Regional Cooperation in Strengthening the Low-Carbon Green Growth: Challenges, Prospects &amp; Policy Framework
Creators: name: Zaman, Kazi Arif Uz
Publisher: name: The Australian National University
Year: 2018
Subjects: Regional Cooperation, Low-Carbon Green Growth, Stochastic Frontier, Gravity Model, Asia, Low-Carbon Energy, Low-Carbon Goods, Emission Management, natural Resources Management.

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