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Al-Ahram Weekly 19 - 25 August 1999 Issue No. 443 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 19 - 25 August 1999 Issue No. 443
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Profile Travel Living Sports Time Out Chronicles Cartoons Letters The win-win game
By Ragi Halim and Mahmoud BakrFrom 12 to 14 August, the Ministry of Environment hosted an "Intellectual Environmental Dialogue" in El-Gouna, Hurghada. The guest speaker was renowned environmental economist Professor Theodore Panayotou, director of the Harvard Institute for International Development and author of Green Market, Not by Timber Alone and Instruments of Change: Motivating and Financing Sustainable Development.
The dialogue attracted a distinguished audience, including members of the international community and representatives of academia, as well as environment officers from various embassies. This diversity greatly enriched the discussion of issues presented by Panayotou. As Minister of Environment Nadia Makram Ebeid, who inaugurated the dialogue, pointed out, "certain things are difficult to apply in Egypt, but it is very beneficial to hear such an eminent professor speak. It opens up new perspectives."
The environmentally-friendly measures devised and implemented by Ebeid herself are well known, as are the difficulties the new policies have faced. The Summary Profile of Initiatives issued by the Ministry of State for Environmental Affairs (1998-99) recognises clearly that Egypt's environmental policy faces the challenge of achieving "a balance between the needs of a developing nation and the protection of our natural resources. In doing so, we are required to address the cumulative impact of environmental problems that extend over the past 40 years, mobilise LE12 billion in investments over the next five years to bring existing industries into compliance with our environmental legislation, build the technical and human infrastructure for environmental monitoring and management, and effect a change in environmentally destructive public behaviour."
These points were illustrated poignantly by the comments of Saad Abu Reida, the governor of the Red Sea, who focused mainly on increased tourism while cautioning against potential hazards to the environment. "In 1997," Abu Reida noted, "we had 13,200 rooms. By 2000, we hope to have 32,000. In 1997, there were 950 boats and yachts on the Red Sea coast, but the rangers of the protected areas of the Red Sea have only one." Abu Reida admitted he was afraid "of losing control"; but, with the help of the Armed Forces, border guards, the Navy, and the rangers of the Egyptian Environmental Affairs Agency (EEAA), he is trying "to put an end to violations".
In July alone, the Red Sea governorate hosted 34,000 divers and 61,000 snorkellers out of a total of 128,000 visitors. This is not the peak: in August numbers rise still further. While such activities are especially beneficial to the economic growth of the area (one diving centre requires an initial investment of half a million pounds), and foster the development of tourist villages to serve diving enthusiasts, Abu Reida emphasised the need for "severe control measures". He added that increased environmental awareness is also crucial.
If the difficulties entailed in the Red Sea area by attempts to reconcile tourism and environmental protection illustrated the potential benefits of the intellectual dialogue, El-Gouna showed one successful approach to resolving the apparently contradictory demands of growth and preservation. The arid landscape surrounding the resort has been transformed: greenery is everywhere, and a network of artificial lagoons dots the landscape with bright turquoise. Where does the irrigation water for all this greenery come from?
From left to right: Abdel-Ghaffar El-Dib, Egyptian ambassador to Zambia; Environment Minister Nadia Makram Ebeid; Professor Panayotou; and Dina El-Naggar of the Ministry of the Environment
"We have a water treatment plant that enables us to reuse every drop of water in an efficient way," said Samih Sawiris, the resort's founder.
In Dawar Al-Omda (one of the resort's hotels), the unique floor draws the visitor's attention. "It's recycled from the remnants of building materials," explained Ayman Moharram, director of the famous Torah Zabbalin (rubbish collectors) Upgrading Project. Strolling between the lagoons, which are fed by the Red Sea, Moharram pointed out the Zabbalin Oasis Compound. "I always dreamed of a resort with no refuse," Sawiris said. "I started a recycling programme for solid and organic waste. All the vegetation you see is fertilised by a compound made of recycled organic waste. Even the clothes-hangers in the rooms are made of recycled plastic."
In her presentation of garbage collection and recycling achievements, Youssriya Loza Sawiris, president of the Association for the Protection of the Environment (APE) in the Muqattam and Torah districts, explained: "Here in El-Gouna, when we first started to separate and classify the garbage, we faced a problem: the lack of expertise of the non-specialised workers. We brought garbage collectors from Cairo who did the work in a professional way and trained those who had no previous experience."
Here, then, were two examples of potential conflict between growth and environmental protection -- food for thought over the course of the two-day meeting. The intellectual dialogue placed these and many other concrete difficulties in a wider context, increasing the participants' awareness of the real problems at hand, and offering hope that a solution was indeed possible.
The dialogue was divided into four sessions: The role of environmental economics in reconciling environmental protection and economic growth; estimating the benefits and costs of environmental management: environmental impact assessment and valuation; internalising environmental costs and capturing environmental values: the role of economic instruments; and environmental policy, international trade and global climate.
Professor Panayotou spoke in detail about the ways of financing sustainable development, and particularly the so-called "win-win" policies for growth and environmental protection, the common enemies of such policies, and the fundamental lessons we must learn if we are indeed to win on both fronts.
With limited resources, multiple objectives -- economic growth, poverty alleviation and environmental protection -- compete and may conflict: economic growth may increase environmental degradation and environmental regulation may constrain growth. This is how Professor Panayotou summarises the paradox of environmental protection in a developing country. Therefore, every effort must be made to reconcile and synergise these diverse social objectives and to allocate resources among them in the most efficient way possible.
"That's why environmental economics is different from any other type. Environmental economics provides us with the analytical tools to reconcile environmental protection with economic growth, poverty alleviation, and other social objectives, and to protect and improve the environment without wasting scarce resources," he added.
The environment, Panayotou explained, cannot be protected without economic growth. Poverty causes environmental degradation and aggravates the population problem. Low income means low demand for environmental amenities. It also discourages people from participating in environmental measures, and diminishes a country's ability to pay for environmental protection and improvement, he added.
But would slower economic growth slow the rate of environmental degradation? "Absolutely not. Slow growth will slow structural changes and lead to continued dependence on natural resources. Slow growth also means a limited tax base and limited public resources for investment in environmental protection and improvement."
A degraded resource base, in turn, can yield nothing but reduced agricultural growth, damage to water and energy supplies and infrastructure, as well as increased rural poverty, according to Panayotou. "What do we expect from a polluted environment?" he demanded: "Nothing but damage to health and productivity, damage to tourism, reduced attractiveness to foreign investors and reduced quality of life at the end, besides the reduced public support for rapid economic growth."
Among the fundamental principles of win-win policies, he mentioned the fact that "heavy dependence on natural resources is detrimental to rapid and sustainable economic growth. It is only by gradually reducing the economy's dependence on natural resources through high rates of savings and capital formation (especially human capital) that sustainable growth can be ensured."
Egypt, Panayotou believes, is lucky to have huge reserves of natural gas, solar energy, the Nile, and a cultural heritage that forms a strong base for sustainable tourism. Egypt also has the advantage of being very close to the markets of northern Europe.
Nor does Panayotou feel that liberalisation measures are necessarily detrimental to the environment, since possible disadvantages "could be mitigated".
Despite the clear economic benefits of sustainable development, it continues to receive insufficient financing. The reason, he says, is that "the world is relying on conventional means to finance an unconventional idea. Official Development Assistance (ODA) in real terms (in 1994 prices) fell from $60 billion in 1992 to $55 billion in 1995 and from 0.35 per cent of donors' GNP to 0.27 per cent, despite a target of 0.7 per cent set in Rio de Janeiro."
In developing countries, Panayotou added, "the public sector is under-investing in environmental sustainability because of severe budget constraints, public sector deficits and more pressing expenditure needs."
The private sector, however, has also failed to fulfil its side of the bargain, "because under prevailing institutional arrangements, it cannot recover costs and earn a decent rate of return from the provision of public goods. True, foreign private capital flows to developing countries have risen beyond expectations, from $93 billion in 1992 to $182 billion in 1995, but there is little evidence that an increasing share is being devoted to sustainable development."
While there is no shortage of pronouncements and good intentions, the financing gap persists. Panayotou believes this situation will prevail unless we begin to think of new and innovative ways to mobilise resources. "Even the concept of sustainable development financing may have to be defined in an 'unconventional way', since many of the changes needed to put the world economy on a sustainable development path may not involve any investments, but simply a change in the incentive structure to induce less wasteful and more environmentally and socially sound behaviour."
While funds are often sought through higher taxes, or by borrowing from foreign donors, many accessible win-win approaches to sustainable financing are left untapped, in Panayotou's opinion. These range from removing costly subsidies and practicing demand-side management to improving security of property rights and better access to resource rents and windfall gains. Other sources of sustainable financing include "greening the tax system, privatisation of state enterprises, competitive provision of public services, incentives for self-regulation and increased reliance on economic instruments that provide incentives and mobilise revenues, rather than on command and control regulations that do neither."
Developing countries like Egypt must often grapple with harsh environmental constraints despite the gradual removal of international trade barriers. One example is the recent European refusal of Egyptian potato exports on the grounds that the shipment was polluted with DDT. Yet wealthy countries impose genetically modified products on Third World countries. Al-Ahram Weekly asked Panayotou who determines the constraints, and how developing countries should deal with such double standards.
There are some questions, it would seem, that even Professor Panayotou cannot answer. "I don't know," he admitted. "All I can say is negotiate and keep negotiating -- but make sure your negotiations are well constructed and informed."
