Dr Heinz Schandl, Dr Graham Turner, Dr Franzi Poldy and Prof Steve Keen - members of the Resource Efficiency: Economics and Outlook project team.

Dr Heinz Schandl, Dr Graham Turner, Dr Franzi Poldy and Prof Steve Keen presented their environment-economy model to UNEP in Bangkok 2009.

Fuelling the rise and rise of the Asia Pacific

To prosper over the remainder of the 21st Century, the countries of the Asia Pacific need a new 'green' industrial revolution to drive dramatic improvements in resource efficiency. (10:39)

  • 14 October 2011

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Learn more out more about Resource efficiency in Asia and the Pacific.

Glen Paul: G'day, and welcome to CSIROpod. I’m Glen Paul. In 2002 the Asia Pacific region overtook the rest of the world to become the single largest user of natural resources, and in the coming decades the region will be the most important driver for global resource use and related environmental impacts, including resource scarcity, pollution, and climate change.

At the same time the Asia Pacific region is becoming less efficient in its use of materials, which is the opposite of what’s required to maintain human development, while avoiding environmental impacts.

If the trend isn’t reversed it will place unsustainable pressures on key natural resources and on the living environment. To better understand this situation a new report from CSIRO and collaborators, called Resource Efficiency: Economics and Outlook for Asia and the Pacific has been prepared for the United Nations, and focuses on the demand for, and use of, natural resources.

Joining me on the line to discuss it is Dr Heinz Schandl, from CSIRO Ecosystems Sciences. Heinz, why has the United Nations called for the report now, nine years on?

Dr Schandl: Most recently, in 2008, we have seen many phenomena converging, including climate change, resource scarcity, food security issues, water shortages.

Now, the UN was looking for credible information on a number of critical resources, including materials, energy, waste and emissions, water, and land use, in order to understand inter-linkages between our economic activities, consumption, and production patters in the region, and the related resource use patterns.

Glen Paul: Right. So there’s been this exponential growth, but why has the Asia Pacific region overtaken the rest of the world?

Dr Schandl: In Asia Pacific, for the last two decades, we can see a massive transition from an agricultural biomass space, traditional economy, to a modern industrial economy. This goes hand-in-hand with the process of urbanisation, changing aspirations, and also establishment of modern systems of provision for food, housing, transport and mobility.

So the region undergoes the same transition which we have seen in Europe, starting in England in the 18th Century, but in a much larger scale, and a much higher speed

Glen Paul: Right. So what has led to this swing away from the traditional agricultural society?

Dr Schandl: This is a really difficult question. There are many theories why countries modernise. One of the reasons is that through processes of globalisation we are involving ever more the regions in the world into the production and consumption processes that we are use to in the OECD countries.

So that has two dimensions I guess. One is OECD countries have started outsourcing manufacturing processes to developing countries, thereby introducing new processes, new opportunities for work, increasing salaries, changing aspirations.

That goes hand-in-hand with the modern communication media where people obviously in many parts of Asia Pacific, even in the remote villages, are starting to watching TV, accessing the internet, and recognising there’s something more than the rural livelihood they’re use to.

So that kicks off a huge transition process, and this is certainly also supported by Government programs that invest in infrastructure, and in modernisation of their economies, in order to compete with other economies globally, I guess.

Glen Paul: OK. But what happens if they can’t compete? How will the rest of the world fair if there is a hard economic landing in the Asia Pacific?

Dr Schandl: I guess though the question really is, are we running into big problems as a global society or not and obviously there are several opinions on that.

What we can increasingly see is that what I would call the old industrial model of consumption and production creates more and more problems, both for the environment and resources, but also in an economic sense.

We just went through an economic crisis, an unprecedented economic crisis you may even say, and we are on the verge of the next one potentially if we can trust Economists.

So in that situation the problem really is that we cannot generalise a certain standard of living we are use to in OECD countries across the globe when we base this on the current way we produce and consume, and the amount of resources and emissions, or in other words the resource and emissions intensity that is related to that – that will not be possible.

There is obviously debate when the crunch is going to come, but we can see there is a real problem, and so future prosperity is really challenged by the availability of natural resources on a global scale.

Glen Paul: And just touching on that, with emissions and climate change, and a region hungry for coal, and not so big on renewable energy, how will this situation be addressed?

Dr Schandl: So I guess we are seeing two parallel trends going on at the same time. China, and India, and other economies in Asia Pacific are currently still investing in the traditional technologies, including coal fired power stations for electricity production. At the same time there is huge investment into alternative green technologies, for example in the energy sector, also moving away from centralised energy systems to more distributed systems of energy provision.

When you look into the policy chapter of our Report, you can clearly see that a number of economies have started to take these issues very seriously. The frontrunner obviously is Japan – Japan has instituted a Circle Economy Law, which actually sets targets for efficiency of resource use, which somehow need to be followed because they’re set in stone in legislation.

And most recently, in 2009, China has taken a similar move, with what they call the Circle Economy Law, which sets targets for China as a whole, which are then attributed to different Provinces within their national planning process.

So there is a lot going on, and while the region is continuing to use these old industrial resources, coal and oil, and also iron ore and those kinds of materials, there is also a move to something different, which is happening just now, and will increasingly occur into the future.

Glen Paul: Now there is another aspect to the Report that is sometimes overlooked in modelling the economic growth of development countries and that is water. So how is that demand going to be met?

Dr Schandl: I think water’s a critical issue. When we looked at water use in many countries in Asia Pacific, then we may not see immediate problems at the national scale because water availability problems usually occur quite regionally. But in some of the countries we can actually see that also at a national level there is a big problem with water availability. So some of these countries are quite water stretched, even as a whole.

Now different sectors of the economy, including agriculture, manufacturing, and cities, are competing for the water resources, and what we can see is a quick drawdown of water tables in many agricultural areas, which unfortunately are often those areas which produce most of the agricultural output. So we also can see this clear linkage between food security and water availability.

So there is a need also in the water sector to move towards technologies, or ways of using water, that are clearly more sustainable than the ones we have now, and that are based also on reuse of water.

Glen Paul: OK. So if we sort out the water situation then of course comes further growth, which means transport, housing, and infrastructure will have to be more efficient. How difficult a task is that?

Dr Schandl: So I don’t think this is actually rocket science, because since many years we know that the technology potential in many of those sectors is actually quite considerable, so when we look at the last book of von Weizsäcker, Factor V, which was released in 2010, then we can see that in many of those areas we can actually achieve about 80 per cent improvements in energy use, in emissions, in water use, for most of those activities.

Also if we look around in CSIRO, we see many parts of our organisation working on new batteries for cars, on solar technology, or on highly efficient houses. So there is a lot in the pipeline.

The question really is how can we turn around what I would call the evolutionary environment for businesses and households to start doing new things, to make new green technologies more affordable and more likely to be picked up.

Glen Paul: So what recommendations does the Report make into growth in the Asia Pacific region?

Dr Schandl: The Report is not so strong on recommendations; it documents the current situation. So it looks at the history, the current situation, and the most likely future of natural resource use in the region, and it also takes stock of all the policies that are in place to deal with the resource use pressures.

One thing the Report does, it looks at those policies which could be called transformational, rather than at those policies which would rather lead to incremental change, and tinkering around the edges.

So the Report, I think, favours and discusses in greater detail such policies which actually introduce change at the macro economical level, which introduce different conditions for all the actors in society.

So one example for this, I think, is what is called the Ecological Budget and Tax Reform. When you look at most of the economies in Asia Pacific, and really globally for that matter, most of these economies have grown very fast in labour productivity, at the cost of material and energy productivity. And this is because the taxation system is a system of incentives, tailored in a way that it actually drives labour productivity at the cost of resource productivity.

Now this needs to be turned around somehow, in order to enable different trajectories. And the Ecological Budget and Tax Reform is one such mechanism that could help to achieve that.

Glen Paul: OK. Well it certainly sounds like a challenge. Thank you very much for your time today, Heinz, in telling us about the Report. Much appreciated.

Dr Schandl: Thanks Glen. It has been a pleasure talking to you.

Glen Paul: Dr Heinz Schandl. For more information find us online at www.csiro.au. You can like us on Facebook, or follow us on Twitter at CSIROnews.