The Will of the People

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The Will of the People

Although climate change and environmental degradation are global issues, local imperatives are increasingly galvanizing emerging markets in their efforts to transition to low-carbon, environmentally friendly economies.


Before President Donald Trump officially announced he would pull the US out of the Paris Climate Agreement, concern had been voiced that doing so might encourage some emerging markets to soften or withdraw their commitments. So far, that appears not to have happened.

The reasons for this go beyond global politics. For many emerging markets, addressing issues to do with their energy mix or providing clean water, air and soil, are driven by local, not global imperatives, as domestic pressure mounts on governments to address major threats related to environmental degradation.

 

China’s water crisis

Take China, for example, where the OECD estimates hundreds of millions of people are drinking water contaminated with pollutants such as arsenic, excessive fluoride, agricultural chemicals and leeching landfill waste.[1] Furthermore, the population is expected to increase by another 20 million to around 1.4 billion by 2022[2]. However, 10% of China’s arable land is polluted and over-pumping in areas such as the North China Plain, a major contributor to the country’s wheat and corn supply, has depleted the water table, which is already threatening food security.[3]

As the water table continues to fall each year, the amount of arable land to feed the growing population decreases, but it also pushes up the cost of supplying fresh water due to deeper drilling.

For many emerging economies, as in China, environmental degradation can also be strongly linked to economic growth prospects. The World Economic Forum, for example, predicts that demand for water in China will outstrip supply by 2030, which could result in economic losses of $35 billion a year.[4]

 

Pressure for change

China is not alone in its environmental challenge. India and Bangladesh, for example, have experienced some of the largest increases in mortality due to air pollution. India is now approaching China for the greatest number of deaths related to air pollution, which is estimated to have killed 366,000 people in China in 2013.[5]

The social and economic challenges emerging market governments are facing are galvanizing them into action. Nowhere is this more clear than in China, which has been quick to fill the leadership gap left by the US in the fight against climate change.

China’s Five-Year Plan for Economic and Social Development (2016-2020)[6], in which the government sets out its strategic intentions and defines its major development objectives, supports the need for greater conservation and reuse of water as the country tries to reduce water consumption per unit of GDP by 23%. The authorities have also signalled that environmental violators will be severely punished.

But China is also investing significantly in its water infrastructure. Between 2016 and 2018, for example, central government in China is expected to allocate nearly RMB 6 billion to ‘Sponge Cities’, where the infrastructure integrates flood controls and the reuse of rainwater into urban planning.

More broadly, the Five-Year Plan puts China on track to meet its commitments under the Paris Agreement by cutting its energy intensity by 15%. Notably, the energy and carbon targets it had in place in the 12th Five-Year Plan were met and surpassed as energy intensity fell 18.2%. The latest Plan also steps up targets for reducing sulphur dioxide and nitrogen oxide, major contributors to air pollution.

Across emerging markets more broadly, climate-friendly initiatives, such as C40, which is a network of megacities committed to addressing climate change, continue to gain traction. Ninety one cities representing 25% of global GDP, including Beijing, Hong Kong, Shanghai, Delhi, Mumbai, Sao Paulo, Rio de Janeiro and Buenos Aires, have signed up to drive meaningful, measurable and sustainable action on climate change through the C40 initiative.

 

The will of the people

Although climate change is a global issue that is likely to remain high on the geopolitical agenda, many of the imperatives underpinning environmentally friendly policies in emerging markets are driven by local issues. As such, the withdrawal of the U.S. from the Paris Climate Agreement may have a more muted impact on emerging markets’ willingness to meet their own targets than initially feared.

As David Sheasby, Head of Governance and Sustainability at Martin Currie, says: "These are issues that transcend borders and are more dependent on the will of the people than the whims of individual politicians."

 

 

[1] China’s Water Crisis Part II  - Water Facts At a Glance, China Water Risk: http://chinawaterrisk.org/wp-content/uploads/2011/06/Chinas-Water-Crisis-Part-2.pdf

[2] World Population Prospects, The 2015 Revision, Department for Economic and Social Affairs, United Nations: https://esa.un.org/unpd/wpp/Publications/Files/Key_Findings_WPP_2015.pdf

[3] Worsening Water Shortages Threaten China’s Food Security, Earth Policy Institute, 2001: http://www.earth-policy.org/plan_b_updates/2001/update1

[4] How should business react to China’s water crisis?, World Economic Forum, 21 July 2016: https://www.weforum.org/agenda/2016/07/what-china-s-new-approach-to-water-means-for-business/

[5] State of Global Air 2017, Global Burden of Disease Project and the Heath Effects Institute, 2017: https://www.stateofglobalair.org/sites/default/files/SoGA2017_report.pdf

[6] The 13th Five-Year Plan For Economic and Social Development of The People’s Republic of China (2016-2020): http://en.ndrc.gov.cn/newsrelease/201612/P020161207645765233498.pdf

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