How Victims Can Pay Polluters For A Win-Win Result

By Euston Quah, Nanyang Technical University

SINGAPORE, September 22 – The dry season is the time of burn and burn in Southeast Asia. From July to October, smoke from agriculture and deforestation not only suffocate the burning countries (mainly Indonesia), but also the neighboring countries of Singapore, Malaysia, Brunei and southern Thailand.

Wildfires and billowing smoke in Southeast Asia have had serious consequences over the years Health risks, environmental damage and economic impacts far beyond the borders.

Convicting the perpetrators is risky. Boycotts of haze-related products like palm oil penalize well-behaved plantations as well as mismanaged ones.

What if the victims had to pay instead? Paying polluters to use fire-free logging practices could be the economic solution the region needs. Especially if countries were willing to ignore narrow-minded national interests and acknowledge haze’s transnational economic and social implications.

Preventing the economic consequences of forest fires is among the many activities undertaken under the development aid label by developed countries and international institutions such as the World Bank, the Asian Development Bank and the Asian Infrastructure Investment Bank.

If those who want a veil-free life make a financial contribution, farmers and plantations could avoid slash-and-burn. Payments could be used to fund appropriate land clearing equipment, as well as financial incentives and disincentives for small landowners to engage in non-fire land clearing practices.

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Funding and transfer of funds between stakeholders could pay for fire monitoring and prevention activities to control and influence polluters.

On the other side of the ledger are the many tangible and intangible costs associated with cross-border haze. Specific costs of haze pollution include healthcare costs, lost productivity due to restricted activity days, loss of tourism and its knock-on effects, and the cost of mitigation and adaptation by government agencies and households. Intangible costs can be difficult to measure, but they still have real impacts on society, such as: B. General public discomfort and loss of enjoyment of outdoor activities.

It may seem unfair – even extortionate – to require victims to pay to avoid harm. But realistically, many in Southeast Asia might be willing to pay to end the annual haze.

A central tenet of welfare economics envisions an increase in welfare when those who are better off can compensate those who lose and are still better off.

The cost of haze pollution control could be shared by the victim nations in proportion to the damage they suffer from the pollution. Game theory could be used to set the rules so no country would be tempted to walk away.

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in 2004, it was suggested Indonesia accounted for 93.8 percent of casualty damage, Malaysia for 5.1 percent, and Singapore for 1.1 percent. A calculation of the tangible and intangible costs of the Haze effects is approximately S$1.83 billion (US$1.2 billion).

If the cost of direct fire damage in Indonesia were also considered, the relative proportions of each country’s casualty damage could be calculated by dividing the total cost of damage for each country by the total cost of wildfires and haze for the region.

Therefore, they should contribute about $1.125 billion, $61.2 million, and $13.2 million per year, respectively. This method only works if the amount paid is less than or equal to the damage suffered.

For example, if the cost of reducing land clearing activities is lower than the cost of fires to its own country, Indonesia could manage the fires itself.

International expertise and financial support could improve Southeast Asia’s environmental conditions, saving countries in the region billions of dollars while modernizing production methods used primarily by small landowners.

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The benefits of agricultural sector transformation in Malaysia and Indonesia could lead to spin-offs for other sectors of the economy, including agricultural machinery. In the long term, the health benefits could be significant and improve the image of the industry.

Another source of funding for cross-border haze reduction could be ordinary people who are ready to pay for non-persistent pollution. In 2018, a willingness-to-pay survey found that Singaporeans were willing to shell out about S$51.31 for a month-long haze episode if it meant skies remained haze-free.

Calculating the cost of the Southeast Asia haze in the victims countries would help each country better decide whether and how much aid to offer to Indonesia and how best to support the sectors affected by the haze.

Balancing the cost of haze pollution damage and the expense of controlling and reducing that damage is important to policy decisions both internationally and locally.

Euston Quah is Albert Winsemius Chair Professor of Economics and Director of the Economic Growth Center at Nanyang Technological University, Singapore.

Article courtesy of 360info.

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