Environment impact assessment of future regional economic integration in East Asia

Proceedings of International Symposium on EcoTopia Science 2007 in Nagoya
Discussion Paper

Currently economic integration in East Asia is accelerating along with a political movement towards creation of an East Asia Community. Regional economic integration could promote sustainability through generating higher incomes and facilitating clean technology transfer on the one hand, but equally it could cause natural resource degradation due to overexploitation and could harm equity in the region. Policy choices will determine which of these futures results from economic integration. Development of appropriate environmental policies that can both mitigate negative impacts and enhance positive impacts of regional economic integration is thus an imperative to promote sustainable development in this region.
As a part of an attempt to develop appropriate environmental policies not imposing excessive economic and social costs through conducting impact assessment of environmental policy implementation, we con-ducted an environmental impact assessment of future regional economic integration in East Asia region using the global trade model combined with sectoral emission factors. Environmental impacts caused by regional economic integration will depend largely on the degree of integration, which is associated with high degree of uncertainty. In order to address this future uncertainty, we employ scenario approach in which the future regional economic integration will be represented as a set of scenarios that cover the plausible range of the degree of integration. The impacts of future economic integration represented by scenarios are simulated using the GTAP model with updated datasets in recursive dynamic manner in which projection data of growth rates in population, skilled and unskilled labour force, physical capital and GDP are given as exogenous drivers. Then, the associated environmental impacts in terms of air pol-lutant emissions in Japan were estimated using emission factors which were updated based on projected clean energy shares to the total industrial energy consumption.