Toward the end of June, the haze pollution broke records by big margins both in Singapore and Malaysia. Although the situation is much better now, the haze problem is so powerful that five ASEAN countries - Indonesia, Malaysia, Singapore, Thailand and Brunei - have convened a meeting to discuss the cross-border issue in mid-July.
These countries have suffered for decades from the haze created by the burning of forests in Indonesia. Why has this problem not been solved earlier? Burning is the most economical way of clearing forests for plantation, but only from the viewpoint of the farmers and plantation companies. From a global perspective, it is most uneconomical, as the costs imposed on others that the burners do not pay for are enormous.
Some economists have conservatively estimated the damages to Singapore from Indonesia's forest fires at about SG$5 million ($3.95 million) a day, which work out to just under than SG$1 per day per capita. These estimates include medical bills, tourism losses, businesses hit, and face masks bought. Focused on more tangible figures and as lower bounds, such figures are not incorrect; however, they grossly underestimate the severity of the problem. They do not adequately reflect the main costs which are the negative health effects, the worries caused, and the effects on global warming.
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By means of the average of the willing-to-pay and the necessary compensation, it is estimated that the losses per day would be orders of magnitude larger. This is also an alert to other countries, including China, that they cannot just focus on the more tangible costs of environmental damages and hence underestimate the true importance of environmental protection.
The meeting that happened in July is encouraging but not enough. Environmental issues, especially climate change, are global problems. Regional meetings do not address the global external benefits of forests adequately. A global approach is also needed. With the advance of science and technology, economic growth and globalization, and campaigns against terrorism and environmental disruption, the world has become much more integrated. Each of the 200-odd countries of the world cannot just look after its own backyard. That is why we have organizations like the UN. But the UN is much less powerful than national governments. The budget of a national government is typically in the order of 30 percent of GNP, whereas the UN budget is less than 0.01 percent of global GNP. In addition, the UN has much less power of coercion than a national government. The UN needs to be empowered to do its job properly. While a democratic and responsible world government would be ideal, a more realistic intermediate step would be to empower the UN by increasing its membership contributions and its cooperation with the WTO. Unfortunately, economists are typically in favor of free trade and reluctant to use the sanctions of WTO to achieve other objectives.
Within a country, all individuals also find individual freedom very important, but that does not preclude the need to imprison criminals who harm others.
To achieve the greater objective of environmental protection, the WTO should cooperate with the UN to use trade and investment sanctions against gross violators of environmental quality such as those who burn forests. It has been many years since the Kyoto Protocol was adopted in 1997.
Global cooperation to tackle environmental problems has not made much progress, with a number of countries withdrawing from the protocol. Many environmental scientists believe that, due to the existence of tipping points and cascading effects, we may only have a few decades left to prevent catastrophic destruction of our living environment.
I hope that many countries, including China, Malaysia and Singapore, take the initiative of approaching the UN with a sensible proposal to empower the organization, and thereby more effectively solve regional and global environmental problems.