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The role of international agreements in environmental conservation and its implication to Vietnam
VIETNAM NATIONAL UNIVERSITY FACULITY OF ECONOMIC YASUKATA FUKAHORI THE ROLE OF INTERNATIONAL AGREEMENTS IN ENVIRONMENTAL CONSERVATION AND ITS IMPLICATION TO VIETNAM Major: Political Economy Code: 62.31.01.01 DOCTORAL PHILOSOPHY OF ECONOMICS Advisor: 1. Associated Professor, Doctor Phi Manh Hong 2. Doctor Phung Xuan Nha HaNoi, 2008 VIETNAM NATIONAL UNIVERSITY, HANOI COLLEGE OF ECONOMIC YASUKATA FUKAHORI THE ROLE OF INTERNATIONAL AGREEMENTS IN ENVIRONMENTAL CONSERVATION AND ITS IMPLICATION TO VIETNAM Major: Political Economy Code: 62.31.01.01 DOCTORAL PHILOSOPHY OF ECONOMICS Advisor: 1. Associated Professor, Doctor Phi Manh Hong 2. Doctor Phung Xuan Nha HaNoi, 2008 CONTENTS Page Introduction ……………………………………………………………………… 1 Chapter I: Economic Theories Related to Environmental Conservation………. 14 1.1. Theories of Common Pool Resources …………………………………… 14 1.2. Theories of Collective Actions and International Agreements ……………. 23 1.3. Coase Theorem ………………………………………………………… 25 1.4. Game Theory ……………………………………………………….…… 26 1.5. Other Economic Theories …………………………………………….… 31 1.6. Application of Economic Theories to Environmental Conservation………. 36 1.6.1. Sustainability and Budget Line – Case Study for Forest Conservation……. 36 1.6.2. Game theory scenarios and possible contribution arrangements of international agreements ………………………………………….………. 46 1.7. Summary of Results ………………………………………………….…… 88 1.8. Recommendations …………………………………………………….… 90 Chapter II: Environmental Conservation in Relation with Trade, ODA and Sustainable Development ………………………………………… ……………. 92 2.1 Trade Agreements and Environmental Issues ………………………… …. 92 2.1.1. The New Politics of Trade ……………………………………… ……… 92 2.1.2. Trade under Commodity Agreements and Environmental Conservation… 96 2.1.3. WTO Dispute Settlement Mechanism and Environmental Conservation 100 2.2. Global Environmental Issues ……….…………………………………… 101 2.2.1. Issues and Problems related to Global Environmental Conservation………. 102 2.2.2. World Summit for Environment ……………….…………………………. 103 2.3 ODA and Environmental Issues ………………………………………… 106 2.3.1. Trade and ODA …………………………………….…………………… 106 2.3.2. ODA and Environmental Issues …………………….……………………. 107 2.3.3. Problem of International Aid …………………………….……………… 107 2.3.4. Private Sector …………………………………………………………… 109 2.3.5. Transparency …………………………………………………….………. 109 2.3.6. The Problem of Sovereignty and Economic Forces ……………………… 110 2.3.7. Capacity Building, Education, and International Treaties ………….…… 110 2.4. Sustainable Management of Environmental Natural Resources ……….…. 111 2.4.1. Definitions of Sustainable Development …………………………………. 111 2.4.2. Economic growth for local welfare and conservation Sustainable Development 112 2.4.3. Problems Causing Sustainable Management …………………… ……… 114 2.5. Environmental Conservation and International Agreement ………………. 116 2.5.1. International Negotiation on Environmental Conservation ……………… 116 2.5.2. Fund Raising under the Existing International Agreements ………………. 117 2.5.3. ITTO and Forest Conservation ……………………………………………. 118 2.5.4. Limit in conservation by an international agreement organization ………… 130 2.6 Experiences in Other Countries……………………………………………. 132 2.6.1 Japan ……………………………………………………………………… 132 2.6.2 South Korea ………………………………………………………………. 133 2.6.3 China ……………………………………………………………………… 133 Chapter III: Issues Related to Vietnam …………………………………………. 137 3.1. The New Trade Debate and Its Implication to Vietnam ………………… 137 3.1.1. Vietnam’s New Membership of WTO …………………………………… 137 3.1.2. New Politics of Trade and Vietnam ……………………………………… 138 3.1.3. CDM and Vietnam ……………………………………………………… 139 3.1.4 ODA and Environment/Trade Issues for Vietnam………………………… 141 3.2. Application of Economic Theory - Implication of ITTO Mechanisms to Vietnam - …………………………………………………………………. 142 3.2.1. Scenario 1 ………………………………………………………………… 144 3.2.2. Scenario 2…………………………………………………………………. 151 3.2.3. Analysis of results ………………………………………………………… 156 3.2.4. Summary of Games ………………………………………………………. 157 3.3. Experiences in Other Countries for the comparison with Vietnam………… 160 3.2.1. Japan ……………………………………………………………………… 160 3.2.2. South Korea ………………………………………………………….…… 160 3.2.3. China …………………………………………………………………… 160 3.2.4. Lessons from other countries …………………………………………… 161 Conclusion ………………………………………………………………………. 162 List of reference materials ……………………………………………………… 168 1 Summary Introduction 1. The Necessity of the Thesis Topic There have been growing concerns in the global community on the degradation of international environmental assets. As the reports of Intergovernmental Panel on Climate Change (IPCC) indicate, human activities are considered culpable for the degradation. Trade is also often criticized for the depleting precious environmental natural resources such as tropical forests. The purpose of the thesis is to examine how International Agreements envisage to contributing to conservation of the global environmental assets that are diminishing rapidly at an increasing rate. It is very timely and important in three main reasons. First, Vietnam has just become a member of WTO. WTO system and its rules have been often criticized by environmentalists for the possible impact on the relations between international trade and global environmental assets. Therefore, Vietnam will have to take into consideration this aspect of WTO as a member. Second, Vietnam is expecting to face environmental problems in the future. As a country whose economy grows by around 7-8 per cent annually, 2 it is the natural, predicted and unavoidable course of development. Third, the relations between trade and environmental have newly emerged as an important issue in the global community to which Vietnam is rapidly being integrated. It is of absolute importance that Vietnam is prepared for the possible consequences of environmental degradation and responsibilities under international agreements. This thesis will introduce some of the possible alternative paths that Vietnam will need to take during its economic development process. 2. Research Background There have been a number of studies related to the relations between trade and environment especially in the context of WTO Doha Round Negotiations. There are also a number of studies related to other international agreements such as FTAA and US-Jordan FTA. One of the best studies probably the “WTO after Seattle” by Jeffery Schott of which the review is stated below. However, there has been no publication analyzing the impact of trade agreements mathematically in terms of environmental conservation. The proposed thesis is, therefore, unique, original and very challenging in this aspect. The followings are some of the important previous 3 studies related to the issue of trade and environment. (a) Governing the Commons (Elinor Ostrom, 1990) Ostrom suggested in this Article that the desirable result can be achieved if proper enforcement system is established prior to the games. However, Ostrom did not discuss about the introduction of arbitration under International Agreements which this thesis tries to incorporate into the games. (b) The Logic of Collective Action (Olson, 1965) Olson first introduced the concept of "collective action problem" in this 1965 article. This article by Olson constitutes one of the backbones of the theoretical approach in environmental economics. (c) WTO, after Seattle (Jefferey Schott, 2001) WTO negotiations became paralyzed at its 3rd Ministerial Meeting held in Seattle in 1999 due partly to environmental issues. This book illustrates how the WTO negotiations are affected by environmental conservation movements. 3. Objectives First of all, the focus will be set on the general mechanisms of international agreements. This approach 4 would make it clear how international agreements try to achieve sustainable management of the global environmental assets. The mechanisms and arrangements adopted by a number of international agreements must be studied carefully in order to understand the effectiveness and impact of their projects in relation with the global environmental conservation. Second, the results obtained by the above studies will be further examined with the relevant economic theories which are introduced in the Chapter 2 of the thesis. By applying economic theories, the roles and mechanisms of international agreements in conservation of global environmental assets will become clearer. Third, the Vietnamese context will be deeply examined. Vietnam has become a member of WTO in January 2007 and its implication to environment needs to be assessed properly. Apart from trade implications, Vietnam will have to take the path of balancing between industrialization and environmental degradation. Japan suffered quite heavily from pollutions during the fast industrialization process during 60‟s and 70‟s. Such experience of Japan needs to be properly introduced to Vietnam whose economy is experiencing a very fast economic growth. The methodology of the study will mainly be the researches based on the statistics and other public 5 documents related the relation between environmental issues and international agreements, especially on trade. Some of the evidences will be derived from interviews and the diplomatic experiences of the author of the thesis. 4. Scope of Study (1) International Aspects First, it is necessary to study the relation between WTO and environmental issues. Environmental negotiation is included in the current Doha Development Agenda (DDA) negotiations but to the minimum extent. The proposed thesis will discuss how the environmental negotiations under DDA will affect the future global trade. Secondly, as a supporting factual background to the DDA negotiations, the efforts that have been made by the international community to conserve global environmental assets need to be examined. (2) Vietnamese Aspects The most important element in the Vietnamese context in the proposed thesis will be the Vietnam‟s accession to WTO. First, the proposed thesis will discuss the current situation of the multilateral and bilateral negotiations on Vietnam‟s accession to WTO. Secondly, the implication of Vietnamese accession to WTO and its obligations related to environmental conservation will be [...]... achieved to the right of OS line as long as the points are to the left of the vertical S line which represents the general sustainability line Gist of Chapter 2: ENVIRONMENTAL CONSERVATION AND TRADE 1 The New Politics of Trade In this chapter, various issues related trade and environmental conservation are introduced Firstly, the new trend in the international trade debate which link trade with various other... ISSUES RELATED TO VIETNAM The Chapter 3 deals mainly with issues related to Vietnam For example, the new trade debate and its implication to Vietnam, Vietnam s new membership of WTO, CDM and Vietnam, are all examined in this chapter Particularly, the implication of Vietnam s new membership of WTO is examined in detail There are quite a few complicated issued related to the issue of trade and environment... issues in the global context are explained in detail The issues include the opening of world summit meetings for environment, ODA and its relation to trade and environment, the role of private sector, transparency, capacity building, education etc Emphasis is on the role of official development aid (ODA) extended by developed countries to developing countries in securing the sustainability of environmental. .. surrounded the venue of the meeting for a few 14 days Thus, the environmental issues have become closely linked with trade in this century, particularly through the framework of international organizations including WTO, IMF, WB and ITTO Then, this chapter explains the international efforts towards the global environmental issues, not necessarily related to trade but to the environmental issues in general The. .. factors as the background of games to see the impact on the contribution trade-offs Within the framework of game theories, this thesis introduces a new factor represented as „a‟ for the arbitration system The games that are assumed to be supported by this factor in the thesis are found to be more successful than normal cases (2) New findings related to the application of theory The games played with the. .. about the current issues related to trade and environment, including commodity agreements, WTO Doha round negotiations, World Environment Summits, and ODA 5 Fifth, the thesis employed the game theory as the main tool to conduct economic analysis related to trade and environmental conservation through international organizations 6 Sixth, the thesis took up ITTO as a case study to apply game theory to see... particularly when the growth is induced by the increase of export of natural resources Then, this chapter introduces game formats which are applied for the cases of forest conservation in Vietnam and its implication to the negotiation under the International Tropical Timber Organization and its environmental fund raising system called Bali Partnership Fund The outcomes of the games played under certain conditions... chiseling, because otherwise there would be no incentive for those chiseling countries to stop making unfair profits out of trade of the resources 7 As for Vietnam, it would be necessary for Vietnam to pay due attention to the issues related to trade and environment especially because Vietnam has 24 become a member of WTO 8 Vietnam will face pressure from international community on its domestic environmental. .. conservation of environmental natural resources This is mostly because the environmental natural resources are generally the international resources and that the cooperation of international community is indispensable for the conservation of international environmental natural resources Then, the next question is how international organizations can conserve the resources A number of games introduced in this thesis... supported by WTO systems As discussed in the Chapter 2, the relation between trade and environment will be focused in the future trade debate in the international context Therefore, Vietnam also needs to be prepared for the role under which Vietnam is expected to follow in order to maintain its domestic environmental resources above the sustainable level Forestry can become an important sector to this effect . The purpose of the thesis is to examine how International Agreements envisage to contributing to conservation of the global environmental assets that are diminishing rapidly at an increasing. further examined with the relevant economic theories which are introduced in the Chapter 2 of the thesis. By applying economic theories, the roles and mechanisms of international agreements in. Introduction 1. The Necessity of the Thesis Topic There have been growing concerns in the global community on the degradation of international environmental assets. As the reports of Intergovernmental