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The Challenge A first-time visitor to Asia's cities will be shocked by the traffic congestion and pollution found almost everywhere. A trip of a few kilometres in Jakarta or Bangkok can be an ordeal, as gridlocked vehicles spew out thick clouds of black smoke. The problem is among Asia's most visible, with costs that can be measured in lost productivity and damage to people's health. An hour's flight from Jakarta is a city where traffic flows smoothly and the air is clean. In Singapore, drivers have to pay hefty fees for car ownership permits: a "polluter pays" strategy that effectively reduces traffic congestion and pollution. Revenues finance a first-class public transportation system. This kind of policymaking, while exceptional, is critical in Southeast Asia where rapid economic growth has come at the expense of the environment. And as the depletion of valuable natural resources continues, more must be done to persuade governments in the region that environmental protection makes economic sense. Research in areas neglected by conventional economic analysis, such as the effect of pollution on health-care costs, makes a convincing case for policies that benefit both the environment and the economy. The Response The Economy and Environment Program for Southeast Asia (EEPSEA) was established in 1993 to support training and research in environmental and resource economics. Its goal is to strengthen local capacity for the economic analysis of environmental issues — whether it be assessing the damages to a river poisoned by copper mine waste in the Philippines or measuring the environmental consequences of liberalized trade in Sri Lanka and its impact on farmers. By calculating the costs of environmental problems — an innovative approach in the developing world — EEPSEA-supported research generates sound advice for policymakers. The program's networking approach provides not only financial support but also meetings, resource persons, access to literature, publication outlets, and opportunities for comparative research across its 10 member countries: Cambodia, China, Indonesia, Laos, Malaysia, Papua New Guinea, the Philippines, Sri Lanka, Thailand, and Viet Nam. The focal point of EEPSEA's program is the biannual workshop, attended by researchers, practitioners, and policymakers from the region and around the world. EEPSEA is funded by a sponsors group of seven donors. Senior scholars and policymakers from the region and international resource persons sit on an advisory committee that sets the program's priorities for research and training. IDRC administers EEPSEA through a small secretariat in Singapore and the Philippines. The Objectives To generate policy-based research on key environmental and development issues facing Southeast Asia. To create a regional network of skilled local researchers in environmental and resource economics. To work in partnership with teaching and research institutions to broaden the impact of EEPSEA's activities. To serve as a catalyst for action that promotes sustainable economic development in the region. The Results Findings from a study of the economic cost of the 1997 fires and haze in Indonesia were presented to ASEAN Environment Ministers in 1998. The study was also discussed by the UN General Assembly Committee on Humanitarian and Social Affairs. (Featured project) EEPSEA has provided training to some 150 people and supported about 65 research projects. More than 30% of people living in the Philippine capital of Manila have no access to the public water system. Most of these people are the city's poor, who are forced to buy water at inflated prices. Researchers examined ways to improve the water supply through economic incentives. Their results have played a role in drafting contracts for the privatization of Manila's water supply services. National parks in Thailand lack the money to counter such threats as illegal human settlement, forest fires, soil erosion, and pollution. Dr Adis Israngkura has designed a framework for an entrance fee system to finance park conservation. His research is being used to prepare master plans for two national parks. Shiqui (Susan) Zhang conducted EEPSEA-funded research on pollution from coal-fired power plants. In 1998, she represented China at two international meetings related to the Montreal Protocol on Substances that Deplete the Ozone Layer. She also received the first China Young Environmental Scientist Award.

A study puts a price tag on the damages caused by 1997 fires and haze in Indonesia.

Drought and El Niño helped to whip small fires into blazes in Indonesia during 1997. Damages amounted to US$4.5 billion. About 80% of Indonesia's fires were set by plantation owners clearing new land. The rest were triggered by traditional "slash and burn" farming practices.

It was one of the worst environmental disasters of the century. For several months during 1997 and 1998, forest fires blazed in Indonesia, caused by uncontrolled land clearing and drought. They destroyed 5 million hectares — an area almost the size of Nova Scotia — in 1997 alone, and generated a noxious, choking haze that affected 70 million people in the region. In response to the crisis, EEPSEA and World Wildlife Fund (WWF) — Indonesia launched a study to assess the economic value of the damage. Teams of researchers in Indonesia, Malaysia, and Singapore quickly swung into action, assisted by EEPSEA and WWF staff and international experts. Using a variety of data and analysis methods, the researchers isolated several costs, including those relating to losses of timber, agriculture, biodiversity, forest products other than timber, industrial production, and tourism. The study also calculated short-term health costs, as the haze resulted in an increase in respiratory problems. Even using conservative estimates, the total damages came to US$4.5 billion — more than the damages assessed for purposes of legal liability in the Exxon Valdez and Bhopal disasters combined. Researchers also presented the costs in terms of lost potential. In Indonesia, the value of the resources lost could have provided all of the country's rural poor with basic sanitation, water, and sewage services. Singapore's losses from tourism alone could have fully funded the country's Community Chest, comprising 50 charities benefitting 180 000 people, for three years. In addition to making strong economic arguments, the study made several policy recommendations to prevent and contain future outbreaks of fire. These centered on changes in land-clearing practices, more sustainable forest management, and better use of fire-monitoring data. Tourism, an important source of revenue in Southeast Asia, accounted for a large share of the financial losses from the fires and haze. The findings affected government thinking immediately. An interim report, presenting estimates for only haze damage, was submitted to the ASEAN Environment Ministers in February 1998 to help in the formulation of a regional haze action plan. After the meeting, when asked how much Singapore could help in dealing with Indonesia's fires, Singapore's Environment Minister said: "Even with a tight budget, we have to prioritize because if we do not help them, the economic losses to us and the entire region are tremendous. Whatever we can spend to help will be money well spent." Members of the UN General Assembly Committee on Humanitarian and Social Affairs also discussed the study at a meeting chaired by the Undersecretary General of the United Nations. The findings and recommendations continue to inform action plans and implementation projects in the region, such as early warning systems and land-clearing alternatives, to prevent the fires from returning. The study generated extensive media coverage, with more than 130 citations from local television stations, CNN, BBC, CBC, the Globe and Mail, the Financial Times, and the Washington Post. Given its distribution by such news services as Reuters, it is likely that the report appeared in every major newspaper around the world. Future Directions Indonesia's Fire and Haze, a book-length version of the study, will be copublished in late 1999 by the Institute for Southeast Asian Studies and IDRC. In addition to detailed results of the study, the book will highlight the methodology the researchers used. The Asian financial meltdown puts the environment at greater risk, as natural resources can be exploited for quick revenues. EEPSEA's role in focusing attention on the economic benefits of environmental protection will be even more important in this rapidly changing region. Future initiatives might include supporting national associations of environmental economists and holding seminars with journalists and nongovernmental organizations. New information technology also has the potential to widen EEPSEA's reach through interactive websites, distance learning, and electronic conferencing. Among the study's recommendations: that Indonesia shelve plans to convert 1 million hectares of peat forest to rice cultivation. Fires in these environments were hard to extinguish and created a "sulphuric acid" haze. Further Reading Reports webzine, "Investigating an Environmental Disaster: Lessons from the Indonesian Fires and Haze" Reports webzine, "Counting the Cost of the 1997 Haze" EEPSEA website Special report, "The Indonesian Fires and Haze of 1997: The Economic Toll"