Our economy needs green growth

Our economy needs green growth

During the past few decades, the Thai economy has been on a roller-coaster transformation from farming to industry. Although industrialisation brings undeniable benefits, such as the creation of jobs, increased incomes and a boost to consumption, a host of environmental problems have emerged.

The environmental problems facing the economy are pressing, huge and very complex. Examples of environmental concerns include poorly managed solid and hazardous rubbish, waste water and air pollution. But the costs of industrialisation are not directly or proportionately borne by those who generate the problems. Instead, the issue is added to the common pile of environmental and social concerns facing the country.

At present, there exists no feedback system to keep these social costs under control, despite the existence of a number of regulations related to the management and control of industrial waste in Thailand. There is clearly a price to be paid for industrial development, but this is not being absorbed by the manufacturers or reflected in the price of industrial products. Given that firms are driven by profit motives, we have to ask whether they are able to soak up such costs without compromising on the sales of their products.

According to economic growth theories, "limits to growth" arise from two sources: the limited base of natural resources and nature's limited ability to act as a sink for the waste resulting from economic activities. By using energy as "input" in the production process, we are drawing down on stocks of exhaustible resources and generating pollution that causes the quality of the environment to deteriorate.

The green growth model links these "source" and "sink" roles of nature and aims to lower the emissions-to-output ratio. To meet environmental constraints, the model proposes that an ever cleaner mix of production methods be adopted. Such continuous improvements would enable the economy to grow while reducing pollution.

However, the economists William A Brock and M Scott Taylor found that simply improving the composition of production methods is not sufficient to satisfy the twin goals of maintaining growth and cutting emission levels. They found that technological progress directly related to innovation is the key player in determining growth and environmental outcomes.

Firms can minimise the impact they impose on the environment by modifying their production processes, improving waste treatment, or inventing new products that generate less emissions, according to a study by Dhira Phantumvanit and Theodore Panayotou.

There are a number of inspired green growth success stories that Thailand could follow. South Korea has transformed its economy by moving away from a heavy reliance on energy-intensive industries toward export-focused research and development into green-tech. Funds from a stimulus package were allocated to finance the development of renewable energy sources, energy-efficient buildings, low-carbon vehicles, green management of waste and expansion of mass transit systems.

In the context of Thailand, a transition towards a low-carbon economy with sustainable production and consumption has been integrated into the 11th National Economic and Social Development Plan. Yet, a paradigm shift is necessary, with collaboration from different stakeholders in the economy.

Producers must create an ecosystem that sustains innovation in the economy. Such an innovative system would include a diverse array of participants, including researchers, entrepreneurs, financial institutions, business development and technical service providers.

To improve the quality of existing products or create new products with superior performance, new ideas and information must continuously be exchanged and evolve.

Thai policymakers can play an important role in supporting green business, particularly through creating the appropriate infrastructure for markets and a stable regulatory framework. They can also use subsidy and incentive systems for green innovations and facilitate cooperation and partnerships between the key actors.

The behaviour of individuals and households has a substantial impact on the environment. According to a study by Anja Kollmuss and Julian Agyeman, it is difficult for citizens to relate personal consumption and behaviour to large-scale problems such as climate change, pollution, biodiversity loss and natural resource depletion.

Green or pro-environmental behaviours include efforts to reduce waste, conserve energy or switch to energy efficient products. But it takes time to achieve changes in consumer behaviour.

Policies are needed to support and encourage green behaviour, to provide a framework allowing individuals to live in a way that is less detrimental to the environment. Such policies could come in the form of mandatory or regulatory measures, financial incentives, better information, or behavioural tools.

Regulatory policies ban or limit certain behaviours or products. Financial incentive policies use taxes or subsidies to influence green behaviour. Information policies include green labelling, for example, which can show the carbon footprint of a product. Last but not least, behavioural tools use the "nudge" concept to encourage consumers to make decisions that are better for the environment.

Since the promotion of green or pro-environmental behaviour must tap into people's habits at an individual or household level, formulating such policies or initiatives is a complex task. Efforts must strike the right balance between encouraging and enforcing. Developing green behaviour initiatives will require robust evaluation and feedback systems to ensure their success.


Kannika Thampanishvong is research fellow of the Thailand Development Research Institute. Policy analyses from the TDRI appear in the Bangkok Post on alternate Wednesdays.

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