Development and environment intimately linked

Chandran Nair gave a keynote address at the 2007 World Cities Forum on 18 April.

The future of China and other major emerging markets are hanging on critical investment and development decisions now, Chandran Nair, founder and chief executive of the Global Institute For Tomorrow, told an international conference on world cities.

Mr Nair was a keynote speaker at the Urban Land Institute’s 2007 World Cities Forum in Shanghai. The forum, held from 17 to 19 April, convened 150 top executives of the property development and the finance industries “to explore the risks of, and rewards for, doing business in China”.

Some of the questions explored at the conference were: “In one of the world’s fastest growing markets, what does it take to succeed in this still relatively immature market place?”; “Where are the potential pitfalls?”; “What have other western developers and investors already learned that can give you a competitive advantage whether you are just still considering this emerging market or trying to expand your existing foothold?”

Mr Nair presented the environmental realities and considerations for business people and investors in China in his address, “The Environmental Future of China and Major Emerging Markets”.

He highlighted the impacts on human development of pollution and the destruction of the natural world, and described how resources management – good and bad – is also deeply influential.

The future quality of an environment was tied to present-day decisions that shaped economic development, and these were as much in private hands as they were in governments’.

“It is so very important that the concept of sustainable development is translated in to real-world actions,” Mr Nair said.

Huge challenges

Its implementation requires fundamental changes in attitude and approach, Mr Nair said, involving exploitation of resources, direction of investments, orientation of technology, and institutional policies and structures.

Some of the biggest challenges in attaining sustainability in Asia were urban and rural tensions, the need to ease poverty, the rapid growth of an already vast population, resource management, the importance of conserving biodiversity, and public health.

“What is the future of Asian cities?” Mr Nair asked. He described three spheres for sustainable development in Asia: Urban issues – including sanitation, water supply, energy demand, air quality, and public health; poverty alleviation – including shelter, food and nutrition, water supply, basic energy needs, land use, and property rights; and the challenge of the commons – which tied in planetary issues regarding the forests, fisheries, water resources, biodiversity, and climate change.

One of the fundamentally most challenging considerations, he said, was how the “giants will sustain themselves when they awaken”.

“The majority of Chinese and Indians have yet to enter the outer edge of the consumption-led economy, and when they do, the threat of environmental impacts becomes truly significant,” Mr Nair said.

“What will these people do – and is the world ready for them? China and India’s development will pose a major challenge to themselves alone, as well as to the rest of the world.”

Making the links

With these questions posed, Mr Nair detailed the links between unprecedented economic growth, major societal transformation, and the costs of both of these in combination in pollution – air pollution, solid waste, e-waste, groundwater and fresh-water contamination – threats to species; the high costs of “blue oil”, or fresh water, in the ill-management of rivers and in attempts to divert rivers; as well as the realities of energy demand and its impacts on the environment and air: all these have and will have local and global impacts, he pointed out.

There must always be a trade-off between the conservation of environmental and societal quality with economic growth, he said, one example being that “the World Bank estimates that pollution each year shaves 8-12% off China’s GDP in direct damage”.

“Five of the world’s top 10 rivers at risk are in Asia, including the Yangtze, Mekong, and Ganges – that’s what WWF says,” he said.

Mr Nair outlined the guiding principles of a sustainable city, saying that they all had their origins in decision making: “There are no absolutes, only choices,” he said.

He introduced the concept of cross-sectoral decision making with specific reference to energy, drawing the lines from consumption and use to consequences and management.

While the technology exists for sustainable development, the infrastructure needs to be brought up to date, and incentives aligned with vision: “Institutional infrastructure needs to be strengthened for new challenges. This involves incentives for private sector participation. Investors lack patience, they suffer from quick-returns syndrome. The biggest barrier to sustainable cities is institutional reforms, and use of economic instruments: government cannot do it alone. Physical infrastructure for new technology too needs to be built, but the sunk costs of the old economy is also a barrier” – for example, a hydrogen economy – “and, of course, there are vested interests: strong lobbies in most key sectors,” Mr Nair said.

Hidden costs

He suggested several reasons why capital does not follow pollution solutions: “Markets take a short-term view,” he said, adding, “the public good is inadequately costed, because there are market imperfections in addressing externalities. Timescales seem to be too much to take in, they are poorly understood. And it’s much easier to shift the burden.

“Critically, political objectives are unclear – and there is weak political will, weakness in institutions – a significant issue – and a competency mismatch between the public and the private sectors. All this amounts to missed opportunities.”

This need not be the case any longer. Mr Nair outlined the guidelines for investing in technology that would move toward sustainability: “Anything that does more with less,” he said. “Anything that enables conservation, enhances energy efficiency, triggers a move beyond the carbon economy, builds in or enables recovery and reuse, and also reduces cost visibly and promptly, and anything that does not reduce convenience.”

He gave a peek in to the future, which had an unprecedented speed and scale of growth: “Will this be economic development or sustainable development?” he asked.