Joint Knowledge Event on Managing Natural Capital to Ensure Food, Energy, and Water Security Nay Pyi Taw, Myanmar 25 March 2014

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1 Joint Knowledge Event on Managing Natural Capital to Ensure Food, Energy, and Water Security Nay Pyi Taw, Myanmar 25 March 2014 Opening remarks by Javed H. Mir, Director of Environment, Natural Resources, and Agriculture Division, Southeast Asia Department, Asian Development Bank Honorable U Win Tun, Union Minister for Environmental Conservation and Forestry, Myanmar Honorable U Khin Zaw, Deputy Minister for Agriculture and Irrigation, Other deputy ministers Distinguished colleagues and friends. Good morning to you all. On behalf of the Asian Development Bank, it is my pleasure and privilege to deliver these opening remarks at this at this knowledge event Let me begin by thanking the Honorable Minister for Environmental Conservation and Forestry and vice ministers from MOECAF and the Ministry of Agriculture and Irrigation for gracing this event with their presence, and the Government of Myanmar for hosting this important event. We believe the theme of managing natural capital to ensure Food, Energy and Water Security is critical for realizing the shared vision of GMS countries of a future that is prosperous, equitable, and environmentally sustainable. I would like to focus my opening remarks on three areas of relevance and importance to today s knowledge sharing event as well as to the GMS Working Group on Agriculture and GMS Working Group on Environment deliberations when they meet tomorrow. 1

2 The three areas I will focus on are (i) the development context, the timing of this event, and the fact this event is being held in Myanmar, (ii) for what and whom we are aiming to improve the condition and management of GMS s natural capital; and (iii) how we see the GMS Core Agriculture Support Program and GMS Core Environment Program help us translate and scale up the knowledge shared and generated at this event. Let me start with the development context: Currently the development community, globally as well as in the Asia-Pacific, are facing three key challenges 1) how to address the persistent, and in some cases, growing inequity that is putting at risk economic growth and prosperity globally; 2) the growing environmental sustainability and climate change challenges, which were also highlighted by the Honorable minister in his welcoming remarks; and 3) that national and household budgets are increasingly squeezed and in response will require all of us to find innovative and more cost-efficient solutions to our food, water and energy security issues. An inevitable consequence is that natural capital management will have to become increasingly knowledge intensive rather than financial capital intensive. Let me also note, that interestingly, unlike in the past, these challenges and the remedies therein cut across developing and developed economies. First, we are just turning the corner from two decades of successful GMS economic cooperation. GMS countries now have launched a very ambitious GMS economic cooperation strategy for that is complemented by a $50 2

3 billion regional investment framework. This offers great opportunities but also challenges for the GMS countries, particularly regarding inclusivity as well as sustainability. GMS countries as part of ASEAN are also at the cusp of the 2015 ASEAN economic union. Again, this offers great hope and potential for GMS countries and its peoples, but also brings to the fore challenges that integration poses on the socio-economic as well environmental sustainability fronts. Now, in terms of both timing and location, the holding of this event in Myanmar signifies that like rest of the GMS, Myanmar s economic development, particularly of its agriculture, is at a crossroads. Myanmar, like other GMS countries, is well positioned to once again become a major regional and global player both in agriculture and environment. Let me try to share a few thoughts on why we believe the sound and sustainable management of land and water resources are important factors that will determine the performance of the GMS economic cooperation program in general, and the GMS agriculture and environment sectors in particular. Later today and tomorrow you will hear a lot more on this issue. Therefore, let me briefly layout for you how we in the Asian Development Bank see the link between natural capital management and the inequity and environment sustainability challenges GMS is facing, and will face in the coming decades. We will need to work more proactively and with more vision, starting now. As we are all into nexus terminology these days, let me briefly point out the natural capital-inequity nexus as I see it. As many of you know, GMS Gross 3

4 Domestic Product (GDP) has grown at around 9% annually during last decade or so. During the same period, Agriculture Sector GDP growth in the GMS has hovered 3.7% annually. Now, considering that 35 to 40% of the workforce in most GMS countries is associated with agriculture, unless and until, the agriculture sector growth rate is accelerated and keeps up with the overall growth rate, it should come as no surprise to anyone that we will be experiencing even greater inequity within as well as between countries. We also know that the future annual GDP growth rate for GMS countries is projected at around 7.5% for the coming decade. So, if we are to avoid greater inequities and related undesirable social and economic consequences, it is imperative that the agriculture and rural sector improves performance in terms of physical productivity, profitability and sustainability. Now, how are we doing on this front? I am afraid not very well. We have seen slower agricultural productivity growth, in many cases declining profitability, and declining transmission of benefits from retail and border prices to the farm gate and producer. On the natural capital front, we continue to see declining soil fertility and moisture retention capacities in GMS. Many of our farm lands are losing their carbon content. This is not only bad for our food security, but also is a clear indicator of reduced water/moisture retention capacity, and reduced soil carbon stock and sequestration - the latter further complicating the climate change situation. 4

5 Because of poor management of natural capital and poor agriculture and water resource management practices, we are seeing new food security and safety challenges arising across the region. These range from arsenic accumulation in many rice growing areas in the GMS, and bacterial blight and blast threatening rice yields and production in many important rice growing areas of the GMS, particularly upland rice areas, which can easily push many upland communities back into poverty and hunger. Therefore, the need for improving competitiveness of agriculture through adopting an integrated approach is more critical than ever in the GMS. The response is needed on multiple fronts: (i) enhancing climate resilience of production systems including natural infrastructure of land and water resources, (ii) reducing reliance on fossil fuels by promoting and increasing agri-energy linkages such as between biomass-based clean energy for irrigation, transportation and bio-fertilizers, and (iii) improving energy efficiency and climate resilience of aggregation, processing, storage, marketing and logistics infrastructure to ensure delivery of safe and value-added agri-food. It is important to note that this cannot be accomplished by the public sector alone. We need more proactive participation of the private sector, and for that to happen, the public sector needs to create an effective enabling environment. We need to enhance resource use efficiencies, we need to look at the agriculture sector from a systems perspective, and look at improvements in all stages not only production but also post-harvest stages. As many of you know, post-harvest 5

6 losses in the rice sector in GMS are typically 15-20% in terms of weight loss and an additional 10-30% loss in terms of market value due to quality deterioration, part of which is associated with climate-related vulnerabilities. In these losses are embedded water and energy losses as well. Now, let me briefly highlight a few other threats to natural capital in the GMS. An estimated 10 12% of gross domestic product in the subregion is lost every year through the over-exploitation of forests, land, wildlife, fisheries, as well as through ecosystem pollution. Forest cover loss since 1990 totals 8 million hectares an area equivalent to almost one third the size of Lao PDR. During the same period, total greenhouse gas emissions increased 76% from 1990 levels in the subregion. In terms of land use change, the subregion accounts for close to 6% of forestryrelated global greenhouse gas emissions even though it has only 3% of the world s forest area. The subregion s rich fishery resources are at great risk due to increasing energy demand, particularly from hydropower development that is yet to be supported by sound economic, social and environmental cost benefit analyses. As energy demand growth runs ahead of the economic growth rate, given the economic growth projections for the GMS, we are likely to see water demand for energy production increase. This will put further stress on water resource allocation for food production, as well as for domestic and industrial use. Unfortunately, from the supply side, ground and surface water sources are depleting and degrading. 6

7 It is imperative that GMS countries take steps to more effectively integrate natural capital considerations into economic development. Otherwise, managing the subregion s natural capital in order to ensure food, energy, and water security is going to be difficult, if not impossible. The very reason we are holding this knowledge event indicates this is not an easy task. This task is characterized by the complex challenge of optimizing allocation of scarce resources across agriculture, energy and water sectors. Effective integration of natural capital considerations into sector development policy, planning and management processes requires reliable, up-to-date data and information on the extent and condition of natural stocks and the demands on these stocks. A complicating factor is the need to value these stocks and translate and integrate this information into national fiscal and investment planning systems. Uncertainties, associated with the non-linear behaviour of most ecosystems and the changing climate make the task, technically and institutionally all the more challenging. Therefore, we need to carefully identify institutional structures, as well as analytical and decision support systems that can support integrated sector planning such as energy and water. Similarly, land use change simulation applications and spatial multi-criteria analysis can smartly inform assessments of agricultural land use potential, reveal the dynamics of land use change, and aid projection of land use change scenarios and alternatives for use and investment. There is much to learn from regional and international experiences in this regard, 7

8 determining what innovative tools and processes exist, what is working, and what is not working. CONCLUSION In closing, I would like to reiterate my conviction that managing the food-energywater resources in an integrated, collaborative and cooperative manner poses the most critical challenge to today s policy makers and development practitioners. I am reassured, therefore, by the concrete work that is being undertaken in response to this challenge. We will hear today about current and possible strategies for integrating food, energy and water security in the GMS. Additional insights will be shared on promoting multi-sector planning to provide some insights into how to do this kind of integrated planning without succumbing to institutional inertia and capacity deficits. We will conclude our deliberations by identifying priority actions for natural capital management to enhance foodenergy-water security in the GMS.. Lastly, I draw your attention to highly relevant work being undertaken through the GMS Core Agriculture Support Program and GMS Core Environment Programs to sustain and secure natural capital for improving the economic and human welfare in the GMS. CASP is promoting productivity and food safety enhancing technologies and institutional arrangements to make the agriculture sector more competitive and resilient. 8

9 Likewise, the GMS Core Environment Program (CEP) is focused on conservation and sustainable utilization of the GMS s vital natural assets for sustainable and inclusive growth and development.. Working in seven transboundary biodiversity landscapes, CEP actions are contributing to protection of critical habitats and the enhancement of ecosystem services through improved land use planning and environmental monitoring. The program is also supporting local community initiatives on reforestation and forest protection, aimed at building more sustainable and resilient livelihoods. The challenge is great, but the potential for gains is undeniable. I firmly believe that the GMS is ready to take on this challenge, and the benefits will be felt for generations to come. It is with this positive thought that I conclude my remarks. Thank you for your attention. 9

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