I
I : W
A
I
d=
smorecounbiesbeginto address environmental problems, new markets for environmental technologies and services are emerging in developing and newly industrialized countries (NICs). The potential for environmental exports to these markets is attracting increased attention from policy makers and environmental firms in the United States and other
B V R 0 D N E V S 0 B IN , S E B A S T IA N R E M 0V , R O B E R T W E IS S L E R , A N D W E N D E L L F L E T C H E R industrialized countries. There is also a growing effort among a number of industrialized countries to use foreign assistance to promote environmental projects and goals in developing countries. In this situation, safeguards are necessary to
2652 Environ. Sci. Twhnol., Vol. 27. No. 13,1993
help prevent export promotion goals from overshadowing environmental and development objectives. Develo€'in~countrY needs Environmental problems in developing countries and NICs are se-
001 3-936x193/0927-2652$04.00/0 0 1993 American Chemical Society
rious and wide ranging. Some result from poverty. Some result from development projects and industrialization undertaken with little concern for the environment. These problems range from acute hazards to human health posed by inadequate sanitary services and lack of basic controls on pollutants to stratospheric ozone depletion, global warming, and biodiversity loss. The economic and human costs of inadequate environmental infrastructure and management in developing countries are vast. The World Bank estimates that 2 million people, mainly children, die each year from diarrheal diseases spread by contaminated water. If developing countries could lower levels of soot, dust, and other particulates to levels determined safe by the World Health Organization, 300,000700,000 premature deaths could be avoided (I).Further risks to human health and the ecology stem from inadequate collection and disposal of solid wastes and, in industrial regions, the growing generation of hazardous wastes without proper treatment and disposal. Overuse and misuse of renewable resources threaten the productivity of fisheries, agriculture, and forests.
Environmental needs are vast in developing countries and the NICs. For instance, the World Bank estimates that only 2% of sewage in Latin America is treated. Worldwide, 1.7 billion people lack sanitation services. More than a billion urban and rural residents lack easy access to safe drinking water: many spend significant portions of their income to buy fuel for boiling water or to buy water from vendors. Modern facilities for handling solid and hazardous wastes are often inadequate even if available. And controls on air emissions from industries and vehicles are frequently rudimentary or completely lacking. The level of investment required to address developing countries’ environmental problems adequately is not precisely known. The World Bank. in an effort to put environmental costs in perspective, identified a sample of benefits that might arise if $75 billion per year-about 1.4% of projected GDP for all developing countries in the year 2000were invested in developing countries for environmental protection. These benefits include reducing child mortality by 3 million per year, reducing respiratory disease, and stabilizing world population at
lower levels. Among the environmental programs considered were pollution control projects that would require technologies more expensive or more sophisticated than are readily available in many developing countries. Such investments are comparable to proportions of GDP spent by the United States and several other industrial countries during the 1970s when environmental issues became a priority. The $75 billion figure assumes high economic growth rates. If developing-country growth rates prevailing in the 1980s continued and only 1% of GDP were committed, $50 billion would be available. The current market for environmental goods and services in developing countries and the NICs is small relative to that of the industrialized countries. However, as these countries grow, they increasingly are addressing environmental needs i n their development strategies. Among the trends that provide opportunities for environmental firms are the following: water-related infrastructure expansion; electrification; growing transportation needs: development of solid and hazard-
Envimn. -1.
Technol., Vol. 27, No. 13, 1993 265653
ous waste disposal capability: increased industrial production: and development of environmental monitoring, standard making, and enforcement capability.
nities in some developing countries and regions are already appreciable. Some of these countries could become important new markets for environmental technologies and services, as bas been the case with some NICs that were considered developing countries a few years ago. Environmental markets are growing in many relatively prosperous, fastgrowing countries in East Asia and Latin America, such as Mexico, Brazil, Chile, Malaysia, and Thailand. One estimate of the annual environ-
Market estimates It is hard to say how large the developing country market is or will be. Several estimates have been made of the cnrrent and prospective demand for environmental goods and services in countries not belonging to the Organization for Economic and Cooperative Development (0ECD)a group that includes developing countries, the NICs, and the transforming economies of Central and Eastern Europe and the former Soviet Union. Some observers estimate that the cnrrent non-OECD market is more than $36 billion and might grow to $55 billion by the year 2000 (2). Another source projects that non-OECD markets will reach $61 billion by 1996 (3).For comparison, these sources e Y.....I.l rent OECD markets at $164 billion to cleaner production) in the six members of the Association of Southeast $236 billion. Estimates of environmental mar- Asian Nations (ASEANI-Brunei, ket size vary widely, in part because Indonesia, Malaysia, Philippines, different definitions are used. Per- Singapore, and Thailand-is $1.8 haps the greatest variable concerns billion (5).An estimate of the 1992 cleaner technologies, including pol- environmental market in six Latin lution prevention and energy- American countries-Argentina, efficient equipment. [A recent con- Brazil, Chile, Colombia, Mexico, gressional report ( 4 ) examines the and Venezuela-is $2.4 billion (6). delivery of energy services to devel- Opportunities are also growing in oping countries.] Most environmen- some lower income countries, intal market studies do not include cluding India and China. China, for cleaner technology markets or in- example, plans to spend 80 billion clude only some discrete portions yuan ($15 billion) for projects with (e.g., renewable energy). Cleaner an environmental component in its technologies are usually difficult to five-year plan ending in 1995 (7). Lack of financing constrains the separate from the industrial, residential, and transportation pro- growth of some developing-country cesses and systems in which they markets. Financial packagesare embedded. Yet cleaner produc- including the availability of develtion and improved energy effi- opment assistance grants and credbe the determining factor ciency are often the most effective its-an and most cost-effective options for in contract awards. Innovative apaddressing pollution and waste. proaches for financing projects that Cleaner production can often yield give project developers stakes in the cost savings and improved product performance of completed projects quality. Although often needed, such as “build-operate-transfer” end-of-pipe and remedial environ- may ease financial strains on develmental controls, by contrast, are al- o p i n g c o u n t r i e s a n d i m p r o v e most always net costs to business project performance as compared to and frequently shift pollutants from conventional projects. The opening of developing-country economies to one medium to another. Environmental business opportu- greater foreign investment and the
loosening of state controls on energy, transport, and manufacturing industries-and privatization-could provide opportunities for environmentally favorable investment. Despite growing environmental markets in developing countries and in the NICs, most expenditures for environmental infrastructure projects are for locally or regionally provided labor and low-value materials. Day-to-day operations employ local labor. Environmental export prospects for firms from the United States and other indusialized nations may :limited largely to enneering and managelent services and relavely sophisticated pipment and materis. US.environmental rms already facing irmidable competion from Japanese, erman, British, rench, a n d other ECD-based rivals are kely to face even more iallenges as NIC and eveloping country enwonmental firms grow Iri capacity to meet their home country ....__--d . pursue exports. At the same time, opportunities for joint ventures and direct investment with local environmental companies are likely to grow. Developing countries may not be able to afford the most sophisticated technologies, or may lack trained personnel and a supporting infrastructure to use them. Thus, less expensive but reliable equipment may be preferable to state-of-the-art devices. It may make sense to modify technologies for such circumstances. For instance, Japan is developing lower cost (and lower pollution removal efficiency) flue gas desulfurization equipment for the Asian market (S),and a number of US. firms offer lower cost, lower efficiency air pollution control technologies.
AID GAU BE AN IMPORTANT
CATALYST FOR ENCOURAGIN6
ENVIRONMENTAL INVESTMENTS IN DEVELOPING COUNTRIES. _-.
2654 Environ. Sci. Technol., Vol. 27, No. 13, 1993
’
Development assistance In 1991,industrial countries provided nearly $57 billion in official development assistance (ODA) to developing countries (9). Environmentally related bilateral aid exceeded $2 billion in 1991,although donor countries’ definitions of such aid differ. For instance, the United States and Japan include euvironmental components of projects whose primary purposes are not environmental in their definition. Ja-
pan also includes natural disaster prevention. Some other countries do not include these. Japan, the United States, and Germany were the largest donors, providing more than $500 million each. Multilateral lending institutions provided more than $ 3 billion in environmental loans (ranging from near commercial to highly concessional terms). Japanese and European aid tends to focus more on major infrastructure projects than does U.S. aid. Such projects generate more export opportunities than do many technical assistance, capacity-building, and rural projects. Donor countries can formally or informally tie their aid to purchases of goods and services from their countries’ firms. Japan formally ties less of its ODA than do the United States, France, Germany, and the United Kingdom, but informal tying-which is hard to document-complicates drawing conclusions about the use of ODA for export promotion. The use of loans instead of grants can increase the value of exports achieved for a given amount of aid if the loan amount is spent in the donor country. U.S. and British ODA tends to be in grant form (more than 95% are purely grants), whereas nearly a quarter of German and French ODA and more than 60% of Japanese aid have loan components. The export-promoting potential of aid goes far beyond the possibility that aid money will be spent in the donor country-that would be an expensive way to promote exports. The greatest benefit to the donor occurs when aid opens the door to continuing long-term commercial relationships. Some other countries, including Japan, show an understanding of this in their use of aid. The United States, until recently, has focused on particular programs and projects and given less attention to developing longterm commercial trade. U.S. export promotion U.S. federal export promotion and financing responsibilities are divided among many agencies. The U.S. Department of Commerce, the Export-Import Bank of the United States (Eximbank),Overseas Private Investment Corporation (OPIC),and Trade and Development Agency (TDA) have major responsibilities to promote exports and investment by U.S. companies. The U.S. Department of Agriculture plays a critical role in agricultural exports. Other agencies, including the U.S.
Agency for International Development (USAID), U S Department of Energy, and Environmental Protection Agency (EPA) have expertise germane to environmental exports and provide varying degrees of direct or indirect assistance to U.S. environmental firms. With so many programs and agencies, there is a growing recognition that federal programs are poorly coordinated and often duplicative, and that an overall strategy to guide federal activities has been lacking. A number of congressional and executive branch initiatives are aimed at improving coordination and providing strategic emphasis. Several are described below. Trade egamples The Trade Promotion Coordinating Committee (TPCC), an interagency group, was established in 1990 and given statutory status under the Export Enhancement Act of 1992. A working group is charged with developing a strategy to promote U.S. environmental exports. The overall TPCC set up a one-stop Trade Information Center, although firms must still apply separately to different agencies for assistance. The United States-Asia Environmental Partnership (US-AEP) was established during the Bush administration to help countries in the Asia-Pacific region to solve environmental problems using U.S. technologies. US-AEP is funded at $100 million over 5 years out of USAID discretionary funds, and efforts are under way to identify other public and private sources of support. Among other activities, USAEP is establishing business offices in a number of Asian countries, developing a one-stop shopping service for American companies, and working with the National Association of State Development Agencies to promote trade opportunities. The Committee on Renewable Energy Commerce and Trade (CORECT) was set up in 1984 to coordinate federal promotion of renewable energy exports. With the Department of Energy as lead agency, 14 agencies and industry participate on the committee. CORECT has identified market barriers, investigated markets, sponsored trade events, and assisted in developing new financing mechanisms. There is interest in extending the CORECT model for energy-efficiency export promotion. The U.S. Environmental Training Institute (USETI), a nonprofit organ i z a t i o n established by EPA,
USAID, and TDA, encourages U.S. firms to train qualified private sector and public sector officials from developing countries. Companies bear training costs but may benefit from familiarizing foreign personnel with their products and capabilities. EPA estimates that federal support exceeds $1 million. TDA, Eximbank, and OPIC have given environmental trade and investment opportunities greater attention recently. TDA funds feasibility studies and other planning activities by US.companies that can improve the chances of U.S. firms winning large development contracts. Eximbank and OPIC provide financing and insurance for U.S. exports and U.S. investments in developing countries, respectively. A number of states are actively promoting environmental exports. The California Energy Technology Export Program, administered by the California Energy Commission, has successfully supported renewable energy and energy efficiency exports. The California Environmental Technology Partnership promotes both exports and technology innovation by California firms. The Minnesota Trade Office is one of several other state programs that have been active in the environmental area and have established close relationships with counterparts in federal agencies such as the Eximbank and the Commerce Department’s U.S. & Foreign Commercial Service. Private efforts to promote environmental exports include the U.S.ASEAN Council for Business and Technology, which works with business, federal agencies, and the USAID-supported Private Investment and Trade Opportunities program to promote U.S. business in the ASEAN region. Environment and energy are major foci of their activities. The Environmental Business Council of the United States (EBC]and the Environmental Technology Export Council are two recently established business organizations trying to establish a business focus on environmental exports. EBC, for instance, has entered into a technology agreement with the Confederation of Mexican Industrial Chambers. Outlook Continuing attention on environmental exports can be expected over the coming year. A number of proposals before the Congress address the issue, and the executive branch is working to establish an environmental technology export strategy.
Environ. Sci. Technol., Vol. 27, No. 13, 1993 2655
S t i l l , the m e s h i n g of e n v i r o n ment, development, and export promotion remains a challenge. A i d can be an important catalyst for encouraging e n v i r o n m e n t a l investments in developing countries, a n d
“Japan To Work with China in Developing Cheap Desulfurization Units for Plants”; International Environment Reporter. July 29. 1992. p. 497. (9) “Development Cooperation 1992 Report”; Organization for Economic Cooperation and Development: Paris. 1992, p. 78. 18)
it can open up commercial opportu-
IL
A
s E Rl
nities for donor country firms. However, export promotion goals could overshadow environmental and developmental goals of aid unless adequate safeguards are i n place. With safeguards, d e v e l o p i n g c o u n t r i e s could benefit by obtaining technologies needed to address their environmental problems: donor countries c o u l d benefit through trade a n d lessened global environmental
The Laser Science, Inc., PRF-WAL pulsed TEA carbon dioxide lase1 impacts. with wavelength agi/ify offers User selected wavelength emission pattern across 60 lines 150 Hz pulse repetition rates No beam wander * Programmable output intensities * Burst or continuous pulsing
operation The PRF-WAL laser is specifically designed for DISC and DIAL measurements. Ideal for atmospheric testing, the system includes; automatic scanner; control computer; variable charge power supply; and separate laser head designed to operate on different isotopes of CO,.
Laser Specifications Wavelength range: 9 - 11 pm Scanning rate: 150 Hz random line selection Pulse energy: >I 00 mJ-multimode on all gain lines Pulse length: 1 pecond Tuning control: RS232 Serial Externaltrigger: l l L level (50 ohm)
Call Laser Science, Inc. at 1-800-447-1020 to find out more about the PRF-WAL.
m
laser a k n c e , Inc.
75 ChepelSlmet Newton. MaSSachwetlS 02158 (617) 969-2271 fmU:4434136
CIRCLE 2 ON READER SERVICE CARD
26.58
Acknowledgments This paper is based on the background paper “Development Assistance, Export Promotion, and Environmental Technology,” OTA-BP-ITE-107, Washin ton, D C US. Government Printing Office, August 1993. prepared by the United States Congress. Office of Technology Assessment. It is the second of three reports prepared under the American Industry and Environment project. The authors wish to acknowledge Susan Lusi, Takashi Mashiko. Robert Atkinson, and Madeline Costanza for their contributions and Audrey Buyrn for support and advice. References
Rodney Sobin is on onolyst at the Congressionol Ofice of Technology Assessment. Previously he worked at the World Resources Institute. He holds on M.A. degree in biology, on M.S. deeree in technology a n d uman affoiL$ from Washingfon Unit sify. Si. Lours. and on A.B. degme from Cornell University.
Sebastion Remoy is a gmduate student in international relations at the University of Sussex, England. At OTA he worked as o r e search onolyst on export promotion a n d RbD policies for the Amencan Industrv and Environment project. Previousli he was a resrorcher at the Center for Stmtegic ond International Studies. Washington. DC.
(1) Development and the Environment:
World Development Report 1992; World Bank Oxford University Press, Oxford, U.K.. 1992; pp. 44-63. (2) The OECD Environment Industrj: Situation. Pmsoects and Government Policies; Org’anization for Economic Cooperation and Development: Paris 1992: OECD/GD(SZ)l. (3) Grant Fernier, president of Environmental Business International, Inc., testimony to House Committee on Merchant Marine and Fisheries, Subcommittee on Environment and Natural Resources, Feb. 25.1993. (4) U S . Congress. Office of Technology Assessment. “Fueling Development: Energy Technologies For Developing Countries”: US. Government Printing Office: Washington, DC, April 1992; OTA-E-516. 15) Jonathan Menes. Acting Assistant Secretary for Trade Development. U S . Department of Commerce, testimony before the House Committee on Merchant Marine and Fisheries, Subcommittee on Environment and Natural Resources, Feb. 25.1993. (6) Environmental Market Conditions and Business Opportunities in Key Latin American Countries, Business Focus Series: U S . Agency for International Development:Washington,DC, October 1992. (7) Foreign Broadcast Information Service. Environmental Issues. Oct. 28. 1992. p. 12.
Environ. Sci. Techml.. Vol. 27, No. 13, 1993
R o h i i Weissler is a senior onolyst at OTA; he has worked on i n t e r n a t i o n a l trade, manufoctur.ii ing competitiveness. and environmental projecis. He holds a low degree from the University of California at Berkeley and a B.A. degree in mathematics from Yale Universiiv. Before joining OTA, he practiced (ow in Washington. DC, and worked as a compurer scientisl in Cambridge, MA.
I
I
Wendell Fletcher is a senior associate at
OTA and director of the American Indus., t y and the Envimnment ossessment, which e x a m i n e s tmde, envimnment, and competitiveness intemctions. He has worked at the Congressional Research Service, the American Land Forum, and the Consemtion Foundation. He holds an M.S. degree from the State Universify of New York College of Environmental Science and Forestly.
.
I.__. I h,
~.* S
