United States, and the environmental quality of agricultural imports, in particular. 68 In addition, efforts to quantify the long-term ecological effects of U.S. economic or aid activities would likely rely heavily on statistical information and assessments that can be subjected to political manipulation. Finally, quite apart from its potential impact on the state of the environment in the region, efforts to reform the multilateral development bank loan process raises sovereignty issues. One can imagine scenarios in which changes in the multilateral development banks' approach to development may conflict with the economic or geopolitical goals that some countries have set for themselves. Bank funding guidelines which emphasize strictly pricing natural resources to reflect their replacement cost and environmental impact, as well as efforts to set limits on consumption that do not exceed sustainable yields or destroy the natural resource base of the global economy may stand at odds with some states' short-term growth and balance of trade goals. Bank attempts to incorporate stricter pollution standards and risk assessment requirements into the lending process may also jar with views about what kind of environmental trade off is appropriate and what level of safety industrial projects must satisfy. Similarly, domestic political priorities may also conflict with particular Bank conservation or environmental projects, or more generally with the relatively long-time horizon which environmental quality goals demand. Yet, the importance of multilateral bank reforms in relation to such

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES 29

sovereignty issues should not be overestimated. Development plans, technical requirements and financial resources have traditionally been identified and developed largely by the staff of the multilateral development banks and "exported" to developing countries. Moreover, states have increasingly recognized the importance of strengthening environmental controls at local, regional and global levels.

TRADE RESTRICTIONS As attention turned to international environmental issues, environmental groups in the United States and Europe have concerned themselves increasingly with the impact of economic policies and practices on the environment in less developed countries. In their attempts to promote ecologically sustainable economic development, these groups have generally stressed the need to price natural resources to reflect their replacement cost and environmental impact, as well as to set limits on consumption that do not exceed sustainable yields or destroy the natural resource base of less developed countries. They have highlighted the important role that economic policies such as tax incentives and commodity subsidies play in resource degradation, 69 and more generally argued that government control over the production and prices of resource intensive goods and services in less developed countries have more often than not led to excessive consumption and environmental degradation. 70 Thus, for example, environmentalists have argued that governments should eliminate tax incentives and credit subsidies to private investors who convert forests; eliminate land tenure conferring title to forest lands on parties who "improve" it by clearing the forest for some other use; discontinue granting timber concessions with terms inducing uneconomic or wasteful uses of their national forests. 71 Along these lines, international efforts to halt the destruction of Brazil's tropical forests have highlighted the fact that tax incentives for ranchers that extend their operations into the Amazon encourage the burning of the forest, and thereby contribute to greenhouse warming. 72 And, they have argued, that timber royalties should be sharply increased and concessions should be auctioned competitively and given for longer periods of time. Coupled with this emphasis on the adverse impact of "below-market

30 MARIA SEDA

pricing" on the environment, environmental groups have also called increasing attention to the pervasive effects of trade activities on natural resource management and environmental regulation, including undesirable land use choices and species extinction. Some of these environmental groups, moreover, have increasingly attempted to link the poverty and growth issues of the so-called North-South debate with those of protection of the global environment. Arguing that global inequities in commerce, investment and other workings of the world market-place exacerbate environmental problems in the less developed countries, they have advocated far-reaching structural reforms of the prevailing economic order. Recently, GATT trade talks have underscored the conflicts inherent in attempts to address environmental issues within the context of international trade. One of the more contentious issues in the recent round of agriculture trade talks was the U.S. proposal to harmonize environmental and food safety standards and regulations. Under the proposal, Codex (Codex Alimentarius) standards on pesticide use in imported food would be the basis for the harmonization of national regulations. Moreover, national and regional legislative attempts to enforce standards stricter than the Codex standards would result in GATT retaliation or a compensation demand. Environmentalists criticized the U.S. harmonization proposal, pointing out that the Codex standards are more lax than current U.S. or Western European standards. The European Community similarly voiced the concern that countries which had already achieved a high health status would find it difficult to systematically relinquish their national standards in favour of lower, albeit international standards. They conclude, therefore, that it was necessary to provide for countries to continue to apply more stringent standards, where "appropriate" .73

Campaigns against Tropical Timber As trade is one of the few tangible handles that environmentalists have on international policy, it has become the focus of recent environmental lobbying efforts in North America and Europe. One of the more visible manifestations of the current attempt to link international trade with

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

31

environmental issues is the campaign to ban tropical timber imports. Southeast Asia was an important regional focus of the campaign. This is hardly surprising since about 25 per cent of remaining tropical rain forests are located in Southeast Asia, and much of the loss in tropical rain forests was from that region. Logging practices have, moreover, been frequently identified as one of the more important causes of primary rain forest destruction in the region.7 4 Within the region, Malaysia and Indonesia in particular have become increasingly entangled in these campaigns as they supply about 80 per cent of the world's tropical timber trade and generally appear to have higher average rates of deforestation than other Southeast Asian countries (Table 1.3). Efforts to boycott and restrict tropical timber imports gained momentum in 1987 soon after Malaysia arrested hundreds ofPenans, an indigenous ethnic group, who were attempting to block logging activities in Sarawak. 75 The arrests not only helped gene~ate world-wide publicity for the campaign to ban tropical timber imports, but led the European Parliament in July 1988 to call on member states to ban the import of tropical timber from Sarawak. The EC, however, rejected the

TABLE 1.3

Annual Rates of Deforestation

Country

Indonesia Laos Malaysia Myanmar Philippines Thailand Vietnam

Forest and woodland (100,000 ha}

Annual average deforestation ('000 ha}

%of remaining forest area

%annual rate of deforestation

1,215 131 198 322 112 148 131

600 100 255 102 91 244

1.4

0.5 1.2 1.2 0.3 0.3 2.4

60

1.5

3.1 3.3 5.4 8.4 5.8

0.6

Sourtes: Norman Myers, "Tropital Deforestation and Climatit Change", Environmental Conservation 15, no. 4 (1988): 293-98; World Resourtes Institute, Wor/J Resources 1990-91 (New York: Bask Books, 1990).

32 MARIA SEDA

call for an import ban noting that such action would be damaging to European timber importers and that Sarawak already met sustained yield management requirements. By 1989, the threat of a tropical timber ban had taken more concrete shape. Two hundred city councils in West Germany had stopped using tropical timber, the West German Minister for Building had announced that the government would stop using tropical timber in its building projects, and almost half of the local governments in The Netherlands had stopped using tropical timber. The European Community, moreover, had proposed a trade regulation which would restrict tropical timber imports from producing countries who refuse to create and adhere to sustained yield management plans. The proposed trade regulation, however, was criticized by some environmentalists because it allowed producer countries five years to prepare management plans, despite the fact that many of the countries presently exporting timber would have all but logged out their forests by the time the plans are prepared. In addition, a number of environmental groups had also begun to lobby in support of a proposal to label timber to show where it came from, thus allowing consumers to boycott tropical timber from endangered forests. In 1990, the International Timber Trade Organization voted to study the proposal, and the British and Dutch Governments openly came out in support of it. The International Timber Trade Organization has already sought for a number of years to integrate a coding system that would restrict exports of tropical hardwood forest products to those derived from forests placed under sustained management. Although a wholesale ban on tropical timber has yet to materialize/6 the campaign has been extremely effective in sensitizing political attention to public interest in rain forest deforestation issues, and in making people more aware of the link between their consumption habits and pressures and incentives to conserve or destroy the environment and natural resource base in foreign countries. The campaign, moreover, has hurt the international image of tropical timber and has prompted ASEAN's timber exporters to lobby against restrictive trade legislation and consumer boycotts. As early as April 1988, for example, concern about moves in Europe to boycott tropical timber imports prompted the Malaysian Government

GLOBAL ENVIRONMENTAL CONCfRNS AND PRIORITIES 33

to send a mission from the Primary Industries Ministry to promote the view that Malaysia's conservation programme is responsible and effective.77 Malaysia reportedly employed tactics reminiscent of those it used in the U.S. anti-palm oil campaign, namely a hard and soft sell approach which stressed that it has a right to extract timber, and that the deforestation campaign is being used by traders in the United States, Canada, the U.S.S.R. and New Zealand to secure markets for temperate timber. 78 More recently, Malaysian Trade and Industry Minister Datuk Paduka Rafidah Aziz announced that Indonesia would spearhead ASEAN's ministerial mission to Europe, the United States and Japan early in 1990 to lobby the European Parliament, U.S. Congress and Japanese Government to reject the proposal to label the place of origin of timber. Questions about the effectiveness of trade bans and restrictions as policy instruments to halt tropical deforestation have also dampened efforts to impose trade restrictions. One obvious problem is that a tropical timber import ban would impose the costs of environmental protection on the respective Southeast Asian states, while conferring to non-tropical countries the benefits of tropical forest conservation. Within ASEAN itself, Malaysia and Indonesia would stand to lose a substantial amount in foreign exchange earnings: Malaysia earned US$2.2 billion in timber exports in 1988, making timber Malaysia's third largest foreign exchange earner after oil and manufactured exports. Indonesia, on the other hand, exported US$3.19 billion of hardwood products (mainly plywood) in 1988. Timber products made up 11 per cent oflndonesia's foreign exchange earnings. 79 To have any real impact, moreover, Japan must join the import ban. Japan alone buys about 54 per cent of world tropical roundwood imports (Table 1.4). More than 90 per cent of Japan's tropical timber imports come from Southeast Asia. Japan bought 89 million cubic metres of logs worth M$12.3 billion from Sarawak alone between 1982 and 1989. 8° Critics of the import ban have noted, however, that attempts to convince Japan to do without to date have been unsuccessful and are unlikely to succeed. They note, moreover, that a world-wide trade ban on roundwood is not likely to be an effective instrument since major producers such as Indonesia and Malaysia are in a position to replace all exports of roundwood with processed products. For a number of years, Malaysia and Indonesia have actively encouraged downstream

34 MARIA SEDA

TABLE 1.4 Imports of Tropical Hardwood by Country and Region as a Percentage Share of World Timber Imports, 1986

Country or region Japan Other Asian Countries Europe USA Other Countries

Roundwood

Processed products

54

9

30 12 0

23 26 13 29

4

Source: Food and Agricultural Organization of the United Nations (FAO), FAD Yearbook, Forest Products (1988).

processing of logs. Indonesia, for example, has imposed rules on foreign firms requiring more domestic processing of raw logs for more than a decade. Similarly, in order to encourage domestic processing, Malaysia has imposed restraints and levies on log exports and has given incentives for exporting processed timber of known species. Therefore an effective import boycott would have to cover the full range of wood and forestry products. There are also many questions concerning the impact of a decline in export demand on domestic demand and logging activities. For example, it has been suggested that a decline in export demand could lead to a substantial fall in domestic timber prices, and rising domestic or regional demand given sufficiently high price elasticities of domestic demand. Critics have also argued that loggers may increase output to compensate for the income losses caused by a price fall in the case of negative supply elasticities. Price elasticities of supply, it has been noted, tend to be very low in the forest sector. A study of the forest sector in Malaysia, for example, shows that domestic demand elasticities are below unity, while supply elasticities tend to be very low. 81 Finally, critics have noted that an import ban by itself is not likely to be effective since it fails to address other major causes of tropical deforestation, namely the conversion of forests into agricultural land and the

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES 35

exploitation of forests for fuel wood and charcoal. In Malaysia, for example, the rate of forest loss due to the conversion of forests into settlements, plantations, and other forms of cultivation between 1986 and 1990 is estimated to be 950 square kilometres per annum, or about 1.6 per cent of forests a year. 82 In short, the activities and pronouncements of governmental and non-governmental groups over the past few years point to a growing interest in the use of trade policy instruments to address global environmental problems. The campaign to ban tropical timber imports, in this respect, is perhaps best conceived as a mere warm-up to what is likely to lie ahead. Southeast Asia clearly has a stake in the shape of efforts to link trade with environmental issues as many states not only rely considerably on the export of primary commodities, but envision exports of semi-manufactured or manufactured goods as critical to their growth strategies. Even "resource-poor" Singapore as a processor and transshipper of commodities could become the target of trade bans and

TABLE 1.5

Imports and Exports of Sawn Timber for Singapore, 1980-90 (In SS millions)

Year

Imports of sawn timber

Exports of sawn timber

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

339.5 294.0 228.9 274.1 228.0 191.5 212.0 262.1 271.5 292.9 305.9

568.9 401.9 347.2 367.6 340.0 301.7 349.1 486.6 529.6 659.4 449.7

Source: Singapore, Yearbook of Statistics (1990).

36 MARIA SEDA

restrictions. A ban on tropical timber might, for example, bite into Singapore's exports of hardwood furniture or other tropical timber processing activities. Though not a locus of logging, Singapore plays a rather active role in the processing and transshipment of timber (Table 1.5). Efforts to use trade restrictions or bans to leverage changes in national economic policies and practices, at best may not be effective, and at worst, may in fact contradict ecological sustainability and social well-being. Such efforts also raise many of the same contentious issues of "burden-sharing" and sovereignty discussed previously in relation to multilateral development reform efforts. The question of who pays for environmental protection and clean-up implicit in such efforts, for example, warrant consideration. There is also a danger that groups seeking to promote their own economic interests or political preferences will be quick to manipulate environmental concerns in the international trade context.

SUMMARY Fifteen years ago most of the effort in the environmental area in the member countries of the Organization for Economic Co-operation and Development was oriented towards environmental issues of a local or regional nature - notably air pollution, solid waste, water pollution and national wilderness conservation. Although these remain as high priorities, increasing scrutiny is now directed to activities, such as trade, aid, commercial lending, and investment, which affect the environment in foreign countries or have global environmental consequences. This paper has examined briefly two dimensions of this increased interest in the transnational or global effects of "domestic" activities or policies, namely, attempts within the United States and Europe to reform the multilateral development bank lending process and to impose trade restrictions on tropical timber. As the discussion in previous sections indicates, efforts to reform the multilateral banks have had a more tangible impact than the campaign to ban tropical timber imports. Donor governments are applying increasing pressures on the banks, and imposing direct unilateral mandates to

GlOBAl ENVIRONMENTAl CONCERNS AND PRIORITIES

37

bank directors requmng environmental reviews and standards in the lending process. The multilateral development banks, moreover, have in the past few years undertaken major environmental reforms of internal processes and operations. On the other hand, efforts to effect a worldwide ban on tropical timber imports have yet to materialize. News of the planet's health, however, are dire enough to keep tropical deforestation issues high on the political agenda, and to generate public interest in campaigns to link trade with deforestation issues. Environmental concerns may well eventually translate into policies that limit trade in goods or services, or otherwise affect production activities. These trends notwithstanding, there are deep disagreements over the propriety and even effectiveness of "unilateral" efforts to reform multilateral development practices or to place restrictions on international trade. From the standpoint of many less developed states, for example, the sovereignty issues posed by such efforts, for example, can hardly be considered negligible. States, directly or indirectly, routinely make judgements about the environmental trade-offs that economic necessity demands. The restriction or allocation of shares in the use of natural resources as raw material and energy inputs as well as pollutant dispersion media, will likely be seen as an important sovereignty issue, and thus possibly contentious international issue. Finally, as the discussion in preceding sections shows, it is apparent that Southeast Asia has an interest in, and should contribute to the understanding of, trends, issues, problems and solutions to global environmental problems. Still wanting, in particular, are efforts within the region to shed light on the social, cultural, economic and political contexts in which environmental degradation takes place. Such efforts are no doubt needed if the region is to articulate useful sustainable development thresholds and strategies, and to design and implement appropriate and meaningful local and regional responses to global environmental problems.

Notes 1. Perhaps the most dramatic example of the growing political importance of environmental issues is the rise of Green parties in Europe. In the 1989 elections for the European Parliament, the Greens won significant gains in legislative

38 MARIA SEDA

2.

3.

4.

5.

races, reflecting in part the electorate's growing concern with the environment. They gained 19 seats in the EC's governing body, for a total of 39 seats in the 518-seat assembly. Significantly, in France the Greens won 11 per cent of the vote, up from three per cent of the vote in 1984, whereas in the United Kingdom the Greens won 15 per cent of the vote, up from less than one per cent in 1984. Serge Schmemann, "Environmentalists and Socialists Gain in European Vote", New York Times, 19 June 1989; Sheila Ruk, "Battling for England's Green and Pleasant Land", New York Times, 10 July 1989. By the end of the 1980s, moreover, the Greens were represented in many national parliaments. They held 20 seats of 349 seats in the Swedish Riksdag, and 13 of 630 seats in the Italian House of Deputies. "Environmental Party Gains 20 Seats, Gets 5.4 Per Cent of Vote in Election'', International Environment Reporter, October 1988; "Greens Capture European Imagination", (editorial) Nature, 22 June 1989. In France, moreover, the Greens won 1,800 city council seats in 1989, thereby establishing a foothold in local government. Michael Malik, "Greens Join Mainstream in France", Washington Post, 22 March 1989. Furthermore, in West Germany, where the Greens have been represented for many years, some of their environmental concerns have been adopted by the mainstream political parties and the federal government. The Greens have also made some headway into mainstream politics in Tasmania, Australia, where they hold the balance of power with five out of 35 seats in parliament. Michael Malik, "Greens Set the Pace", Far Eastern Economic Review, 13 July 1989. See generally, P. Kieborn, "Environment is Becoming a Priority Issue", New York Times, 15 May 1989, at C5, Col. 4. See also, "Seven Nations' Leaders Endorse Action to Promote Earth's Ecological Balance", International Environment Reporter, August 1989. For a discussion of the importance of the renewable resource base for the ASEAN countries, see generally ASEAN Economic Bulletin?, no. 2 (November 1990), "Special Focus on Environment and Economic Growth: The Political Economy of Resource Management in ASEAN". See also T. Panayotou, Natural Resources and the Environment in the Economies ofAsia and the Near East: Growth, Structural Change and Policy Reform (Cambridge, MA: HIID, 1989). F. Jalal, "An Overview of the State of the Environment in the ESCAP Region", in Environmental Management for Sustainable Socio-Economic Development (Bangkok: UNESCAP, 1985); State ofthe Environment in Asia and the Pacific 1990 (Bangkok: UNESCAP, 1990). See generally, Mya Than, "ASEAN, Indo-China and Myanmar: Towards Economic Co-operation?", ASEAN Economic Bulletin 8, no. 2 (November 1991): 173-93.

GLOBAL ENVIRONMENTAL CONCERNS ANO PRIORITIES

39

6. In Thailand, local timber prices reportedly rose by 45 to 50 per cent soon after the ban. Far Eastern Economic Review, 2 February 19&9, pp. 26-27. See also Far Eastern Economic Review, 22 February 1990, pp. 16-18. 7. See for example, Environmental and Socio-Economic Impacts ofClimate Change in East and South East Asia. Supplement to the First Impact Assessment Report of the IPCC Working Group II (Tokyo: Intergovernmental Panel on Climatic Change-Japan, 30 October 1991). 8. See generally, R. Kasten, "Hand in Hand: Economic Development and Environmental Protection'', Environment Law Reporter 18 (1988): 10047-49; InternationalEnvironmentReporter(BNA) 538-39 (October 12, 1988); Bruce Rich, "The Multilateral Development Banks, Environmental Policy and the United States", Ecology Law Quarterly 12 (1985): 707-12. See also J. Rafferty, "A Small Bank with Big Ambitions", Institutional Investor 135 (April 1984): 30-37, discussing the Asian Development Bank's environmental initiatives. 9. World Bank Development Committee, Environment and Development: Implementing the World Bank's New Policies (Washington, DC: World Bank, 1988); World Bank, Striking a Balance: The Environmental Challenge of Development (1989). 10. In a closely associated move, the World Bank also modified Bank policy and implementation procedures for involuntary resettlement projects. Criticisms of the Bank's involuntary resettlement policies and procedures had frequently gone hand in hand with criticisms of the Bank's environmental record. M. Cernea, Involuntary Resettlement in Development Projects: Policy Guidelines in World Bank Funded Projects (Washington DC: World Bank, 1988). 11. World Bank, Environment Bulletin l, no. 3 Qune/July 1989): 1. 12. Although by 1981 the Bank had already launched a formal dialogue with developed country N GOs, these efforts were mainly a public relations exercise. The dialogue was largely marginal to the mainstream activities of the Bank since the International Relations office rather than the Operations office managed the Bank's participation in the dialogue. Bank officials later acknowledged that the intent of the dialogue initiative in 1981 was to develop a lobbying constituency for multilateral development bank replenishment. 13. Several of these hearings focused specifically on the environmental aspects of bank activities. See for example, the Draft Recommendations on the Multilateral Development Banks and the Environment: Hearings Before the Subcommittee on International Development Institutions and Finance ofthe House Committee on Banking, Finance and Urban Affairs, 98th Congress, 2nd Session (1984); Multilateral Development Banks and Health: Hearings Before the Subcommittee on International Development Institutions and Finance ofthe House Committee on Banking, Finance and Urban Affairs, 98th Cong. 1st Sess. (1983); and the

40 MARIA SEDA

14.

15.

16.

17. 18.

19.

1984 Tropical Deforestation Hearings. In addition, the environmental performance of the banks was discussed at a series ofhearings focusing on other foreign policy and aid issues. See for example, 3 Foreign Assistance and Related Programs Appropriations for 1984: Hearings before the Subcommittee on Foreign Operations and Related Agencies of the House Committee on Appropriations, 98th Cong., 1st Sess. 469-93, 562-77 (1983); 1 Foreign Assistance and Related Programs Appropriations for Fiscal Year 1985: Hearings Before the Subcommittee on Foreign Assistance and Related Programs of the Senate Committee on Appropriations, 98th Cong., 2d Sess. 889-951, 112124 (1984); Security and Development Assistance: Hearings Before the Senate Committee on Foreign Relations on S. 2346, S.2347, S.232l, S.2416, 98th Cong., 2d Sess. 1427-68 (1984); U.S. International Environmental Policy: Hearings Before the Subcommittee on Human Rights and International Organizations of the House Committee on Foreign Affairs, 98th Cong., 2d Sess. 105-13 (1984). International Environment Reporter, Current Report 50 (1986); Bruce Rich, "Environmental Management and Multilateral Development Banks", Cultural Survival Quarterly 10 (1986): 4. The legislation appeared within an omnibus continuing appropriations bill. See House Joint Resolution 465, Further Continuing Appropriations For Fiscal Year 1986, Act of December 19, 1985, 1985 U.S. Code Cong. & Admin. News (99 Stat.) 1185, 1309, 22 U.S.C. section 2621. Environmental Deftnse Fund Newsletter, December 1986, p. 2. By way of comparison, in 1987 the Treasury Department refused to approve six World Bank loans for environmental reasons. The loans rejected included loans for agricultural rehabilitation in the Sudan, a paper mill in Nepal, an electric power project in Peru, an abattoir in Botswana, a livestock development project in Benin, and an agro-forestry and livestock development project in Mali. P. Walsh, "World Bank Pressed on Environmental Reforms", Science 234 ( 14 November 1986): 814; International Environment Reporter, Current Report (1986): 277-78; "A Greener Hue for Development Aid", The Economist, 28 March 1987, p. 69. 22 U.S.C. sections 262m to 262m-6 (Supp. V. 1987). S. 1160, 101st Cong., 1st Sess. 1989; S. 603. 101st Cong., 1st Sess. 1989; S. 324, 101stCong., 1st Sess. 135 Cong. Rec S289-30 (dailyedJan 3, 1989); HR 1078, 101stCong., 1stSess.1989;HR1704, 101stCong., 1stSess.135Cong. Rec H7167-77 (daily ed Oct 18, 1989); HR 2655, lOlst Cong., 1st Sess. (1989); HR2494, 101st Cong., lstSess. 135 Cong. Rec H7139-52 (recorded as Pub L No 101-240). International Development and Finance Act of 1989, Pub. L No. 101-240,

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

41

103 Stat. 2492, 2507. The Act adds the proviso that "the Secretary of the Treasury shall include support for sustainable development and conservation projects when providing a framework for negotiating or facilitating exchanges or reductions of commercial debt offoreign countries." [section 511(1)] It also directs the Treasury Secretary to support development and conservation projects when assisting or facilitating debt reductions for the heavily indebted countries through the banks [section 511(2)(A)]. Finally, it directs the U.S. executive directors of the banks to "actively promote, coordinate and facilitate debt for nature exchanges." (section 512). Previously, the Treasury Department had been instructed to analyse "potential initiatives" to be implemented through the multilateral banks, the International Monetary Fund and other existing or newly created institutions to enable developing countries to repay portions of their outstanding debt through investments in the conservation of tropical forests, wetlands, and other conservation activities. 20. Multilateral banks are prohibited from directly participating in debt conversions because their loans cannot be sold in the secondary markets, cannot be converted to grants for environmental purposes and cannot be rescheduled. See U.S. Dept. ofTreasury, Report to Congress on Debt for Nature Swaps, 5 (13 April 1988); Pub. L No. 100-202, Title V, section 537(c), 101 Stat. 1329 (1987). an analysis of the Order, see for example, "Comment, Federal Agency For 21. Responsibility to Assess Extraterritorial Environmental Effects Abroad of Major Federal Actions: An Executive Order Ordains a National Policy", Harvard Environmenta l Law Review 3 (1979): 136; "Agency Responses to Executive Order 12,114 (Note)", Cornell International Law journal 14 (1981): 481 22. Development assistance institutions such as the multilateral banks are prime instruments for the transfer of external capital to developing countries. It has been estimated that approximately one-third of all net external capital receipts by developing countries come from bilateral donor agencies and multilateral concessional sources, while two-thirds come from nonconcessional sources such as private bank loans and private direct investment. Organization for Economic Co-operation and Development (0 ECD), Development Cooperation: Efforts and Policies ofthe Members ofthe DevelopmentAssistance Committee, 1982 Review (1982), pp. 51 and 53. Estimates have also shown that though approximately three-fourths of all foreign aid comes from bilateral donor agencies, multilateral development banks constitute the largest single source of official economic assistance to the developing countries. L. Stern, "Prospects of Development Financing in the 1980s",Ameri can UniversityLaw Review32 (1982): 146,147. Each dollar the

42 MARIA SEDA

multilateral banks lend, in turn, typically raises two or three more from recipient country governments, other aid agencies and private banks. To illustrate, it has been estimated that every dollar the World Bank lends raises more than two additional dollars from other sources. In comparison, for the Inter-American Development Bank (IDB), every dollar raises nearly three dollars of matching funds from other sources. World Bank, 1983 Annual Report, p. 13; World Bank, 1984 Annual Report, p. 18; IDB, 1983 Annual Report, pp. 12-13; Bruce Rich, "The Multilateral Development Banks, Environmental Policy, and the United States", op. cit., p. 684. The potential for environmental harm is further magnified by the fact that most project lending finances projects and programmes in the environmentally sensitive areas of agriculture, development, energy and transportation. In 1983, for example, 25.5 per cent ofWorld Bank project lending was for agriculture and rural development, 15.5 per cent was for transportation projects and 12.2 per cent was for power projects. By way of contrast, in the same year, 16.1 per cent of IDB lending was for agriculture, 24 per cent was for mining and industry, 5.6 per cent for transportation and 31.8 per cent for energy, mainly hydroelectric projects. IDB, 1983Annual Report, p. 33. In financing projects, the multilateral development banks have also typically played important roles in the dissemination of hazardous technologies. In 1987, for example, the World Bank approved a controversial US$85 million credit to the Sudan for the purchase of dangerous chemical insecticides and herbicides. World Bank,

Report and Recommendations ofthe President ofthe International Development Association to the Executive Directors on a Proposed Credit ofSDR 64.4 million to the Republic ofSudan for Agricultural Rehabilitation Project ( 1987): 111. The World Bank has also come under criticism for delays in reviewing the use of asbestos and other toxic substances in projects it finances. See H.R. Rep. No. 165, lOlst Cong., 1st Sess. 24-25 (1989), Report on Foreign Operations, Export Financing and Related Programs Appropriations Bill. Finally, the banks' influence on development strategies and ecological sustainability is enhanced by their role in funding research, technology transfers, training and other forms of institutional support, as well as in certifying a country's credit worthiness to potential lenders in the private sector. 23. Although the banks are managed by a president and an internationally recruited staff, policy and funding authority rests in a two-tier governing system. At the World Bank, for instance, authority is vested at the highest level in a Board of Governors which meers annually to review the Bank's broadest policy issues. The World Bank has 146 governors individually representing each member country. Below the Board of Governors stands a Board of Executive Directors which approves disbursements and matters of policy and

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES 43

operations. Each of the bank's five largest shareholders, namely the United States, United Kingdom, Germany, Japan and France, appoints its own directors. The remaining 16 directors are elected by the governors to represent groups of countries. Voting in the banks is weighted according to the capital contributions of the members and each vote is decided by a simple majority. However, at the Inter-American Development Bank, votes are decided by a two-thirds majority. Consequently, the coalition centred its lobbying efforts on the donor nations on which the banks depend for funds. In the 1980s, the United States had contributed nearly one-fifth of the World Bank's funds and a substantial portion of other banks' funds. As of 1984, the United States held 19.3 per cent of the vote in the World Bank, outweighing the combined voting power of the three next most influential countries. The three next most influential members were the United Kingdom, Germany and Japan. They respectively held 6.2 per cent, 6.02 per cent and 5.99 per cent of the vote. Byway of comparison, in the Inter-American Development Bank the United States held 35 per cent of the vote. Brazil, the next most influential country, held 12.87 per cent of the vote. At the Asian Development Bank, the United States held 13.6 per cent of the vote, equal to Japan and more than twice that of any other country. Although the United States' vote in most of the banks was insufficient to veto any loan or proposal, its influence was often great enough to constitute effective control. The United States has traditionally exerted strong influence on the multilateral development banks, reflecting its leading role in world affairs. A Treasury Department report released in February 1982 notes, for example, that the United States has "viewed the [banks] as an important multilateral foreign policy vehicle to enhance [its] security, economic and humanitarian interests", and explains that "[the] sources of United States power, from which [United States] influence in the [banks] derives, originate in the advantages inherent in [the United States'] predominant position in the banks; the expectation of others as to [the United States'] ability and will to use those advantages; and the U.S position as a world leader ... " It concludes that" ... other significant actors- management, major donors and major recipients- have recognized the United States as a major voice in the banks. They know from past experience that [the United States is] capable and willing to pursue important policy objectives in the banks by exercising the ... leverage at its disposal". In addition, the report notes that the United States was at least partially successful in about 80 per cent of the 70 different instances between 1970 and 1980 in which it sought changes in bank policy, practice and procedure. Specifically, it indicates that the United States was able to effect changes in relation to such significant issues as increased lending to the poor, improved education and auditing

44 MARIA SEDA

systems, containment of administrative expenses and the introduction and termination of a World Bank energy affiliate. 24. Among the multilateral banks, the World Bank has been found to be the largest individual source of funds for developing countries. In 1987, for example, the World Bank, Inter-American Development Bank, Asian Development Bank and African Development Bank together committed US$25.376 billion in new loans to developing countries. The World Bank alone committed US$17.674 billion in loans - US$14.188 billion from the IBRD and US$3.486 billion from the IDA. World Bank, 1987 Annual Report, p. 8. The International Financial Corporation invested US$790 million in 1987. See IFC, 1987 Annual Report, p. 1. The IDB lent US$2.36 billion, of which US$346 million was from the concessional rate fund for Special Operations and US$ 58 million was from other concessional accounts. IDB, 1987Annual Report, p. V. The World Bank, moreover, has significant leverage over the development agenda through its important role in structural adjustment lending. 25. Four congressional subcommittees are directly responsible for multilateral bank oversight and legislation: the House Banking Subcommitte e on International Development Institutions and Finance, the Senate Foreign Relations Subcommittee on International Economic Policy, the House Appropriatio ns Foreign Operations Subcommitt ee and the Senate Appropriatio ns Subcommittee. The House and Senate Appropriations Subcommittees on Foreign Operations control the appropriations -they are responsible for the inclusion of multilateral funding in the annual omnibus appropriations bill for foreign assistance. In the House, the Committee on Banking controls legislation authorizing U.S. replenishment of multilateral development bank funds; whereas in the Senate, the Committee on Foreign Relations exercises exclusive jurisdiction over the foreign policy aspects ofU.S. participation in the banks. In addition, the House Foreign Affairs Committee oversees 'general foreign policy aspects of U.S. activities in the multilateral banks and can influence bilateral and multilateral assistance policy through its direct jurisdiction over the Foreign Assistance Act. While the authorizing and appropriating committees dominate the formal process for managing the consideration ofpending legislation, control over the multilateral bank initiatives is not fully centralized. Amendments to reduce contribution levels or to require policy initiatives may arise during floor consideration. Moreover, other committees whose areas of responsibility ostensibly have little to do with multilateral bank affairs can and have introduced major policy initiatives. 26. It has been estimated that since 1979, around 540,000 families have been resettled in the Outer Islands. By the end of the 1980s, it is estimated that about

GlOBAl ENVIRONMENTAL CONCERNS AND PRIORITIES

45

one million hectares of forested land will have been converted to agricultural land for transmigration. World Bank, Indonesia- Transmigration Sector Review (Washington, DC: 1986). See generally, C. Secrett, "The Environmental Impact of Transmigration'', The Ecologist 16, no. 2/3 (1986): 77-88; Wolf Donner, Land Use and Environment in Indonesia (London: Hurst, 1987), pp. 249-63. 27. These efforts to underscore the interrelationship between economic activity and its biological and ecological underpinnings appear to have been, by and large, a success. At the 1984 hearings to review the draft recommendations, for example, Deputy Assistant Secretary of the Treasury for Developing Nations James Conrow noted, while explaining the Treasury's substantive endorsement of the recommendations that, "what struck [him] in listening to the hearings and going over the testimony from the various witnesses ... [was that] there is a strong argument to be made, not only environmentally, but on economic grounds to take into account environmental concerns early in the project development". 28. The records of Robert Kasten, a Republican from Wisconsin and chairman of the Senate appropriations Subcommittee on Foreign Appropriations until the 1986 election, and Representative David Obey, a Democrat from Wisconsin, illustrate the bipartisan and varied appeal ofmultilateral bank reform arguments. Kasten and Obey were two key congressional figures behind efforts to improve the environmental policies and practices of the banks in the 1980s. They not only introduced environmental provisions to the bills appropriating money for the World Bank, but successfully sought bipartisan support for such appropriations riders. Prior to his involvement in multilateral bank reform issues, Kasten had a strong record of opposing multilateral development funding requests. Obey, in contrast, was seen as generally supportive of multilateral aid and environmental issues. Kasten's opposition to multilateral aid, however, appears to have softened in recent years. In 1987, for example, he refused to support an amendment promoted by Senator Jesse Helms to terminate supplemental funding for the multilateral development banks that year. Pat Aufderheide and Bruce Rich, "Environmental Reform and the Multilateral Development Banks", World Politics journal (Spring 1988): 301. 29. See for example, C. Ruckelshaus, "Toward a Sustainable World", Scientific American, September 1989, p. 169, citing polls showing that increasingly large majorities of the public (approximately 65 per cent in 1986 and 80 per cent in June 1989) agree with this statement, "Protecting the environment is so important that requirements and standards cannot be too high, and continuing environmental improvements must be made regardless of cost." But see "Green Movement Stumbles in US: American Public Withdrawing Support

46

30.

31. 32.

33.

34.

35.

36.

37.

MARIA SEDA

for Environmental Plans and Projects", (Comment) Straits Times, 23 April 1991, p. 29. Bruce Rich, "The Emperor's New Clothes: The World Bank and Environmental Reform", World Policy journal (Spring 1990), pp. 305-29. It has also been suggested that the World Bank's organizational reforms are more oriented toward public relations than an integrated sustainable development strategy. PatAufderheider and Bruce Rich, "Environmental Reforms and the Multilateral Development Banks", op. cit. Rich, "The Emperor's New Clothes: The World Bank and Environment Reform", op. cit., p. 317. John Horberry, "The Accountability of Development Assistance Agencies: The Case of Environmental Policy", Environmental Law Quarterly 12 (1985): 817-69. See also World Bank, The Project Cycle (1987). For a discussion of the World Bank's reliance on capital-intensive, large-scale projects and the adverse environmental and social effects associated with it, see for example, P. Adams and L. Solomon, In the Name ofProgress: The Underside of Foreign Aid (London: Earrhscan, 1991); Bruce Rich, "The Multilateral Development Banks, Environmental Policy and the United States", op. cit., pp. 689-703. Critics have noted that although a project may take over two years to prepare, the directors are given access to appraisal reports on average only two weeks before they are asked to approve a project. They have also criticized the Bank for usually only providing project information to the directors at oral briefings. Hearings on H.R. 3186 Before the Senate Comm. on Appropriations, lOOth Cong., 1st Sess. 49-50 (1987), testimony ofThomas B. Stoel, Jr., Director of Natural Resources Defense Council. The World Bank has argued against these attempts, noting that it must restrict the circulation of project preparation documents since they are draft materials and the staff would feel restrained in conducting its work impartially if their written opinions were subject to outside review. In addition, the World Bank has argued that public scrutiny of documents prepared in planning projects would undermine the Bank's negotiation relations with recipients. See generally, J. Sanford, Access to World Bank Information (Congressional Research Service Report no. 89-89 December 1988), explaining the variety of information that the Bank generates and the arguments against less restrictive access to that material. Efforts to achieve broader public access to information about the banks' operations began in the Senate in 1988. In its version of the fiscall988 foreign aid appropriations bill, the Senate sought to broaden access to bank documents by requiring that U.S. representatives to the banks have direct access to any

GLOBAL fNVIRONMENTAL CONCERNS AND PRIORITIES 47

38.

39.

40.

41. 42. 43. 44.

45.

46.

confidential documents which the banks might have in their possession. In theory, if U.S. executive directors had access to a document, Congress could also have access to it. In practice, NGOs might also have had access to the document through their Congressional contacts. Ultimately, Congress decided that the entire requirement of access to information held or created by the banks could be waived if the administration certified that the confidentiality of requested data was essential to the banks' operations. H.R. Con£ Rep. No. 498, lOOth Cong., 1st Sess. 830. See generally, Conservation International, The Debtfor Nature Exchange: A Tool for International Conservation (Washington, DC: Conservation International, 1989). See also P. Huynick, "Debt-for-Nature Swaps: Effective But Not Enforceable", Case Western Reservejournal ofInternational Law27 (1990 ): 141, discussing enforcement problems. C. Cody, Debt-for-Nature Swaps in Developing Countries: An Overview of¢ Conservation Efforts( Congressional Research Service, Sept 26, 19 8 8), discussing World Bank's arguments and providing counter-arguments. TheN ature Conservancy, Concept Paper: Debtfor Nature Trust Fund (Arlington, VA: The Nature Conservancy, 1989). See also F. Baker, Structure of Debt for Nature Swaps (Internal legal memorandum prepared for The Nature Conservancy, Arlington, VA., May 1989). World Resources Institute, NaturalEnckJwments: Financing&source Conservation for Development(Washington, DC: World Resources Institute, 1989). Rich, "The Emperor's New Clothes", op. cit., p. 319. International Monetary Fund, 1989Annual Report, pp. 26-27 (1989). Soon after this decision, however, it was reported that Japan was considering financing the projects, despite the lack of any assurance of environmental safeguards. Japan had just announced that it was planning to finance projects dropped by the World Bank. To date, the only debt for nature swap implemented in the region involves the Philippines. The swap took place in June 1988. The buyer of the obligation was the World Wildlife Fund and the sellers of the debt obligation were various foreign banks. The nominal value of the debt purchased was US$2 million. The funds are being used to finance environmental projects in St. Paul's Subterranean River National Park and El Nido National Marine Park. A co-operative working relationship was established between the World Wildlife Fund, the private local (Philippines) Haribon Foundation and the central government of the Philippines. See generally, William K. Reilly, "Debt for Nature Swaps: The Time has come", InternationalEnvironmentalAffairs2, no. 2 (1990): 134-39. H. Sun, "Costa Rica's Campaign for Conservation", Science 239 (1988): 1366, 1368.

48 MARIA SEDA

47. It has been estimated that in 1987, over US$25 billion was transferred from the North to the South through nature tourism. H. Whelan, "Nature Tourism", Environmental Conservation 15 (1988): 182. Costa Rica provides a good example of a country that makes significant use of ecotourism. It reportedly earned nearly US$138 million in 1986 from nature tourism, which is the country's third major foreign currency earner. Ibid. See also, Economist Intelligence Unit, "Costa Rica/Panama", International Tourism Reports, no. 3, Report 140, August 1987, pp. 63-75. 48. World Resources Institute, National Endowments: Financing Resource Conservation for Development, op. cit. See more generally, for example, G. Budowski, "Tourism and Environmental Conservation: Conflict, Coexistence, or Symbiosis", Environmental Conservation 3, no. I (1976): 27-31; M. Romeril, "Tourism and the Environment: Towards a Symbiotic Relationship", International Journal of Environmental Studies 25, no. 4 (1985): 215-18; Arwel Jones, "Green Tourism", Tourism Management 8, no. 4 (December 1987): 354-56. 49. Debt for Development Coalition, Inc., Debt for Development: Exploration of Issues, 7 April1989. 50. World Bank Development Committee, Environment and Development: Implementing the World Bank's New Policies, op. cit. 51. By 1985, American expenditures on pollution control and waste management had reached almost US$20 billion per year. In Europe the pollution control market is worth more than US$27 billion per year and is growing at a rate of six to 11 per cent per year. It appears that the waste management and control pollution control sectors will grow significantly in Asia's NICs in the near future. Far Eastern Economic Review, 21 September 1989, pp. 80-82. WHO has estimated that for every dollar turned over in Asian NICs by the turn of the century, 18 cents will go to environment-related expenses. It also estimates that over the next five years, Asian NICs will have to spend three per cent of government revenue to clean up after polluting industries. Asian Business 27, no. 4 (Aprill991): 58-90. 52. Asian Business27, no.4 (Aprill991): 58-60. According to Asian Business, Japan has become Asia's number one exporter of pollution control equipment. The article also notes that analysts think Japanese firms will own as much as 60 per cent of the Asian market for such equipment by 1996. 53. Trends in Europe and the United States and Japan may well "catch on" in the region. In Britain, according to a recent survey, two of five adult purchasers consider the environmental impact of a product before purchase. In the United States, almost five per cent of all new products introduced in 1989 were sold on the basis of their environmental friendliness. Newsweek, 19 November 1990,

GlOBAl ENVIRONMENTAL CONCERNS AND PRIORITIES

54. 55.

56.

57. 58.

59.

49

pp. 38-47. In Japan, "ecology corners" can be found in department stores. Within the region, moreover, Singapore has already announced plans to introduce consumer labels indicating products' "environmental friendliness". See generally, J. Elkington, T. Burke, and J. Hailes, Green Pages: The Business of Saving the World (London: Rutledge Press, I988). SeeASEAN Experts Group, Environmental Programme III, 1988-1992 (1987), p. 21. Ooi Jin Bee, Depletion of the Forest Reserves in the Philippines (Singapore: Institute of Southeast Asian Studies, 1987), p. 7; Wolf Donner, Land Use and Management in Indonesia (Honolulu: University ofHawaii Press, 1987). Forest loss in the Philippines has also been placed at twice this figure for the period 1972-81. L.S. Chia, Environmental Management in Southeast Asia (Singapore: National University of Singapore, 1987). Philip Hirsch, "Deforestation and Development in Thailand", Singapore journal of Tropical Geography 18, no. 2 (1987): 130. But compare Nart Tuntawiroon, "National Development, Resource Depletion and Environmental Deterioration in Thailand", Contemporary Southeast Asia I, no. 4 (1980): 305-33 (arguing that Thailand's forested area declined from 57 per cent of the nation in I96I to 25 per cent in 1977). S. Postel, "Protecting the Forests", in State ofthe World(Boston: Little Brown, 1984), p. 85. In the Philippines, a timber export ban went into effect on 1 July 1989. Logging had generated employment for about 220,000 timber workers and was worth about US$511 million, accounting for 1.58 percent ofGNP in 1987. The Thai Government, on the other hand, approved a nationwide logging ban on I 0 January 1989, largely in response to public pressure. Prior to the ban, rural villagers had organized protests, particularly in the hilly northern regions of Thailand against logging companies which were destroying catchment areas and traditional irrigations systems. Moreover, conservationists had also organized a campaign against concession agreements in some oiThailand's most important wildlife sanctuaries and other protected areas. Of more immediate importance, however, was the widespread public shock and outrage at the mud slides which resulted from deforestation in Southern Thailand in November 1988. These mud slides took the lives of hundreds and buried whole villages and farmland. Thailand now depends on Malaysia, Myanmar, Laos, Vietnam and Papua New Guinea for logs to feed its timber products industry. Far Eastern Economic Review, 12 January 1989, p. 10. UNESCAP, State ofthe Environment in Asia and the Pacific(Bangkok, 1990); Far Eastern Economic Review, 25 February 1988, p. 48. For Malaysia, Bank Negara has predicted that there will be no high quality timber left by 1990.

50 MARIA SEDA

Sahabat Alam Malaysia, Towards Greater Environmental Awareness (Penang, Malaysia: SAM, 1983), p. 26. 60. The Tropical Forestry Action Plan can be singled out as the most important multilateral arrangement for the conservation of tropical rain forests. It lays out a five-year funding schedule (1987-91) in five problem areas: fuel wood and agro-forestry, land use and upland watersheds, forest management for industrial use, conservation of moist tropical rain forest ecosystems, and strengthening institutions for forest management, research, training and education. The Tropical Forestry Action Plan task force is made up of the United Nations Development Programme, the World Bank, the Food and Agriculture Organization and the World Resources Institute. 61. A complete analysis of the kinds of criticisms levied against the Tropical Forest Action Plan is beyond the scope of the discussion in this paper. For other criticisms of the Plan, see for example, M.S. Ross and D.G. Donovan, "The World Tropical Forestry Action Plan: Can it Save the Tropical Forests?" journal of World Forest Resource Management 2 (1986): 119-36; N. Hildeyard, "Tropical Forests: A Plan for Action", The Ecologist 17, no. 4/5 (1987): 129-33. 62. See for example, Philip Hurst, Rainforest Politics: Ecological Destruction in Southeast Asia (London and New Jersey: Zed Books, 1990) on political favours involved in the allocation of many timber concessions; R. Goodland, "Indonesia's Environmental Progress in Economic Development" (New York: Office of Environmental Affairs, World Bank, 1981); Malcolm Gillis, Multinational Enterprises, Environmental and Resources Management Issues in the Tropical Forest Sector in Indonesia (Cambridge, MA: Center for International Affairs, 1984); "Southeast Asia's Forests: Lost for Trees", Far Eastern Economic Review, 10 April 1986, notes that widespread logging is being carried out, instead of selective cutting of commercially valuable trees; Norman Myers, The Primary Source: Tropical Forests and Our Future(New York: W.W. Norton, 1992) asserts that" [f]orests are seen as part of the immediate problem rather than as a factor in an eventual solution. The Indonesian Government now derives about [US] $450 million per year in royalties, levies and taxes on its timber exports. Yet it devotes only about [US] $100 million to the forestry sector, the funds being spent mainly on replanting trees in devastated areas, rather than on forestalling further devastation"; World Bank, Indonesia: Problems and Prospects for NonOil Exports (Washington, DC: World Bank, 1986) notes that a comparatively low proportion of the production of forest rent is taken as government tax, encouraging rent-seeking behaviour and a policy emphasis on maximizing production as a means of increasing total revenue; M.J. Kasijanto, "Masalah Pertambangan Kayu", Kompas, 31 August 1978; and N. Guppy, "Tropical Deforestation: A Global View", Foreign Affairs (Spring 1984).

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

51

N GOs have focused considerable attention, in particular, on East Kalimantan. Three companies have dominated timber exploitation activities here: the International Timber Corporation Indonesia which is under contract with the Army-Yasasan related PT Tri Usaha Bhakti, the Georgia Pacific Indonesia Company headed by Bob Hassan, who reportedly has ties with ruling political circles and the Army; and the Sumber Mas Group, headed by Jos Sutom, who is also said to have ties with political circles in Jakarta. See, for example, SKEPHI "The Human Perspective of Tropical Forests", paper presented to the Rainforest Action Network Conference, November 1980, San Francisco. See also Biodiversity: Social and Ecological Perspectives (Penang, Malaysia: World Rainforest Movement, 1991). 63. For a discussion of deregulation moves in Indonesia, see for example, Far Eastern Economic Review, 12 January 1989, p. 141; Far Eastern Economic Review, 10 September 1987, pp. 70-74; Economist Intelligence Unit, Indonesia 1-1987, pp. 9-10. 64. Far Eastern Economic Review, 7 February 1991. 65. Already a number of Western donor nations have directed their executive directors to push for multilateral bank reforms. Pressures to incorporate environmental review into a reformed development loan process, for example, have come from Germany, Great Britain, The Netherlands, and the Scandinavian countries. Canada has also asked the Board of Directors of the World Bank to implement environmental impact statement review procedures for all construction loan projects. International Environment Reporter (BNA)

(1988): 538-39. 66. "Aid Group's Head Upbeat about Help for Jakarta", Straits Times, 14 May 1991. 67. See footnote 76 for a brief overview of some current bills in Congress which link adherence to international environmental agreements or environmental standards with trade. It should be noted, however, that higher environmental standards are not necessarily irreconcilable with trade - they may in fact stimulate trade byencouragingthe development of pollution control, recycling waste and environmental information technologies. 68. There is growing concern that the United States may be linked with less environmentally strict states through imports. Many chemicals banned for use in the United States, for example, may wind up in the United States as developing country imports. Pesticides, in particular, may end up on the tables of U.S. consumers in the form of agricultural imports. It is also increasingly feared that environmental management deficits in developing countries may result in direct, physical transfrontier harmful effects on the United States or the global commons.

52 MARIA SEDA

69.

70. 71. 72.

73.

74.

75.

In a similar vein, environmental groups have opposed the North American Free Trade Agreement (NAFTA), arguing that it would possibly damage the Mexican as well as U.S. southwestern environments. Cross-border pollution between Mexico and the United States has included the depletion and contamination of joint ground water reserves; the dumping of sewage and industrial wastes into the Rio Grande, New and Tijuana rivers; the coppersmelting triangle around Douglas, Arizona; air pollution in the El-Paso Ciudad Juarez area; the shipping by U.S. companies of hazardous wastes to Mexico for illegal dumping; and the illegal dumping of hazardous wastes in Mexico by Maquiladora industries. Fertilizer subsidies, for example, may result in degraded groundwater due to the overuse of chemical fertilizers. See generally, R. Repetto and Malcolm Gillis, The Forest for the Trees? Government Policies and the Misuses ofForest Resources (Washington, DC: World Resources Institute, 1988). William U. Chandler, The Changing Role ofthe Market in National Economies, Worldwatch Paper, no. 72 (Washington, DC: Worldwatch Institute, 1986). R. Repetto and Malcolm Gillis, The Forest for the Trees, op. cit., pp. 27, 13. In 1989, Brazil, responding in part to such international criticism of the burning of the Amazon rain forest, withdrew these tax incentives. See "Score One for the Trees", The Economist, 14 January 1989; James Brooke, "Rain and Fires, But Mostly Rain, Slow Burning of Amazon Forest in Brazil", New York Times, 17 September 1989. Submission of the European Communities on Sanitary and Phytosanitary Regulations and Measures, 1989, p. 2. For a review of the environmental concerns raised by GATT, see S. Shrybman, "International Trade and the Environment", The Ecologist 20, no. 1 (January/February 1990). See, for example, C. Secrett, l?dinforests: Protecting the Planet's Richest Resources (London: Russell Press, 1986); N. Myers, The Primary Source (New York: Norton, 1984); J.I. Furtado, "The Status and Future of the Tropical Moist Forest in Southeast Asia", in Environmental Problems and Development in Southeast Asia, edited by Colin McAndrews and L.S. Chia (Singapore: McGraw-Hill, 1979). Members of the environmental group Sahabat Alam Malaysia (SAM) who had worked to cancel timber concessions and increase the area of protected communal forests in Sarawak, as well as members of the PerakAnti-Radioactive Committee, which had attempted to force the permanent closure of the Asian Rare Earth factory in Perak (a factory producing radioactive waste as a by-product), were also arrested in October 1987. Malaysia's Internal Security Act was used in October-November 1987 to detain a wide range of regime

GLOBAL ENVIRONMENTAL CONCERNS AND PRIORITIES

76.

77. 78. 79.

53

critics - including those who had criticized the Mahathir administration on its poor human rights record, disregard for constitutional integrity, lack of public accountability, disregard for environmental degradation and the more marginalized sectors of the population, and raised issues offraud and corruption in government. The October-November arrests marked the second largest police operation under Malaysia's preventive detention legislation. Amnesty International, Malaysia: Detentions Under the Internal Security Act (London: Amnesty International, 14 March 1988 and 15 June 1988). It has been suggested that opposition to Malaysia's logging policy has not generally been well taken by the government since leading politicians and their families have major timber concessions and timber is one of Malaysia's important export earners. Far Eastern Economic Review, 30 April 1987, p. 14, and 30 May 1985, pp. 36-39, 42. For a discussion of the overlap of timber interests and political circles, see generally, Philip Hurst, Rainforest Politics: Ecological Destruction in SoutheastAsia, op. cit.; Wall Street journa4 22 July 1987 describes the Malaysian situation as a "Marcosian web affront companies and foreign bank accounts"; The Star (Kuala Lumpur), 5 September 1987 and Nick Seaward, ''At Loggerheads with Power", Far Eastern Economic Review, 2 July 1988, p. 32 reports that Minister of Tourism and the Environment Oatuk James Wong owns 100,000 hectares of timber concessions in Sarawak. Efforts to ban tropical timber imports continue. In the U.S. Congress, for example, there is currently a bill calling for an eventual ban on imports of tropical timber not grown under sustained yield programmes. There is also a bill before the Senate which would allow the United States to impose countervailing duties on imports from countries whose environmental standards are less strict than those in the United States. Another bill would require government agencies to study the competitive impact of other countries' environmental and health laws and their adherence to international environmental agreements. The bill also provides for the use of trade retaliation to encourage other nations to abide by international environmental agreements. Far Eastern Economic Review, 19 September 1991, p. 50. Such retaliatory trade practices, however, are likely to violate GATT standards. Already, on 16 August 1991, a GATT panel ruled that aU .S .law banning tuna imports from countries whose fishing fleets kill more dolphins than U.S. fishermen do violates trade agreements. Far Eastern Economic Review, 28 April1988, p. 48. Ibid. See ''ASEAN States to Campaign against Timber Boycotts: Loggers Unite to Fight Greens", Far Eastern Economic Review, 18 January 1990, pp. 45-46.

54

MARIA SEDA

80. Singapore Business, October 1991, p. 25. 81. SeeR. Kumar, The Forest Resources ofMalaysia: Their Economics and Development (Singapore: Oxford University Press, 1986). 82. Mark Collins, The Last Rain Forests (London: M. Beazley, 1990).

TWO

Rights over Natural Resources in Southeast Asia MANAGING FISHERIES IN INDONESIA Mochtar Kusuma Atmadja

While sharing the global concern about the environment, the Southeast Asian region is saddled with specific environmental problems of its own. Of particular significance in the Southeast Asian context is the accelerating deterioration of the region's marine ecosystem, resulting from rapidly increasing coastal development, the growing demand on living and non-living resources of an expanding population, increasing maritime traffic, and the rising amounts of industrial and urban wastes dumped at sea. 1 The Southeast Asian countries support an aggregate population of 430 million. By the year 2025, it is forecasted that this will increase to more than 687 million. As Table 2.1 shows, the region's urban population is concentrated in coastal cities and towns. As the pace of residential and commercial development increases in the coastal areas, resource use conflicts and environmental deficits (for example lack of adequate sewage treatment plants) will make themselves increasingly felt, placing heavy strains on the coastal and marine habitats and their resources. 2 The seas of Southeast Asia have not only traditionally been a very important source of food supply for the Southeast Asian nations, 3 but have also played an essential role in the overall economic development of the region. 4 Per capita fish consumption is high (Table 2.2), and fish provide the major source of protein for the populations of Southeast Asian countries. As Table 2.3 shows, most Southeast Asian countries have increased

56

MOCHTAR KUSUMA ATMADJA

TABLE 2.1 Urban Population in Large Coastal Cities, 1990

Country Singapore Indonesia Malaysia Philippines Thailand Vietnam Myanmar

Percentage of urban population in large coastal cities

Urban population (%of total population)

100

100 29 42 42 23 22 25

77

62 64 94 52 77

Source: World Resources Institute, World Resources /990-/991 (New York: Rosie Books, 1990).

TABLE 2.2 Average Annual Marine Catch in the Southeast Asian Countries

Country Indonesia Malaysia Myanmar Philippines Singapore Thailand Vietnam

1985-87

('000 metric tons)

1,861 609 524 1,378 19 2,135 593

Change since 1975-77

73 14 43 15 24 29 46

Source: World Resources Institute, Worlcl Resources 1990-199/ (New York: Rosie Books, Inc., 1990).

RIGHTS OVER NATURAL RESOURCES IN SOUTHEAST ASIA

57

TABLE 2.3 Consumption of Fish in the ASEAN Countries (Kilogrammes per year)

Country Brunei Indonesia Malaysia Philippines Singapore Thailand

Per capita consumption

24.1 12.0 25.7 30.0 30.0 15.0

Source: G. Kent and M.J. Valencia, eds., Marine Policy in Southeast Asia (Berkeley: University of California Press, 1985). their catch substantially since the mid-1970s - the average annual marine catch for the period 198 5-87 amounted to almost 7 million metric tons. Thus the question of how to ensure the rational management of marine resources - both renewable and non-renewable - assumes great importance not only as a purely ecological issue but as an economic development planning issue as well. This paper focuses on the issues and problems Indonesia faces in managing its fishery resources. It does not attempt to answer what policy mix- "command and control" measures and market based controlsIndonesia should adopt in order to effectively manage its fisheries. It merely highlights important issues and conflicts which Indonesia must address in order to properly manage its marine fishery resources. Moreover, for the sake of clarity and brevity, this paper does not examine in any detail the relationship between fishery resource management and other marine and coastal environment management issues. This is not meant to suggest that the management of fisheries can be disassociated from other marine environment or resource degradation and control problems. 5 An important cause of stock depletion no doubt has been the

58 MOCHTAR KUSUMA ATMAOJA

growth in non-fishing uses of the sea and the degradation of nearshore areas due to coastal development. 6 Finally, it is also outside the scope of this paper to discuss all the jurisdictional questions raised by the 1982 United Nations Convention on the Law of the Sea.? First, this paper will provide some necessary background information on Indonesia's archipelagic waters, and on the growth and development of the Indonesian fisheries sector. The next section focuses on the management process from a domestic point of view. An examination of the problems Indonesia faces in implementing and enforcing fishery management regulations in its territorial waters provides a useful counterpoint to the problems it faces in dealing with controls over fishery use and development at the bilateral or multilateral level. It illustrates the real difficulties countries experience in attempting to eliminate overuse and overcapitalization problems in an open access resource such as the sea, even where a legal claim to jurisdiction and sovereignty over living marine natural resources has been wellestablished. This is followed by a brief examination of Indonesia's efforts at bilateral negotiations and some of the difficulties it has encountered with such bilateral fishing agreements. The final section briefly summarizes the main arguments or observations of this paper.

LOCATION AND STATUS OF FISHERIES IN INDONESIA A glance at a map (Figure 2.1) easily explains why the sea is sci important to Indonesia. Indonesia is an archipelagic nation located between the continents of Asia and Australia and between the Indian and Pacific oceans. Its total coastline length amounts to approximately 54,716 kilometres (Table 2.4). The important Straits of Lombok, Sunda, Sumba, Malacca, Karimata, Gaspar, and Makassar are arguably within the internal waters of lndonesia. 8 From Indonesia's standpoint, moreover, the 1982 United Nations Convention on the Law of the Sea lends support to its jurisdictional claims over 7,893,25 0 square kilometres of ocean. 9 Its jurisdictional claims over ocean space can be broken down as follows: 0.3 million square kilometres of territorial sea, 2.7 million kilometres of exclusive economic zone (EEZ), and 2.8 million square kilometres of archipelagic waters.

•(

~

I:

0

""C' I:

-

0

c--4 ~:::

....

0

o:::;:

::I

D .... 0

.... _. (!) -

60 MOCHTAR KUSUMA AT MADJA

TABLE 2.4 Estimated Coastline Length of the Southeast Asian Countries (Kilometres)

Country Brunei Darussalam Cambodia Indonesia Malaysia Myanmar Philippines Singapore Thailand Vietnam Total

Coastline extent 161 443 54,716 4,675 3,060 36,289 193 3,219 3,444 I06,200

Source: World Resources Institute, World Resources 1988-1989 (New York: Busic Books, Inc., 1988).

Under this "legal" map, a very large number of fish stocks have been brought under Indonesia's national jurisdiction. It has been estimated that Indonesia's marine waters have a potential yield of 6.6 million tons of fish per year, consisting of 3.96 million tons of demersal species (including shrimp, molluscs, coral fish). Indonesia's EEZ alone has a potential yield of 2.1 million tons of fish per year, whereas the inland open waters have a potential yield of 690,000 tons of fish per year. At 10 present, about 23 per cent of the potential yield is being exploited. As Table 2.5 shows, the volume of catch and landings of pelagic species amounted to only 2.17 million tons in 1988 - a 49,000 ton increase over the 1983 yield. Growing attention has been focused in recent years on the production of brackish shrimp, as evidenced by its annual rate of growth of 15.9 per cent (Table 2.6). The fishery sector is of great importance to Indonesia which has become a net fish exporting country. However, it is not possible to group Indonesia with the larger long-distance fishing nations. Within the

RIGHTS OVER NATURAL RESOURCES IN SOUTHEAST ASIA 61

TABLE 2.5 Catch and Landings of Pelagic Species of Indonesian Marine Fisheries, 1983-88 (Tons)

Year

Catch and landings

1983 1984 1985 1986 1987 1988

1,682,000 1,713,000 1,822,000 1,923,000 2,017,000 2,166,000

Note: Average annual growth was 4.4 per cent. Source: Director General of Rsheries, January 1990.

TABLE 2.6 Production of Main Species in Indonesia (Tons)

Shrimp Year 1983 1984 1985 1986 1987 1988 Average annual growth (%)

Tuna/Bonito

Marine

Brackish

Total

102.900 111.400 121.100 135.900 143.100 167.100

111.140 101.400 107.200 113.900 131.900 153.700

27.1 32.1 37.6 40.8 56.0 82.6

139.100 133.500 144.800 154.700 187.900 236.300

7.1

7.3

15.9

11.7

Source: Director General of Fisheries, January 1990.

62 MOCHTAR KUSUMA ATMADJA

region, Thailand and the Philippines have more developed long-distance fishing fleet sectors. Indonesiis efforts to develop commercial fishing, nevertheless, are not new. Since 1963 Indonesia has sought to develop fisheries for high-priced species of international demand through joint ventures, domestic companies and state enterprises. !I Prior to 1980, the total number of shrimp trawlers operating within national waters and the 200-nautical mile EEZ totalled 237. Since 1983, with the enactment of the Exclusive Economic Zone Act, Indonesia has intensified its efforts to develop a modern fishing industry in its EEZ. As Table 2.7 shows, while Indonesia has been able to considerably increase the size of its motorized fishing fleet, from 5,707 vessels in 1968 to 7,268 in 1972, the greater part of the fleet still consists of sailing boats. Some efforts have also been made to establish joint ventures with foreign fishing companies. By 1986, 51 Indonesian fishing companies operating on joint partnership or joint venture basis with companies from Taiwan, South Korea, Thailand, Malaysia, the United States, Australia, Honduras, Philippines, Hong Kong and Panama had been registered. These companies operate in the Indonesian EEZ off the coast of the Arafura islands, as well as in the Pacific Ocean, Indian Ocean, South China Sea, Sulawesi Sea and the Straits of Malacca.

TABLE 2.7 Fishing Fleet in Indonesia, 1968-72

Year

Motorized

Sailing boots

Total

1968 1969 1970 1971 1972

5,707 5,319 6,034 7,176 7,268

278,206 275,314 289,402 277,662 277,439

283,913 280,633 295,436 284,838 284,707

Source: "Address of Stole by the President of the Republic of Indonesia before the House of People's Representotives, 16 August 1973" (Tobie Vl-25) Jokorto, p. 267. Reproduced in Phiphot Tongsubkul, ASEAN and the Low of the Sea (Singapore: Institute of Southeast Asion Studies, 1982), p. 52.

RIGHTS OVER NATURAL RESOURCES IN SOUTHEAST ASIA 63

Moreover, as of February 1990, the number of foreign ships which had been given permits to conduct fishing operations (Surat Ijin Penangkapan Ikan [SIPI]) numbered 1,048 (Table 2.8). Of the 1,048 vessels granted fishing permits, 974 had been in operation since 1989. A total fee of US$26,094,452.662 had been collected from the issue of these licenses as of February 1990. More recently, as of March 1990, the number of foreign ships which had been granted fishing permits declined to about 598 (Table 2.9). Aside from these foreign vessels, Indonesian flagged vessels also operate in the Indonesian EEZ. In fact, the number of Indonesian flagged vessels were increasing in the late 1980s. In the early months of 1989, 87 companies were active in the Indonesian EEZ, with 512 vessels operating mainly in the South China Sea, Sulawesi Sea, Arafura Sea, Pacific Ocean, Indian Ocean, and other parts of Indonesia's national waters. By way of comparison, in February 1990, there were 886 Indonesian flagged vessels operating in the EEZ (Table 2.10). The increase in Indonesian flagged vessels and decrease in foreign flagged vessels is in line with the government policy of giving priority to Indonesian flagged vessels in the exploitation of living resources in the EEZ. It reflects, moreover, the increased capabilities of the Indonesian commercial fishing sector - its greater mastery of

TABLE 2.8 Foreign Fishing Vessels, as of February 1990 Type of net

Gill net Long line Purse seine Fish net Total

Number of licences

124 345 241 338 1,048

Source: Purwito Martosubroto and Ketut Widana, "Pengelolaan penantaatan sumber daya hayati lout di peroivan Indonesia dan pengembangan terjosama internasional". Paper presented at the Seminar Hukum Nasional V(Vth National Law Seminar), Indonesia.

64

MDCHTAR KUSUMA ATMAOJA

TABLE 2.9 Foreign Fishing Vessels, as of March 1990 Type of net

Number of licences

Gill net Long line Purse seine Fish net Total

79 341 16 162 598

Source: Purwito Mortosubroto and Ketut Widono, "Pengeloloon penontooton sumber doyo hoyoti lout di peroivon Indonesia don pengembongon terjosamo internosionol". Paper presented at the Seminar Hukum Nasionol V(Vth Notional Low Seminar), Indonesia.

TABLE 2.10 Indonesian Flagged Vessels, as of February 1990 Type of net

Gill net Long seine Purse seine Fish net Pole and line Shrimp trawlers Total

Number of licences

39 120 199 203 88 237 886

Source: Purwito Mortosubroto and Ketut Widono, "Pengeloloon penontooton sumber doyo hoyoti lout di perairon Indonesia don pengembongon terjosomo internasional". Paper presented at the Seminar Hukum Nosionol V(Vth Notional Low Seminar), Indonesia.

RIGHTS OVER NATURAl RESOURCES IN SOUTHEAST ASIA 65

commercial fishing techniques and technology, and greater purchase power vis-a-vis modern vessels and equipment. Finally it should also be noted that now that greater interest is being paid to the eastern part of the Indonesian archipelago, foreign investment and joint ventures will likely increase. Indonesia would welcome this kind of investment or venture since the national fishery sector does not yet have the resources to develop fully on its own the economy of the eastern part of Indonesia. From Indonesia's point of view, marine living resources in the Banda Sea and the eastern part of the Indonesian archipelago are presently underharvested. Tuna, in particular, are abundant in the area. In view of the important role that the fishery industry plays and could play in Indonesia's economy, especially on the future development of the eastern part of the Indonesian archipelago, it is essential that Indonesia's policymakers effect sustainable fishery management policies and practices for long term gain. A conceptual and institutional orientation of fishery development and management predicated upon free access and unrestricted large-scale commercial exploitation will deny Indonesia the full benefits of its extended authority under the new Law of the Sea regime. Within the Southeast Asian region, Thailand's experience with trawl fishing in the Gulf of Thailand serves as a pointed reminder of how free access to fishery resources leads to overfishing and overcapitalization, and the depletion of fish stocks.U Because of the important role that foreign investors and corporations are likely to play in the development of Indonesia's fishery resources, it is also important that policymakers understand the difficulties they could face in implementing fishing agreements and profit-sharing arrangements. The next sections of this paper highlight significant problems, limitations, demands and realities that Indonesia will have to face in the course of trying to manage and develop its fishery resources.

MANAGEMENT OF THE NATIONAL WATERS As Indonesia begins the task of managing a greater share of the living resources off its coast under the exclusive economic zone and

66 MOCHTAR KUSUMA ATMADJA

archipelagic state concept, it not only faces a range of institutional and policy options on the focus of fishery management and development, but also a variety of implementation and enforcement-relate d constraints. To date, Indonesia's success in developing and managing its marine fishery resources has been mixed, mainly because of problems of implementation or enforcement. These implementation and enforcement problems, in turn, no doubt can be partly attributed to the lack of experience of the Director General of Fisheries, who first became involved in the regulation of commercial fishing in the 1960s when Indonesia entered into an interim arrangement with Japan on fishing activities in the Banda Sea. It is possible to identifY, moreover, at least four other major implementation and enforcement problems or constraints that have limited Indonesia's efforts to ensure rational management in its territorial seas. First, Indonesia needs to reform the administrative and institutional machinery dealing with fisheries. Indonesia's institutional approach to fishery management represents a continuation of past colonial administrative policy. Fishery management is dealt with by the Directorate General of Fisheries, which is part of the Department of Agriculture and Fisheries. Such an administrative system may have been adequate in the past, when fishing activities in Indonesia were predominantly of the traditional or artisanal variety. Today, fishery management calls for a separate department or ministry given Indonesia's greatly expanded marine space under the new Law of the Sea regime, and the growing importance of commercial fishing activities. Indonesia could follow Thailand's lead in this field. Thailand, which has a much smaller national marine space, has a Department of Fisheries headed by a Minister. In addition, a clear division of power and functions between the central agency and the provincial offices dealing with fishery management and enforcement is needed. Second, Indonesia needs to adopt an integrated approach to marine resource use and development. The system for managing the marine environment and resources is characterized by ad hoc measures taken by the central government for different uses. That is, the past and current approaches are not comprehensive, but rather sectoral in nature - most measures are typically taken to deal only with particular uses, such as land reclamation, fisheries and navigation. There is, therefore, a need to

RIGHTS OVER NATURAL RESOURCES IN SOUTHEAST ASIA 67

establish a uniform system of data collection, analysis, and co-ordination of multiple demands. Third, Indonesia needs to improve its enforcement capabilities. Improved technical knowledge and data on fisheries in the South China Sea, new institutional arrangements, and increased manpower and financial resources are needed to reverse the lack of sustained and systematic implementation and enforcement of fishery management regulations. Moreover, in view of the limitations of the public sector, Indonesia should explore the possible use of market-based instruments in fishery management, as well as the introduction of self-regulatory schemes that complement current administrative efforts. The participation of artisanal fishermen in surveillance, monitoring or enforcement, for example, might relieve understaffed and underfunded enforcement departments. 13 Finally, in developing its fishery resources, one important problem that Indonesia must consider is how a development and management regime can be structured to accommodate both national growth demands and the interests of fishermen in Indonesia. Although insignificant in monetary terms, subsistence fishing is very important from a social and political point of view. Traditional fishing has been carried out along the whole east coast of Sumatra, including the Riau archipelago, the whole north coast of Java and the island of Madura, the whole west coast of Kalimantan, its southern and eastern coast, the whole coastal area of western and southeastern Sulawesi, parts of northern Sulawesi, the Moluccas and Irian Jaya. Clearly, a viable national marine fishery development model cannot afford to overlook the serious human and social costs associated with the breakdown of artisanal fishing communities. The artisanal fishing carried out in Indonesia is of a subsistence nature; its low productivity potential is only partially oriented to the market economy, and a substantial part of daily catches are for home consumption. Fishing activities, moreover, are very often of a coastal nature. Its technology, techniques and production organization sharply contrast with capital-intensive large-scale commercial fishing. Artisanal fishermen employ fish traps as well as coastal sailing craft and small motorized vessels of limited capacity. By and large, their fishing techniques and equipment were developed and passed on from generation

68 MOCHTAR KUSUMA ATMAOJA

to generation, changing little except that manufactured synthetic gear is replacing home produced gear. In many of these traditional fishing communities, fishing is characterized by a high degree of order, with social regulation of entry, catch and gear that are well-adapted to the needs of the community and preservation of the fish stock. In coastal communities in Sumatra, for example, fishing rights were traditionally obtained by annual auctions for specific areas. 14 In addition, the auction allocated usage rights for fishing from platforms, dropping nets from a frame, using a motor-powered boat, and using sail-powered boats. The individual auction winner also wins the right to manage the resources in the area, including collection of user fees, and buying fish from others who harvest within the auctioned area. Efforts to rationalize all aspects of the fishing industry including the artisanal fishing sector may have undesired consequences. The introduction of new gear, for example, may upset the catch and conservation balance that has evolved over time. In Indonesia, trawlers had to be banned since they indiscriminately took a variety of non-targeted fish species and age groups, thereby affecting the regenerative capacity of fishing, as well as the ability of the artisanal sector to survive. 15 In terms of employment, the introduction of more efficient boats with smaller crews can also have serious consequences for communities with no alternative employment opportunities. 16 Efforts to get artisanal fishery communities to produce for export markets can also lead in certain circumstances to unbreakable debt-cyclesY At the same time, it should also be noted that in certain situations, it might not make economic or ecological sense to eliminate artisanal fishing techniques. Some species, for example, have a relatively high potential yield but are spread thin, such that commercial harvesting of these species either destroys large numbers of non-target stocks or requires inordinate time, effort and fuel outlay. 18 Since fish populations vary by area, season, time, and other factors, it makes good sense to incorporate local ecosystemic knowledge into fishery management schemes. Fishery authorities not only could take advantage of local knowledge regarding fishery conditions, but allow artisanal fishermen to assist in information gathering and enforcement functions. Finally, the danger of over-exploitation of highly priced or scarce species might be lessened in certain circumstances by limiting access to them to artisanal

RIGHTS OVER NATURAL RESOURCES IN SOUTHEAST ASIA 69

fishermen with appropriate gear. In short, these kinds of measures would constitute an important step in the direction of taking more fully into account the social costs of fishery activities. Recognizing that the development of locally-centred artisanal fishing needs to be fostered along with commercial and export-oriented fishing activities, Indonesia has already taken some measures to mitigate the socio-economic and ecological consequences of the rush to embrace large-scale commercial fishing. In order to ensure the participation of traditional fishermen in the development of Indonesia's fishing resources in certain areas such as North Sulawesi, the Moluccas and West Irian, the Indonesian Government has set up a co-operative arrangement programme or scheme called Pola Perusahanan Inti Rakyat (PIR). Under the scheme, the state fishing company not only provides local fishermen with production facilities and fishing gear, but buys up all the tuna catches of the local fishermen participating in the programme. The PIR scheme is also being implemented for the benefit of local fishermen in such areas as Southeast Sulawesi, the Flores Sea, the Eastern Lesser Sunda Islands, and East Timor. In these areas, access to the programme is by and large limited to local fishermen using vessels of up to 30 gross tons. At the same time, it should also be noted that the Indonesian Government has sought to reserve certain areas for artisanal fishermen. The Coastal Fisheries Act of 1927 established four coastal fishing belts. The three inner belts, which are three, four and five miles in width, respectively, are reserved for coastal or artisanal fishing. Moreover, as previously mentioned, trawling has also been largely prohibited since the 1980s in Indonesian waters. It is now only permitted in the Indian Ocean and some parts of eastern Indonesia.

BILATERAL AND MULTILATERAL AGREEMENTS As has been frequently noted, bilateral and multilateral agreements can maximize the benefits of resource management via mutual co-operation mechanisms and enhance environmental conservation by encouraging a higher level of abatement. 19 One serious obstacle which Indonesia faces in attempting to manage and conserve its fishery resources is the lack of precise boundary

70 MOCHTAR KUSUMA ATMADJA

delimitations in the South China Sea. The new Law of the Sea regime has not solved entirely or conclusively conflicting claims over maritime boundaries in the South China Sea. Boundary delimitation in the region remains a complex task, made difficult by conflicting economic and geopolitical interests, differences in size, political power, and wealth. The new Law of the Sea regime has, moreover, lent support to overlapping jurisdictional claims. There is no coastal state in the region whose claim of exclusive economic zone is not in conflict with another state's claim. To make matters worse, boundary delimitation problems are further complicated by archipelagic state claims. Clearly, in the absence of any agreement on maritime boundaries, whether temporary or permanent, attempts to deal with the issues of rights and entitlements in the South China Sea (and ensuing obligations in fishery resource management) are virtually out of the question. Indonesia, not surprisingly, has been able to conclude only a few agreements with some of its neighbours on matters related to fishing. Before it claimed a 200 nautical mile exclusive economic zone in 1980, Indonesia had only concluded fishery agreements with Japan for the exploitation of tuna in the Banda Sea; an agreement with South Korea to encourage co-operative efforts in matters concerning fisheries; with Australia on the operations of Indonesian traditional fishermen in the waters off the coast of Australia; and agreements with Singapore and Thailand to allow them to continue their traditional fishing activities 20 within specified areas of Indonesian archipelagic waters. These agreements largely reflected the principles and practices embodied in the 1958 High Seas Convention. More recently, Indonesia concluded with Australia the Memorandum of Understanding of 1981 on the Fisheries Surveillance and Enforcement Line in Waters South of Irian Jaya to the Ashmore and Cartier islands, as well as the Memorandum of Understanding of 1989 which broadened the recognized scope of Indonesia's traditional fishing rights in various parts of the Australian continental shelf.2 1 It is important to have a precise boundary line established between the exclusive economic zones between Indonesia and Malaysia, Indonesia and Thailand, and Indonesia and Australia to avoid disputes. Disputes can and have arisen. Measures are often taken by Malaysia, for example, against Indonesian fishing boats in the Straits of Malacca and

RIGHTS OVER NATURAL RESOURCES IN SOUTHEAST ASIA

71

off the coast of Sarawak due to the lack of agreement over fishing rights. An agreement has so far proved elusive since Indonesia and Malaysia have approached boundary delimitation on fishing rights from different theoretical bases. Indonesia finds untenable the Malaysian position which holds that the existing boundary line dividing the continental shelf and seabed area between the two countries is at the same time a boundary for fishing purposes. Indonesia has argued that the subject bound by the existing continental shelf delimitation agreement does not include fishery rights; that is Malaysia's jurisdiction over the continental shelf only establishes sovereign rights for the purpose of exploiting and exploring the natural resources of the seabed, and not the water column. Thus, from Indonesia's viewpoint, there should be a separate and special agreement on fishery jurisdiction based on the relevant rules of international law. Similar disagreements have also hampered Indonesia's efforts to settle with its other neighbours the problem of overlapping EEZ jurisdictions. Efforts to reach an agreement on EEZ and archipelagic boundaries, for example, are complicated by traditional fishing rights claims. Under the new Law of the Sea regime, an archipelagic state must recognize the traditional fishing rights of an immediately adjacent neighbouring state in areas falling within the archipelagic waters (Article 51). The terms and conditions for the exercise of traditional fishing rights, including the nature, extent, and the area to which they apply, can be regulated by bilateral agreements at the request of any of the states concerned. Thus, for immediate neighbours like Malaysia and Singapore, Indonesia may have to recognize their claims to traditional fishing rights in waters now within the Indonesian archipelagic waters. 22 On the other hand, there is great potential for negotiating a fishery agreement with Thailand, a country known to have a large distant water fishing fleet. Although Indonesia's policy of marine living resources exploitation in the EEZ is now under review, the Indonesian Government has reached an understanding with Thailand to enhance cooperation between the two countries in the development of marine living resources in the Indonesian EEZ. If carried out properly, such Indonesian-Thai co-operation should be beneficial to both parties as Indonesia and Thailand complement each other's strengths and weaknesses in the development of a fishery industry. Indonesia, because of its

72 MOCHTAR KUSUMA ATMADJA

legal right to the marine living resources and adjacent national waters, has a huge marine living resource base in its EEZ. It does not, however, have the capacity to exploit these resources fully and effectively. Thailand, on the other hand, has a well-developed, long-distance fishing fleet, and a very small marine living resource base in the Gulf of Thailand, which is at present overutilized. In short, Indonesian-Thai co-operation is an obvious and natural solution to differing needs and resources that would remove one serious potential source of friction between two countries. Along these lines, it should be noted that the Southeast Asian coastal states have already shown some flexibility in dealing with their differences, as evidenced by the recent settlement of some vexing maritime boundary disputes. As of 1990, for example, Indonesia had settled a good number of its most troublesome boundary problems. It had concluded a total of 15 boundary agreements with neighbouring countries, including Malaysia, Singapore, Thailand, Papua New Guinea, and Australia. Joint development arrangements roughly covering disputed areas are also not new to the region. Broadly speaking, in a joint development zone regime, competing claimants put aside their claims to exclusive jurisdiction to enable development of a resource on a shared basis. In the face of a delimitation impasse, Malaysia and Thailand established a joint development zone regime in the Gulf of Thailand in 1979, obviating the need for a precise boundary delimitation. 23 More recently, on 11 December 1989, Indonesia and Australia signed a Treaty on a Zone of Cooperation in the Seabed area of South Timor, the so-called Timor Gap Agreement. Apart from the difficulties of achieving consensus on boundaries or fishing rights, fishery agreements are not in and of themselves easy to devise and implement. In fashioning a use or joint development arrangement, a wide range of matters need to be considered, including the area subject to use or joint development, the allocation, sharing and collection of revenues, and the mix of management techniques to overcome waste (for example limits on the quantity of fish taken, limits on the gear type or style). At the outset, decisions also have to be made about the mechanics of surveillance and arrest, trial and punishmentY These decisions are particularly important in light of the tendency of parties in an agreement to defect in order to pursue their own self-

RIGHTS OVER NATURAL RESOURCES IN SOUTHEAST ASIA

73

interests and reap the higher economic benefits that defection entails for the defecting party. Indonesia's experience with profit sharing contracts illustrates some of the problems that make it difficult to develop effective bilateral arrangements for developing fishery resources and limiting entry and use patterns. The Indonesian State Fishing Enterprise (Perikanaan Samodra Besar or PSB) signed in 1975 a three-year profit sharing contract with two Japanese fishery associations - the National Federation of Fisheries Cooperatives of Japan and the Federation of Japanese Tuna Fishermen Cooperative Association for the latter to fish tuna in Indonesian archipelagic waters. The contract not only imposed a profit sharing formula, but restricted the activities of Japanese fishing vessels in Indonesian archipelagic waters. Under the contract, Japanese fishing vessels were only allowed to use a long line fishing method; the use of mother ships or transporting vessels was prohibited; the maximum catch was fixed at 8,000 tons per year; and the maximum number of long-line vessels to be used was fixed at 100. The contract, moreover, limited the area of operation and required the Japanese Associations to prepare and submit to the PSB a sailing plan of their tuna fishing activities in Indonesian waters for each year of the contract. To facilitate enforcement, the contract also required Japanese vessels to bear the identifYing marks spelled out in the contract. In practice, enforcement of these restrictions met with various difficulties. First, the area covered by the contract was relatively large, making it difficult and expensive for Indonesia's law enforcement agencies to regulate the activities of Japanese fishing fleets. Second, the task of distinguishing Japanese fishing vessels covered by the arrangement from other vessels was not easy as a good number of vessels also used the contract area as a transit route between the Indian and Pacific Oceans. Third, enforcement was hampered by the relative inefficiency of various Indonesian enforcement agencies, stemming from a lack of adequate personnel and equipment, as well as methodological and co-ordination problems. Fourth, the slowness with which the judiciary adjudicated contract violations rendered enforcement activities time consuming and expensive. In order to make use of judicial sanctions, the crew of a vessel apprehended at sea for violating the contract had to be brought to court,

74

MOCHTAR KUSUMA ATMADJA

which could be several hundred kilometres away from the site of apprehension. Court cases could take between a few weeks to months to be resolved. The costs and inconvenience of judicial intervention to the vessel and the Indonesian Government, who had to bear, among other things, the cost of feeding the crew during the entire trial period, thus could be substantial. By the early 1970s, Indonesia had already recognized that it needed to address the problem of high judicial adjudication costs in fishing violation cases. In response to this problem, the Indonesian Government introduced an administrative sanction procedure: the "peaceful fine system" whereby a vessel alleged to have violated Indonesian fishing laws and regulations could leave Indonesian waters immediately upon paying specified fines to Indonesian enforcement agency officials. This sanction procedure, however, eventually had to be abandoned since it was accompanied by bribery abuses. At the same time, the profit sharing contract was a failure as a revenue generating mechanism. Under the terms of the contract, PSB gained 40 per cent of the Japanese Associations' profit. Mter three years of operation, the Japanese Associations' profit was only 2.5 per cent. PSB gained 40 per cent of the 2.5 per cent, namely, one per cent of the gross profit. According to Hasjim Djalal, this amount was not enough for PSB to cover the costs of administering the contract. 25 As a result of this experience, Indonesia has not entered into any other profit sharing contracts. Instead, it has encouraged foreign investment and joint ventures between foreign and local Indonesian firms on the basis of the Foreign Investment Law of 1967. To date, only some Japanese companies have made investments in the eastern part of the archipelago off the coast of Irian Jaya and the Arafura Sea, primarily in shrimp culture ventures. These ventures, however, have been very successful and are an important source of foreign exchange for Indonesia. A further problem arises from the "non-stationary" character of fishery resources. Marine boundaries notwithstanding, fishery resources are still, in practice, largely owned in common by various coastal states rather than individually. As has been frequently noted, most species in the region are wide-ranging - they do not respect political boundaries. Thus, overfishing and other unrestricted uses of the marine environment outside a state's maritime borders can have an adverse effect on the fish population within its boundaries. Under these circumstances, unless

RIGHTS OVER NATURAL RESOURCES IN SOUTHEAST ASIA 75

JOlnt and regional co-operation efforts are undertaken to overcome transboundary fishery management problems, rational management becomes illusory. While fishery management is still wanting at the regional level, there are some regional organizations already in existence that could contribute to a regional approach. The Association of Southeast Asian Nations (ASEAN) is one existing body that could promote regional co-operation and action, even though its membership is limited to only six countries in the region. In this regard, the Indo-Pacific Fishery Commission (IPFC) of the FAO may also be able to provide some help. Its very wide scope of responsibilities and budgetary constraints, however, will likely continue to render this institution's role a limited one. On the other hand, the International Center for Living Aquatic Resources Management (ICLARM) and the Southeast Asian Fisheries Development Center (SEAFDEC) can contribute to the technical aspects of fishery management and development. Technical fishery management concerns of immediate interest to Indonesia in which a regional approach may play a useful role include efforts to improve knowledge of the marine environment, efforts to monitor migratory species, and efforts to improve personnel capabilities. To establish the level at which maximum sustainable yield can be obtained, in particular, the Indonesian Government could benefit from region-wide research on population dynamics, including reasonably accurate estimates of the total biomass of a stock, of its recruitment as well as of natural and fishery mortality for the whole region.

CONCLUSION At the heart of international fishery management issues is the fact that the sea is an open access resource and that fisheries are a renewable, nonstationary resource. It is these three facts which place jurisdiction and sovereignty co-operation and enforcement concerns at the centre of rational management efforts. There can be little question that free access to fisheries does little to prevent overfishing and inhibit externalities. The new Law of the Sea, with its recognition of the extended 200 nautical mile exclusive economic zone and archipelagic state concept, may constitute an important step in internalizing the costs of overfishing. 26

76 MOCHTAR KUSUMA ATMAOJA

Yet, jurisdictional issues notwithstanding, resource "management" as opposed to resource "exploitation" is a concept which is easier to define than to implement. Indonesia's experience demonstrates, in a practical sense, how officials who formulate and implement fishery management measures need to examine carefully both their conceptual approach to fishery management and the practical application of these measures. Ensuring that policies are effectively put into practice can prove to be a hydraheaded problem. The physical size of the national waters alone renders difficult surveillance and monitoring activities. Barring this problem, there is also a need for well-trained and impartial enforcement personnel who can ensure full compliance. In this connection, there is also a need for a clear legislative mandate, a clear division of functions and responsibilities between central and provincial departments, and an efficient adjudicatory process. Indeed, it is of prime importance that cases of noncompliance can be dealt with effectively and swiftly. Needless to say, rational management cannot possibly be achieved where a coastal state does not have the interest and/or capacity to control marine pollution and habitat degradation, and to limit access by its nationals and foreign vessels according to the principle of maximum sustainable yield. It should be noted, moreover, that without an international enforcer or "Leviathan", adherence to multilateral and bilateral agreements and international conventions is selective and voluntary. 27 Under these circumstances, the parties effectively have to rely more upon political persuasion than legal coercion; and the effectiveness of the instrument as a conservation mechanism largely depends on the goodwill of the parties and the perception that the agreement maximizes the benefit of all the parties concerned. As a final concluding remark, it must be stressed that the problem of marine fishery management in Indonesia is still "manageable". However, much work remains to be done and careful planning and co-operation between Indonesia and its neighbours will be needed to reach the best results. Indonesia must above all remember that fishery management cannot be understood as just another system of rules and regulations, but rather must be viewed as part of a comprehensive process of resource management, informed by technical knowledge, and progressively integrated with socio-economic and political realities.

RIGHTS OVER NATURAL RESOURCES IN SOUTHEAST ASIA 77

Notes 1. See generally, GESAMP (IMO/FAO/Unesco/WHO/WMO/IAENUNEP Joint Group of Experts on the Scientific Aspects of Marine Pollution) The State ofthe Marine Environment. UNEP Regional Sea Reports and Studies, no. 115 (1990). 2. Some of these issues have been highlighted by D. Hinrichson, Our Common Seas: Costs in Crisis (London: Earthscan Publications, 1990). 3. Fish provide over half of all animal protein consumed by ASEAN countries. See generally, D. Pauly and T.E. Chua, "The Overfishing of Marine Resources: Socioeconomic Background in Southeast Asia" Ambio 17, no. 3 (1988): 200-06; G. Kent and M.J. Valencia, eds., Marine Policy in Southeast Asia (Berkeley: University of California Press, 1985). 4. Annual marine catches in the ASEAN states reportedly increased almost fourfold from 1.5 million tons in the early 1960s to 5.5 million tons in the early 1980s. D. Pauly and T.E. Chua, "The Overfishing of Marine Resources: Socio-Economic Background in Southeast Asia", op. cit. It has been estimated that the region's catch roughly represents three per cent of gross national product of the respective countries. G. Kent and M.J. Valencia, eds., Marine Policy in Southeast Asia, op. cit. By way of comparison, the value of fish catch in most OECD countries roughly represents one per cent of the gross national product of these countries. 5. Generally speaking, there are three interrelated environmental problems of concern for fishery management: conservation of habitats for spawning and mature fish; conservation of fishery resources; and prevention of marine pollution which may affect the fish stocks due to habitat changes. 6. See for example, E.D. Gomez, "Overview of Environmental Problems in the East Asian Seas Region", Ambio 17, no. 3 (1988): 166-69. 7. While not all of the Southeast Asian states are parties to the 1982 Law of the Sea Convention, nine states - Brunei, Burma, Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam- have already signed the convention. 8. R.P. Anand, "Mid-Ocean Archipelagos in International Law: Theory and Practice", Indian journal ofInternational Law 2 ( 1977): 235-36. 9. Traditionally, coastal states have only been able to claim jurisdiction over the territorial sea, marine zone limited to a maximum breadth of 12 nautical miles from the coastal state. Thus much of the ocean was part of the High Seas, an area under the regime of freedom of fishing for all members of the international community. In recent years, however, coastal states have sought

78

MOCHTAR KUSUMA ATMADJA

to expand their jurisdiction over adjacent sea areas, making claims to an extended national maritime zone of200 nautical miles. Moreover, archipelagic states such as Indonesia and the Philippines have postulated that an archipelago should be regarded as a unit, the territorial sea of which should be measured from baselines drawn between the outermost islands. At the 1960 Second Conference in Geneva, the Indonesian delegation introduced into the record of the proceedings the Indonesian Presidential Act No.4, which reiterated the argument that all islands and waters lying between the Indonesian archipelago should be regarded as a single unit. The Act also indicated that straight baselines encircling all islands comprising the archipelago should be drawn, such that all waters within its baselines are internal. The 1982 United Nations Convention on the law of the sea also enables a coastal state to establish an exclusive economic zone (EEZ) beyond its territorial sea, extending 200 nautical miles from its territorial baselines (Article 57), in which it enjoys "sovereign rights for the purpose of exploring and exploiting, conserving and managing" the natural resources, whether living (Article 56), or non-living (Article 55). Coastal states can determine by themselves what the maximum allowable catch of fish should be in the EEZ. However, when the coastal state does not have the full capacity to harvest the entire allowable catch, it mu.st give other states access to the surplus of the catch {Article 62.2). The 1982 Convention also enables an archipelagic state to draw straight baselines connecting the outer boundaries of the outermost islands so that the waters enclosed within will become archipelagic waters. In drawing these archipelagic baselines, however, an archipelagic state must comply with several requirements: within such baselines, the ratio of the water area to land area must be between 1: 1 and 9:1; such baselines cannot exceed 100 nautical miles in length, except that up to three per cent of the total number of such baselines may exceed that limit up to a maximum length of 125 nautical miles; and, the drawing of such baselines cannot depart to any appreciable extent from the general configuration of the archipelago (Article 17). An archipelagic state enjoys sovereign rights over the natural resources contained within these waters, regardless of their depth or distance from the coast {Article 49). 10. Drs. Soejoto Darmoredjo, "The Implementation of the Law of the Sea Convention with Regard to Living Resource Management", in The Inter-

national Law ofthe Sea: Issues ofImplementation in Indonesia. Proceedings ofa Seminar at jakarta, 22-27 August 1983, edited by E. Hey and A.W Koers, pp. 96-108 {Rijswijk: The Netherlands Institute ofTransport, 1984). 11. John C. Marr, "Fisheries and Resource Management in Southeast Asia", paper No. 7 in a series prepared for the Program oflnternational Studies of Fisheries Arrangements (Washington, DC: Resources for the Future, Inc., 1976).

RIGHTS OVER NATURAL RESOURCES IN SOUTHEAST ASIA

79

12. Reportedly, in the Gulf ofThailand and west coast of southern Thailand, fish stocks have been exploited at a level of 40 per cent above the maximum sustainable yield. See for example, A. Arbhabhirama, et al., eds., Thailand 1987: Thailand Natural Resources Profile (Bangkok: Thailand Development Research Institute, 1987). 13. M. Bailey, "Managing an Open-Access Resource: The Case of Coastal Fisheries", in People Centered Development: Contributions Toward Theory and Planning, edited by D. Korten and R. Klaus, p. 98 {West Hartford, CT: Kumarian Press, 1984). 14. WL. Collier, "Development Problems and Conflicts in the Coastal Zone of Sumatra: Swamps are for People", paper presented at programmatic Workshop of Land-Water Interactive Systems given at U.N. University and Bogor Agriculture University, Bogor, Indonesia, 18-22 September 1978. 15. I. Sarjono, Trawlers Banned in Indonesia (Manila: ICLARM, 1980). 16. See for example R. Crutchfield, "Economic and Social Implications of the Main Policy Alternatives for Controlling Fishing Efforts", journal of Fishery Resources Board of Canada 36 {1972): 742. 17. See for example, P. Cordell, "Modernization and Marginality", Oceanus 27 (1973): 28. Cordell argues that for Pacific islanders, a shift to a money-based economy encouraged competition for money and a larger share of the fish captured, destroying the conservation ethic inherent in the traditional fishing system. As fishermen bought better equipment and fished more diligently, fishery stocks were drawn down. In order to cope with diminished stocks, fishermen continued to upgrade their equipment. As the price of the equipment rose beyond their means, fishermen began to borrow heavily to fund such purchases. 18. See for example, JoseAlaya Sabella, "Analysis of a Peruvian Fishing Cooperative that Failed", Anthropological Quarterly 53 (1980): 62. 19. For a discussion of some of the problems encountered in international co-operation efforts to manage common-pool resources such as the seas, see S. Barret, "The Problem of Global Environmental Protection", Oxford Review ofEconomic Policy6, no. 1 (Spring 1990): 68-79. 20. See generally, Dr Hasyim Ojala!, "Fishing Agreements with Foreigners", in ICLARM Conference Proceedings no. 2 (Manila: International Center for living Aquatic Resources Management, 1980). 21. In 1981 Indonesia entered into a provisional fishery management arrangement with Australia to settle the former's claim to traditional fishing rights in the Arafura and Timor seas. The arrangement generally adopted the median line, with the exception that the outlying Australian islands of Ashmere,

80 MOCHTAR KUSUMA ATMADJA

22.

23.

24.

25. 26.

Cartier, Browse and Scott Reef, which are closer to the Indonesian coast, are not generally used by basepoints. Singapore not only claims that for years its ftshermen have ftshed in certain parts of the Indonesian archipelago, but also that Singaporean vessels have been visiting and plying the waters between the Indonesian islands to buy fish from Indonesian fishermen. Indonesia has argued that this latter point bears litde relevance to the question of traditional fishing rights since it merely attests to ongoing commercial or trading activity rather than fishing activity. Memorandum of Understanding Between the Kingdom of Thailand and Malaysia on the Establishment of the Resources of the Sea-Bed in a Defined Area of the Continental Shelf for the Two Countries in the Gulf of Thailand, February 21, 1979. For a discussion of fishery management problems, see generally, Francis T. Christy, Jr., Summary Report, JCLARM/ISEAS, Law of the Sea Workshop, ICLARM Conference Proceedings no. 2(Manila: International Center for Living Aquatic Resources Management, 1980). Francis T. Christy, ed., Law ofthe Sea: Problems of Conflict and Management ofFisheries in Southeast Asia (Singapore: ICLARM and Institute of Southeast Asian Studies, 1978), p. 44. As has been frequendy pointed out, the entire South China Sea could come under the 200 nautical mile claims of the Southeast Asian coastal states, leaving no area in the South China Sea under the High Seas regime of freedom of fishing for all members of the international community. As a result, unilateral action by any of the Southeast Asian coastal states would, in principle, have a greater effect on the conservation or destruction of fisheries in the South China Sea. This new legal geography of the South China Sea, it has been argued, would help limit the diseconomies flowing from the open-access or "public" nature of far offshore fisheries, internalizing the cost of overfishing and stock depletion at the Southeast Asian coastal states. Beyond laying down a general framework for competing claimants to work out boundary disputes, the 1982 Convention also encourages states to co-operate in the conservation and management of living resources, and the protection and preservation of the marine environment. Article 123, for example, urges the states in a semi-enclosed sea to co-operate with each other in the exercise of their rights and in the performance ofduties, particularly in the areas of management, conservation and use of living resources, preservation of the marine environment and marine scientific research. The new Convention also contains provisions establishing a non-binding obligation for coastal states exploiting the same stocks in adjacent EEZs to cooperate. More specifically, the states concerned must "seek to agree upon the

RIGHTS OVER NATURAl RESOURCES IN SOUTHEAST ASIA 81

measures necessary to coordinate and ensure the conservation and development of such stocks ... " (Article 63.1 [20]). In addition, while within their respective EEZs, the coastal states continue to have the right to take unilateral measures (Article 63.2); this right is tempered by the obligation to maintain or restore populations of harvested species at levels which can produce the maximum sustainable yield in the EEZ (Article 6.13). Finally, the new Convention also appears to recognize that marine species other than those of direct benefit to man should be preserved. Under Article 61.4, parties when taking conserva-tion and management measures in the EEZ must also take into consideration the effects of these measures on species associated with or dependent upon harvested species with a view to maintaining or restoring populations of such species above levels at which their reproduction may become seriously threatened. 27. A further problem arises from the lack of clear legal obligations frequently set out in such conventions and agreements. While private contracts normally stipulate that a party "shall" do or refrain from doing a particular action, international agreements and conventions such as the 1982 Convention on the Law of the Sea commonly employ non-binding wording requesting rather than demanding government action or inaction. Where provisions are discretionary rather than mandatory, the question arises whether legal obligation, in the strict sense, actually obtains. Similar difficulties also beset bilateral and regional arrangements. Formal regional or bilateral agreements, however, can stipulate more precise and more onerous problems under definable, localized circumstances. To be effective, regional or bilateral agreements require, at the very least, that each party designates a national authority and set up the administrative machinery necessary to implement the agreement.

THREE

Urban Environment in ASEAN CHANGING REGIONAL CONCERNS AND APPROACHES Sham Sani

While urbanization and all that it stands for contributes greatly to development and increased standards of living, the same processes that have made this possible have also given rise to environmental degradation in urban areas. This has become an issue of much concern, particularly in the face of rapid population increase. See Table 3.1 for population trends in selected Southeast Asian countries. United Nations estimates show that along with world population increase from about 4.4 billion in 1980 to about 10 billion projected for the year 2050, there is a tendency for the population to concentrate in urban areas so that by the year 2000 almost 50 per cent, and by 2025 more than 60 per cent, of the world's population will live in cities. 1 Of greater concern is the fact that while both the rates of total population growth and of urbanization in the developed world are slowing down, those of the developing nations are showing an increase. In the ASEAN region, the increasing dominance of large cities can be seen in the rising proportion of the urban population living in millionplus cities: 13 per cent in 1950, over 30 per cent in 1975 and dose to 50 per cent projected for the year 2000. For the years 1960 to 1990, the population increased on average by 4.3 per cent per year for the urban sector and by 1.9 per cent per year in the rural sector. By way of comparison, the corresponding figures for Europe were 1.1 per cent and 0.7 per cent, respectively. 2

TABLE 3.1 Population Trends in Selected Southeast Asian States

Average annual growth(%)

1990 1960 (millions)

Population (millions)

Population density (per 1,000 ho)

1965-80

1980-88

2025* (millions)

(ambadia Laos Myanmar Vietnam

5.4 2.4 21.7 34.7

4.2 40.8 65.1

177 603 1,963

1.9 2.3 2.2

2.6 2.1 2.4

12.3 8.6 66.0 108.5

Indonesia Malaysia Philippines Singapore Thailimd

96.2 8.2 27.9 1.6 26.9

182.6 18.0 61.5 2.7 56.4

959 546 2,050 45,000 1,099

2.4 2.5 2.9 1.6 2.9

2.1 2.6 2.5 1.1 1.9

272.7 26.8 102.8 3.3 85.9

Projected figures. Sources: Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries (Manila, July 1990); UNESCAP, Statisticol Yearbook for Asia and the Pacific (Bangkok, 1989); World Bonk, World Development Report 1990 (Washington, DC: 1990); World Resources Institute, World Resources 1990-91 (New York, 1990).

*

URBAN ENVIRONMENT IN ASEAN

85

TABLE 3.2 Urban Population as a Percentage of Total Population in Selected Southeast Asian Countries 1960

1970

1980

1985

1990 (Projected)

Vietnam Myanmar Laos Cambodia

14.7 19.3 7.9 10.3

18.3 22.8 9.6 11.7

19.3 23.9 13.4 10.3

20.3 23.9 15.9 10.8

21.9 24.6 18.6 11.6

Indonesia Malaysia Philippines Thailand Singapore

14.6 25.2 30.3 12.5 100.0

17.1 27.0 33.0 13.3 100.0

22.2 34.2 37.4 17.3 100.0

25.3 38.2 39.6 19.8 100.0

28.8 42.3 42.4 22.6 100.0

Source: World Resources Institute, World Resources 1988-1989 (New York: Basic Books, 1988) A breakdown of the urbanization patterns in various Southeast Asian nations is given in Table 3.2. The manner and rapidity of urban growth in ASEAN has caused a great deal of concern among planners, architects, environmental scientists, and policy makers. The central issue of concern is how to achieve sustainability in the urban environmental context, both in terms of ensuring suitable human habitats and ecological support systems. Evidence indicates that while some aspects of the urban environment have greatly improved, the general state of the environment and quality of life in many cities are deteriorating. Although such urban environmental problems have largely been linked to population pressures, a number of problems can only be understood against the backdrop of environmental mismanagement and the absence (or lack) of environmental considerations in planning and decision-making. The respective governments are taking various measures within their means to minimize the negative side effects of urbanization. A great deal more needs to be done, however. The aim of this paper is three-fold:

86 SHAM SANI

firstly, to provide a general overview of the more important environmental issues in some of ASEAN's major cities; secondly, to emphasize the need for more systematic study of the environmental problems of such major cities; and finally to share some thoughts on the shape that such a systematic study of urban centres in ASEAN (or Southeast Asia more generally) can take in order to assist in the planning and management of the urban environment in the region.

ENVIRONMENTAL ISSUES IN MAJOR ASEAN CITIES While substantial efforts have been made to cope with the challenge of metropolitan growth in Southeast Asia, and ASEAN in particular, considerable social, economic and environmental problems still persist in all the cities of the region. As previously mentioned, many of these problems are linked to continuing population increases in the urban regions. The process of rapid industrialization is also closely linked to most forms of urban environmental degradation in the region, as industries are primarily located in or near urban centres. Urban centres such as Bangkok and Jakarta increasingly must cope with industryrelated air and water pollution problems, as well as hazardous waste problems. In his discussion on urban-environmental issues in Southeast Asia, Abdul Samad Hadi (1988) classifies urban environmental problems into two major categories, namely the "population-basic needs" category and the "natural cycles and processes" category. 3 The former includes issues relating to the need for shelter, food, social services and amenities, as well as issues relating to work mobility and rural-urban migration. The latter includes the transformation, and in many cases the degradation, of the biophysical environment as a result of human activities. Issues in the first category have been discussed in detail by many authors including Sivaramakrishn an and Green (1986), Bianpoen (1988), Abdul Samad Hadi (1988), Nierras (1988), and Johari Mat 4 (1988), and will not be elaborated on here. Only major issues relating to the transformation and degradation of the biophysical environment will be highlighted.

URBAN ENVIRONMENT IN ASEAN

87

TraHic Congestion Traffic congestion has become an increasingly serious problem as automobile ownership proliferated in major urban areas in the ASEAN countries. In 1984 it was estimated that the Philippines had over one million vehicles. About 471,000 vehicles were reportedly operated in Metro Manila alone. 5 For Bangkok the corresponding figure in 1982 was about 600,000 vehicles. Between 1984 and 1988, the average annual growth rate in the number of motor vehicles reached nine per cent in Thailand, compared with about two per cent in the United States and three per cent in the United Kingdom. 6 Recently, it was reported that the car population in the Klang Valley in Malaysia was growing at the rate of about 5,000 cars a month, and that about 80,000 cars enter the city centre every day. 7 To reduce traffic congestion, the Malaysian Government may adopt a scheme similar to Singapore's area licensing scheme, and impose a fee on all vehicles entering the city centre of Kuala Lumpur. 8

Air Quality Available air quality information for cities in ASEAN suggests that ambient concentration of some selected pollutants is high. This is particularly true in the case of suspended particulate matter (SPM). Tables 3.3 and 3.4 show that while sulfur dioxide concentration is comparatively low, that of SPM already exceeds World Health Organization (WHO) guidelines in all of the selected cities listed. Cities that have exceeded the 98 percentile guideline values for SPM are shown in Table 3.5. This essentially refers to cities which, on the average, exceed 230 micrograms per cubic metre more than seven days per year. As the tables indicate, Thailand has the highest level of suspended particulate matter. 9 Of the ASEAN cities, perhaps Singapore is the only city where the air quality has remained within the long-term air quality guidelines set by WHO and the U.S. Environmental Protection Agency. In Singapore, the level of SPM has shown a steady decrease since about 1983. However, the nitrogen oxide concentration appears to be on the increase in Singapore (Figure 3.1).

88 SHAM SANI

TABLE 3.3

Range of Annual Average Con,entration of Sulfur Dioxide in Seleded Southeast Asian Cities, 1980-84 (miuograms per 'ubi' metre)

Annual overage range of individual site

Manila Kuala lumpur Bangkok

Minimum

Maximum

Combined sites

50

90

65 23

16

19

17

Note: WHO guideline is 40-60 microgram~ per cubic metre Source: UNEP-WHO, Environmental Oota Report, 2nd. Edition (UK: Blackwell, 1989)

Two major sources of air pollution in the urban areas are the transport and industrial sectors. Automobiles, for example, are major generators of air pollutants such as carbon monoxide, nitrogen oxide and lead. 1° Concern about the health and environmental effects of such air pollutants has prompted the introduction of emission standards in many countries. In practice, however, these standards appear to have had little impact in some of ASEAN's major urban centres. To illustrate, despite the existence of emission standards, over 50 per cent of vehicles tested in Bangkok some years ago failed to meet both the carbon monoxide and smoke emission standards.U Yet, even if countries such as Thailand were able to promote the more widespread application of emission control technology (such as the fitting of catalytic converters) and to effectively enforce emission standards, large increases in vehicle numbers are likely to offset any potential national emission reductions. The deterioration in air quality together with increases in potentially polluting activities is indeed a cause for concern in ASEAN's cities. Air pollution problems may grow more intractable as increasing motor vehicle ownership and rapid industrialization place additional pressures on the dispersion medium function of air sheds. Current trends in air pollution and air polluting activities are particularly disturbing in view

URBAN ENVIRONMENT IN ASEAN

TABLE 3.4

Range of Annual Average Concentration of Suspended Particulate Matter in Selected Southeast Asian Cities, 1980-84 (micrograms per cubic metre)

Range of individual site

Jakarta Bangkok Kuala lumpur Manila

Minimum

Maximum

Combined sites

180 120 100 68

295 290 190 260

250 200 150 100

Note: WHO guideline is 60-90 micrograms per cubic metre Source: UNEP-WHO, Environmental Data Report, 2nd Edition (UK: Blackwell, 1989)

TABLE 3.5

Selected Southeast Asian Cities that have Exceeded the 98 Percentile Guideline Values for Suspended Particulate Matter, 1980-84*

Manila Kuala Lumpur Bangkok Jakarta

Best site

Average for all available sites

Worst site

4 12 6 4

16 45 102 185

250 65 210 302

• This refers to SPM levels above 230 micrograms per cubic metre Source: UNEP-WHO, Environmental Data Report, 2nd. Edition. (UK: Blackwell, 1989)

89

Overall Air Pollution Levels in Singapore

80

70 60

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50

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FIGURE 3.36

Air Layer Modified by a City in Calm Conditions

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Source: T.R. Oke, "lndavertent Modification of the City Atmosphere and the Prospect for Urban Climates", in Proceedings, WMO Symposium on Meteorology as Related to Urban and Regional Land Use Planning, WMO Technical Note no. 444 (1976): IS0-75.

URBAN ENVIRONMENT IN ASEAN

97

To date, research on urban heat island effects in cities other than Kuala Lumpur within ASEAN has been limited. Studies, however, suggest that such effects can be far-reaching especially for large capital cities in the region.

Water Quality Domestic sewage is a major cause of water pollution in the region. With the exception of Singapore, where about 96 per cent of the population enjoys modern sanitation, other ASEAN cities have no comprehensive central sewage system. In Metro Manila, only about 12 per cent of its population - about 7.15 million in 1986 - is served by a sewage collection system. 15 For the majority of the residents not served by a pipe sewerage system, sanitary facilities range from septic tanks to no facility at all, especially in the slums and squatter settlements. 16 In Bangkok, Jakarta and Kuala Lumpur the situation is similar. In Kuala Lumpur, for example, only a small percentage of the population is served by a central sewage system. 17 In Bangkok, on the other hand, there is no central sewage system at all. 18 Human waste is disposed of mainly through septic tanks and cesspools, and the effluents are discharged into storm water drains or klong. Inefficient drainage coupled with periodic flooding and a high water table render this water pollution problem a major health hazard. Along these lines, it has been estimated that about 50 per cent of Bangkok's 2,500 tons of garbage finds its way into the klong daily. 19 Much of the waste, needless to say, ends up in the Chao Phraya River as it flows through Bangkok. It should also be noted that the lack of adequate sewage treatment plants is not only contributing to the degradation of fresh water bodies such as rivers, but also to the degradation of coastal waters and shallow marine habitats since many fast growing cities in the region are located in coastal areas. 20 Discharge from industries is another major cause of water pollution in the urban areas. As mentioned previously, industries have tended to establish in and around urban centres due to economies of agglomeration.21 There has also been a tendency for few industries to have adequate waste treatment plants, and for a great many industries to dis-

TABLE 3.8 Some Pollution Indicators for Selected Rivers in ASEAN

Biological oxygen demand (mg per litre}

Indonesia Sunter Surabaya Citarum Banjir Kana Malaysia Klang Kelanlan Mud a Philippines Pampanga (agayam Thailand Chao Phraya

Median BOD

Percentile 10

Mean

Percentile 90

5.26 3.30 3.08 5.06

9.35 14.79 6.88 10.40

13.0 22.10 11.10 16.20

3.55 0.60

6.79 1.55 0.92

9.58 2.76 1.00

0.20

0.73

1.30

Median dissolved oxygen (mg per litre}

Median pH

1979-81

1985-87

1979-81

1985-87

1919-81

1985-87

2.5

6.4

7.7

7.1

7.1

3.2

5.7

7.0

7.0

6.7

2.8

2.7

1.4

3.3'

7.9

8.()


Sg. Padas

200 100

0

2,000

4,000

6,000 2 Catchment area (km l

8,000

10,000

12,000

TABLE 4.6

Mean Values of Conventional Water Quality Parameters for Selected Rivers in Sabah and the Water Classification

River/location

n

DO

BOO

coo

NH4

TSS

pH

Class

Kinabatangan River: Kuamut La mag Padas River: Tambunan Beaufort Ranau labuk River: Telupid Poring Sugut River: Bongkud Segama Segama River: Madziang Moyog River: Kasigui lnanam Inanam River: Am bar Tawau River:

15 15 26

84.1 71.5 85.0 83.9 73.6 76.7 83.8 86.3

1.3 1.4 0.8 1.0 0.8 1.8 0.6 0.4 1.1 0.4 0.9 1.3 1.4

14.9 14.7 8.1 20.1 6.7

0.01 0.02 0.02 0.02 0.01 0.01 0.02 0.02 0.03 0.01 0.01 0.15 0.03

237 129 19 160 38

7.0 6.7 7.2 7.0 7.l

II II

145

7.l

55 147 101 36 23 96 36

7.2 7.6 6.8 6.7 7.1 6.7 7.1

11

32 ll 35 31 21 10 14 28 16

77.9 92.1 80.5 64.5 84.6

3.4

5.7 6.2 8.7 2.6 7.2 13.2 12.2

II

Notes: DO: dissolved oxygen (% soturotion); BOD: bio£hemi£al oxygen demand (mg/1); COD: £hemi£al oxygen demand (mg/1); NH 4: ammonia£al nitrogen (mg/1); TSS: total suspended solids (mg/ll; n: number of data sets. Values given were derived from raw data gathered by the Department of Environment.

MANAGING ASEAN'S FORESTS

125

National Parks generally can be classified within the Class I category. However, as soon as the river traverses through a Commercial Forest Reserve, the water quality is degraded to Class II. A number of experimental catchment studies have also been undertaken in Sabah. Studies carried out at the Danum Valley Field Station by Douglas et al. (1990), for example, have shown that logging activities in the headwater areas can contribute as much as 13,000 milligrams per litre of suspended solids following major storms. The study also found that, in most storms, the suspended solids concentration of more than 1,000 milligrams per litre could persist for over one hour whereas in an undisturbed catchment, peak sediment concentration exceeding 1,000 milligrams per litre occur only for less than 10 minutes. 16 Observations over a longer time frame at the Berembun watershed in Negeri Sembilan 17 showed that the suspended solids yield increased twenty-fold during the first year of "unsupervised" logging and remained high (four- to five-fold) in subsequent years. For "supervised" logging, on the other hand, the increase was only two-fold, reverting to a normal level the second year. In terms of suspended solids concentration, a sixty-fold increase over the baseline level has also been measured downstream of a deforested area in Tabin, Sabah. 18 As mentioned previously, it is apparent that apart from directly causing topsoil erosion, the removal of tree canopy will also result in higher water yields and hence increase in the magnitude of peak flows. The resulting flash floods would then aggravate river channel erosions, especially in sections where the channel material is of an alluvial type that can easily succumb to high flows. Suspended solids levels of up to 1,000 milligrams per litre have been measured downstream of such river channels. The changes in the level of suspended solid load with the flow that normally follows deforestation are exemplified by the case of the Mengalong River (Figure 4.3). For this particular river, the present day mean suspended solids level was found to be nearly five times the level measured before forest operations started in 1983. In addition, flow surges were found to occur more frequently. Flash floods are typically shown by a single one-day peak flow increase of about ten-fold.

126 MURTEDZA MOHAMED AND Tl TEOW CHUAN

FIGURE 4.3 Sediment Rating Curves for Mengalong River for the Periods 1978-83 and 1985-89

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•

c.

v=1.65X + 0.07 (r =0.87)

c

•

•

•• •

2

3 lN (Flow) m3/s

•

c•

1978-83 1985-89

4

5

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By way of summary, the presence of an excessive quantity of suspended solids in water bodies is undesirable since it interferes with the self-purification process of water by diminishing photosynthesis; it can damage fisheries and other aquatic life; it can reduce stream capacity; it can cause mechanical problems to installations such as pumps and turbines; it raises the cost of water treatment; and it renders water bodies unsightly.

Depletion of Biological Resources Borneo's biological diversity is now threatened by poorly regulated development and the non-sustainable harvesting of the island's rich natural resources, especially timber. The habitats most threatened by these developments are the lowland rain forests, where species richness is greatest. 19 Several Bornean plants and animals are already considered endangered. Five, or possibly six, species of Rafflesia that occur in Borneo are threatened by forest clearance. Similarly, mammal species such as the clouded leopard, orang-utan, proboscis monkey, elephant and banteng are already included in the IUCN Red Data Book. Birds such as hornbills and pheasants are rapidly decreasing in number, and the Sumatran rhino is now close to extinction primarily due to illegal hunting, rendered easier by the presence of logging roads. Apart from these large conspicuous species, many smaller species may be slipping into extinction unnoticed and unrecorded. In view of these circumstances, the recent move by the Malaysian authorities to require an Environmental Impact Assessment (EIA) of new logging activities, to be carried out before the approval of such activities, is particularly timely. A properly executed EIA would catalogue potential environmental effects of proposed logging activities, considering the "external" costs and possible alternatives, as well as internal costs. An EIA could be used to identifY and assess the potential polluting effects to the watersheds, and to assess the potential loss of biological resources that would result if the proposed logging activities were to proceed. Appropriate recommendations on conservation options should be considered whenever the proposed logging area is found to be the

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habitat of certain rare and endangered animal or plant species. Simply put, the EIS should be an exercise in policy development to determine what can and should be done so that logging activities will cause the least amount of "external costs", including damage to biodiversity. The only way to conserve a wide range of species is to conserve their ecosystems. Sabah has already taken some positive steps in this direction. However, steps still need to be taken to improve the protection and management of forest reserves. Without such improvements, Sabah's biodiversity will continue to be at risk.

Socio-economic Implications Studies analysing or describing the effects of logging and deforestation activities on specific local communities in Sabah are scarce. Nevertheless, descriptions by Marsh and Gait (1990) on a number of villages in Ulu Kinabatangan are perhaps representative of the impact scenarios typically observed following logging and deforestation activities in the Bornean forests. 20 In the Ulu Kinabatangan case, the principal economic activity undertaken by the local inhabitants had been the shifting cultivation of hill paddy and a variety of vegetables and fruits, as well as hunting, fishing and gathering of forest produce such as rattan, honey, resins and bamboo. As a result of logging, the livelihoods of most villagers were adversely affected as they could no longer meaningfully pursue these traditional economic activities. Elsewhere in the State, especially in Dalit, Keningau, logging has typically ravaged the land that falls under customary tenure, and even damaged farm lands. 21 Bulldozer operations have compacted the soil, leaving it uncultivable. The rivers that the rural inhabitants depend on have been muddied and polluted. To varying degrees water catchment areas and riparian reserves have been bulldozed and logged. The muddied water and toxic sap from fallen trees that could have seeped into the rivers have allegedly caused health problems. Important components of their subsistence economic regime - namely, forest products - have become scarce. In short, logging generally has had a detrimental effect on rural communities. These communities are confronted with reduced

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and altered wildlife availability for hunting, as well as depleted fishing and other forest product stocks (for example rattan stocks). At the same time, other sustainable sources of income have not emerged to replace the traditional sources of income. The arrival of logging activities near a hitherto isolated community has far-reaching consequences, not only because they can cause changes in the physical and biological basis of the inhabitants' livelihood, but also because they introduce value and behavioural changes in largely selfsufficient subsistence communities . Local inhabitants are provided with temporary opportunitie s for wage employment . The opportunitie s to sell forest products to outside traders also improve, and will likely encourage the greater exploitation of forest product stocks. Efforts to take advantage of these greater trade opportunitie s, accordingly, help draw down forest resource stocks, compoundin g the physical damage that logging itself inflicts on stocks. On the other hand, logging activities will likely improve access to consumer goods and lead to greater reliance on a cash economy. Increased direct contacts with loggers, moreover, will also contribute to the social disruption' of traditional communitie s. The booming cash economy is, however, likely to be temporary in nature. A slump, resulting from employmen t lay-offs, washed-out road access and depleted stocks of saleable commodities such as rattan, is inevitable. A third phase then emerges, characterized by high rates of emigration, politicization 22 and increased dependence on the government. As the above discussion suggests, logging activities may not present the most valuable use for forests, and may only be beneficial from the viewpoint of the individual firm. If all the relevant costs of logging are taken into account the net social benefit could well be negative. For example, if the social or environmen tal costs of logging - such as the costs of watershed degradation; the costs of social dislocation and loss of livelihood to local communities ; and the costs associated with loss of option value of the future use of forest resources, and its biodiversity in particular- are included in the assessment, the apparent benefits to be reaped from logging may vanish. The sustainable management of tropical forests in Sabah, accordingly, presupposes accounting correctly for all the benefits and costs associated with the conservation

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and destruction of the forests. It is unfortunate that in assessing the value of renewable natural resources such as forests, governments often ignore the social and environmental costs. This state of affairs is partly due to the fact that these costs are difficult to measure and express in monetary terms. It must be emphasized, however, that while it may not be practicable to place monetary values on these costs on all occasions, to ignore these costs will be to the detriment of the community at large and future generations.

ENVIRONMENTAL PROTECTION MEASURES Perhaps the most effectively enforced, and well publicized federal piece of legislation on environment in Malaysia today is the Environmental Quality Act 1974 (hereinafter referred to as the EQA). The Act, which is enforced by the Department of Environment, Ministry of Science, Technology and Environment is aimed at improving the quality of life of the people of Malaysia. It has for its objectives the prevention, abatement, and control of pollution, and the enhancement of the quality of the environment. A number of regulations and orders have been formulated under the EQA. One such order, which has an important bearing on forest sector activities is the Environmental Quality (Prescribed Activities) (Environmental Impact Assessment) Order 1987, which has been in force since April 1988. Under the Order, logging is a "prescribed" activity that requires the submission of an EIA Report prior to approval. Except for the EIA Order, the management of forest resources and land matters in Sabah is under the jurisdiction of the State Government. During the last 30 years or so, some positive steps have been taken by the State Government towards the conservation and protection of Sabah's natural resources and environment. One such step was the gazetting of certain forest areas as Sabah Parks, Permanent Forest Reserve and Wildlife Reserve. Presently, 265,794 hectares of land and marine areas (approximately 3.61 per cent of the State territory) in various parts of the State have been gazetted as State Parks. Table 4. 7 provides information on Sabah's State Parks.

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TABLE 4.7

State Parks of Sabah Hedores

Kinabalu Park Tunku Abdul Rahman Park Turtle Island Park Pulau Tiga Park Tawau Hills Park Crocker Range Park Total

75,370 4,929 1,740 15,864 27,972 139,919 265,794

To strengthen forest management strategies, a set of guidelines have also been formulated, and are to be adopted by forest operators. These guidelines provide that: 1. Construction of all new main and secondary extraction roads and any such access must be carried out with written permission from the Conservator of Forest and in accordance with the specifications laid down by the said Conservator of Forest. The access should, as far as possible, follow natural contours. 2. There shall be no obstruction of or interference with the natural waterways. Where a road is to be cut across a river or stream, bridges and culverts as prescribed by the Conservator of Forest shall be constructed and maint;ined according to specification. 3. Apart from the approved constructions mentioned above, there shall be no interference of the reserved areas along each side of the river. The reserved areas are as follows: River Width Reserve Area (metres) (metres) More than 20 40 Up to 20 20 4. Where necessary, mitigating measures such as silt traps, water bars and side drains shall be constructed in all hauling roads in order to

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reduce siltation into natural waterways. 5. In the hilly areas where the slopes exceed 35 degrees, logging is not permitted. The areas are to be conserved as watersheds and for recreational purposes. 6. On completion of logging operations, remedial measures must be taken to ensure that the total sediment in the water downstream is maintained at original or improved values, subject to the satisfaction of the Conservator of Forest. Apart from the EQA, there are a host of laws and regulations that deal with a variety of conservation issues in Sabah. Other enactments and ordinances relevant to conservation issues in Sabah include: the Forestry Enactment 1968; the Sabah Park Ordinance; the Fauna Conservation Ordinance 1963, 1964, 1965; the Bird Nest Ordinance 1914; the Country Land Utilisation Ordinance 1962; the Fisheries Act 1963; the Continental Shelf Act 1966; the Fauna Conservation (Turtle Farms) Regulations 1964, and the Pearl Oyster Shell Fishery 1969. Recognizing the urgent need to avoid and prevent further deterioration of the environmen t (especially its forests) the State Government , through the relevant Ministries, has also established a number of specialized Committees to closely examine matters concerning the environment and to co-ordinate and harmonize enforcement, monitoring and assessment activities among the various related agencies. These committees, among others include: the Ministerial Committee on Environment; Ministerial Committee on Wildlife; the Joint Committee for Monitoring of Pulp and Paper Mill Pollution; the State Tourism Committee; the State Beautification Committee; the Environmen tal Quality Council Committee; and, the National Coastal Erosion Committee. Finally, it is also important to note that there are also a number of Non-govern mental Organizations (NGOs) in Sabah actively involved in efforts to conserve and protect the local environmen t. Some of the NGOs known for their valuable contribution towards the improvemen t of environmen t, particularly the environmen t in the State's capital, are the Sabah Society, Sabah Environmen tal Protection Association, Sabah Nature Club, and Malayan Nature Society (Sabah Branch). Despite the multiplicity of rules and guidelines dealing with forest sector activities and related conservation issues, the environmental record of the forest sector has hardly improved. Why? Obviously there is a need

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here for a close assessment of the effectiveness of the enforcement system. Equally important is a survey on the level of conservation awareness among the logging supervisors and other individuals who actually carry out logging activities on a day to day basis. At the same time, as is the case with other policing and regulatory efforts, cases of non-compliance do occur and will continue to occur, from time to time. It is in this respect that civic consciousness or public awareness is relied upon as it is totally impossible for licensing authorities or enforcement agencies to constantly be on site policing potential offenders.

FUTURE SCENARIO A study by Chai and Yahya Awang (1989) showed that timber production from natural forest was to experience a sharp decline from 1989 onwards. 23 According to the study, the balance of the forests (both State Land and Commercial Forest Reserves) as of 1988 was 1.16 million hectares. Logging in all of these forests has already been licensed. The study indicates that special Licences and Concessions forests will be completely logged by the year 1993, along with most of the Annual Licences and Concessions forests. The exception to this scenario are those Annual Licences and Concessions on State Lands, which are now in the process of being converted into agricultural plantations. Furthermore, by 1993, the majority of the timber producing areas will be located in the Sabah Foundation Concession, now comprising 1.04 million hectares. From 1992 onwards, the projected timber production from natural forests in Sabah will not be able to meet local demand. At present, the annual requirement for domestic downstream activities is about three million cubic meters. Although the forest plantations could keep the Sabah timber industry going, they would not totally offset the state revenue shortfall since timber from these plantations is generally treated as another agricultural crop. A revised estimate of the 1989 budget for the State revealed a deficit of M$342.7 million while the budget deficit for 1990 was estimated at M$338.3 million. As of 1990, the government has a reserve of M$897.8 million in its consolidated revenue account; this will likely be fully depleted before the end of 1992. Then what? There is always the

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possibility that the State Government may resort to short-term solutions to finance its commitments. These may include the disposal of commercial assets, external borrowings, or the de-gazetting of its abundant forest reserves as commercial forest! However, such extreme measures are very remote possibilities given the expressed concerns and policy initiatives of the State Government in conservation and sustainable use of natural resources. Since the 1970s, the State Government has recognized the problem of dwindling forest resources, but the implementation of remedial measures (to slow down the rate of timber extraction) has not been particularly successful (Sun 1990). The Export Quota System for example, which was introduced to encourage downstream processing locally, has never been seriously adhered to. The annual volume of timber export has always exceeded the six million cubic metres limit. Nevertheless, the quota system has had some impact on the development of the downstream wood industry, which was strongly advocated by the State Government. A number of complementary measures have been instituted, the more significant of which are as follows: 1. Royalty and export structure. A new royalty structure for logs was implemented on 1 January 1990 and this will increase the levy by 25 per cent over the next two years. The royalty for locally processed logs has been set at a nominal rate while the export cess for processed wood products has been structured on the principle that as the amount of wood products that are processed increases, the smaller will be the export cess levy. 2. Issuance of licences. Issuance of sawmill licences has stopped since January 1990 while those for plywood and veneer mills ceased to be issued from 1 May 1990. The former is expected to reduce primary processing of logs into sawn timber and encourage the use of waste wood from sawmilling. This measure is also designed to improve recovery rates in the industry. Currently only about 50 per cent, compared to over 90 per cent in Japan and Taiwan, of the gross volume of trees is used. Because of the resource constraint, market forces will dictate that existing mills improve their efficiency and make use of present industry wastes. Technological innovations and production of a wider range of products such as blackboards and chipboards, in particular, will reduce waste and raise levels of use.

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3. Other government initiatives. To promote an orderly and fair transition from log exports to value-added wood products, the government has encouraged the establishment of a self-regulatory private sector umbrella body to cater for all sectoral interests in the industry. An effective transition will also be promoted through the establishment of integrated timber complexes in seven locations in Sabah. Existing production units will be realigned into clustered production areas where conditions will promote greater efficiency in resource use. In short, a conducive environment has been established to facilitate the transition from a log exporter to a producer of value-added wood products. To supplement the timber from natural forests, forest plantations have been established in Sabah, primarily by the public sector. To date plantations with a total of 52,500 hectares of fast growing tree species have been established by three State agencies. Due to the long gestation period and relatively high initial capital outlay, such investments have not been viewed very favourably by the private sector. Accordingly, efforts are being undertaken to develop a package of investment incentives that will mitigate these investment constraints. Thus, as we can see from the above discussion, the state's key strategy to address the problem of dwindling timber resources revolves around the expansion of an efficient and technologically advanced downstream wood processing industry and the expansion of the timber plantation sector. These measures, notwithstanding, it can be expected that Sabah will experience a dramatic decrease in the log harvesting rate. Ironically, "shortage" conditions could perhaps help place forestry in Sabah on a sustainable yield footing.

CONCLUSION There is no doubt that as the pace of development activities has intensified over the past two decades, Sabah's environment has suffered. Mistakes and the lack of environmental awareness on the part of decision makers, planners, and developers in both the public and private sectors have likely been at the centre of Sa bah's environmental problems.

APPENDIX 1 Primary Features of Five Major Watersheds in Sabah

Watershed Sungai Kinabatangan Gauging station: Balat !117"35'50"E; on 8'35"Nl Upstream catchment area: 10,800 km 2 Annual rainfall: 2,500-3,500 mm Sungai Pados Gouging station: Tenom (115.55'50"E 05.07'00"Nl Upstream catchment area: 7,718 km 2 Annual rainfall: