Twenty five years of industrial development: a study of resource use rates and macro-efficiency indicators for five Asian countries

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Abstract

Economic and population growth in Asia over the last three decades has been unprecedented. While conventional economic indicators have been increasing consistently, indicators of resource and environmental quality have been deteriorating, raising questions about the implications of future growth. Economic growth in the future is considered to be contingent on ensuring a more efficient use of natural resources, while simultaneously striving to reduce environmental impacts. We examine time trends of three efficiency indicators; agricultural efficiency, energy efficiency of economic production and carbon efficiency of energy use, for the five most populous countries in Asia in order to assess whether industrial development has lead to increased resource use efficiency and an associated reduction in total resource use and environmental impacts. Our results indicate that agricultural efficiency has decreased in all five countries. Results are mixed for energy and carbon efficiencies. Where increases in energy and carbon efficiency have occurred, they have been completely overwhelmed by absolute increases in energy use and carbon emissions caused by increases in the scale of economic activity. Based on this analysis, we study the potential for further improvements and policy implications for future food supply, energy consumption and carbon emissions in the region.

Introduction

For the last three decades, Asia has been the locus of unprecedented economic and population growth, and has emerged as one of the most important economic regions of the world (World Bank, 1998, WRI et al., 1998). This economic growth, however, has been achieved at a large environmental cost. Most surveys of the status of Asia's environment and natural resources indicate a significant deterioration of environmental indicators such as extent of forest cover, depth of topsoil, and air and water quality (World Bank, 1998, WRI et al., 1998). Projections indicate that relative to other regions of the world, the demographic and economic importance of Asia will increase further in the new century (e.g. World Bank, 1998).

Traditionally, economic growth has been seen as the solution to most problems plaguing developing Asia, such as low material standards of living, low environmental quality and low resource use efficiency resulting in intense pressure on natural resources (WCED, 1987, Pearce and Warford, 1993, Vincent and Panayotou, 1997). While one cannot argue with the objective of improving standards of living in developing nations, one needs to analyze empirically the biophysical relation between the process of economic development and environmental quality, in order to identify the reasons for the current situation in Asia and to evaluate the potential effectiveness of the growth prescription.

Given the non-renewable nature of many critical natural resources and imperfect substitution possibilities between natural and manufactured resources (Georgescu-Roegen, 1971, Georgescu-Roegen, 1975, Daly, 1991, Cleveland and Ruth, 1997), most investigators have promoted the idea that Asia's future economic development is contingent upon a more efficient use of its natural resources (such as energy resources), to meet the needs of its growing population, while simultaneously striving to reduce environmental impacts (Reddy and Goldemberg, 1990, Byrne and Shen, 1996). It has been reported that industrialized economies have achieved increased efficiencies of industrial processes (production of cement, steel, chlorine etc.) resulting in a reduction in energy and materials used per unit of output produced (e.g. Reddy and Goldemberg, 1990, Ayres and Simonis, 1994). These improvements in process efficiencies have led to micro-efficiency gains that are in turn expected to lead to economy-wide dematerialization and associated reduction in total environmental impacts (Williams et al., 1987, Reddy and Goldemberg, 1990).

The expectation that increased micro-efficiency will result in overall reduced resource dependency and environmental impact, i.e. improved macro-efficiency, has been criticized by other researchers who suggest that economic growth itself undermines improvements in micro-efficiency (e.g. Ehrlich and Ehrlich, 1990, Ekins, 1993).

We evaluate whether micro-efficiency gains, if any, have led to macro-efficiency gains by examining trends of natural resource use rates and macro-efficiency indicators for five Asian countries; China, India, Indonesia, Japan and Pakistan, over a period of 25 years of industrial development. We then assess the potential for, and implications of, continued economic growth in the future. In this study we focus on three efficiency indicators; agricultural production per unit of fertilizer used, energy efficiency of macroeconomic activity, and carbon efficiency of energy consumption in the economy.

The agricultural sector is of particular importance because the large current and projected human population of Asia makes securing sufficient food supplies a primary concern (Brown and Kane, 1994, Harris, 1996). Agriculture in Asia is generally characterized by increasing use of industrial inputs such as fertilizer, pesticides and extensive irrigation systems (WRI et al., 1998). Thus, our analysis will also provide an understanding of the implications of efficiency changes in agriculture for energy demand and environmental impacts. The strong positive correlation between energy use and economic production generally observed for many countries (Cleveland et al., 1984, Stern, 1993, Cleveland et al., 1998) is particularly relevant today for developing countries (Ishiguro and Akiyama, 1995, USDOE/EIA, 1998). The current fossil fuel-intensive economic system in Asia, combined with the finite nature of high quality global fossil fuel reserves (Campbell, 1997, Laherrere, 1999) makes it imperative that the energy use efficiency of Asian economies be studied, and the potential avenues for improvements identified. The combustion of fossil fuels is considered to be the largest single contributor to anthropogenic carbon dioxide (CO2) emissions (IPCC, 1996). The amount of CO2 emitted by a country's burning of fossil fuels is a function of three factors: the total quantity of fuel used, the carbon content of the fuel mix, and the efficiency of energy conversion and end use. An examination of the carbon efficiency of an economy over time and the relative importance of the contributing factors help to assess the degree of decarbonization achieved and the potential for improvements in the future.

Section snippets

Methods

Our analysis comprises three steps. First, we document total cereal production, fertilizer and land used in cereal production, during the period 1961–1995, and economic growth, energy consumption and carbon emissions during the period 1970–1995, for five Asian countries; China, India, Indonesia, Japan and Pakistan. We then examine time series trends of the efficiency indicators. We chose the five most populous countries in Asia as our sample (Table 1). In 1995, these five countries together

Results

Our results indicate mixed trends. Over the past 25 years of industrial development, fertilizer use efficiency has been declining in all of the five countries studied. Carbon efficiencies have increased in the four developing countries. Energy efficiencies have increased in Indonesia and China, and have decreased in India and Pakistan. In the case of Japan, there have been improvements in both energy and carbon efficiencies, however its pattern of overall declining fertilizer use efficiency

Agricultural efficiency

The substantial increase in total cereal production in the four developing countries is a function of more land being devoted to cereals and the use of more fertilizers, rather than pure efficiency increases, with fertilizer use playing a more critical role than land area. The overall strong dependence of increased cereal production on fertilizer use was most pronounced in the case of China and India, which have had only small changes in land area under cereals during the period 1961–1995 (

Conclusion

Our study shows that for the Asian countries studied, after nearly three decades of industrial development there is no consistent evidence that micro-level efficiency gains, wherever achieved, has translated into an economy-wide reduction in resource use rates and environmental impacts. Rather than alleviating environmental problems, rapid economic growth has taken its toll on the environment19

Acknowledgements

Financial assistance to P.J. Tharakan from the Eugene Farnsworth Memorial Fellowship is gratefully acknowledged. Our thanks to two anonymous reviewers whose comments improved the manuscript.

Pradeep J. Tharakan is currently pursuing a Ph.D. degree in Forest Resources Management at the State University of New York College of Environmental Science and Forestry (SUNY-ESF), and a master's degree in Public Administration at the Maxwell School of Citizenship and Public Affairs, Syracuse University. His research focuses on plant physiological ecology, biomass energy, climate change and linkages among energy production and use, environment and economic development.

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  • Cited by (0)

    Pradeep J. Tharakan is currently pursuing a Ph.D. degree in Forest Resources Management at the State University of New York College of Environmental Science and Forestry (SUNY-ESF), and a master's degree in Public Administration at the Maxwell School of Citizenship and Public Affairs, Syracuse University. His research focuses on plant physiological ecology, biomass energy, climate change and linkages among energy production and use, environment and economic development.

    Timm Kroeger holds master's degrees in economics and environmental science, and is currently pursuing a Ph.D. degree in Environmental Science at SUNY-ESF. His primary research focuses on the analyses of interactions among environmental, economic, and political systems, and the use of a systems approach to design effective environmental policies.

    Charles A.S. Hall is a Professor of systems ecology at SUNY-ESF. His research interests lie in the application of integrative tools of science including simulation modeling, to the understanding and management of complex natural systems, and relationships between people and nature, with special focus on energy issues. He has applied these approaches to study small rivers, estuaries, fish migration, tropical land use change, petroleum extraction and national economies.

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