To Main Proceedings Document
Dual Economic Development and Degradation of Ecological
Environment of Lancang River Basin
Xu Honggang
xuhonggang@ yahoo.com
Abstract
The development of Lancang River basin has shown the dual structure in that the
major development efforts have been paid to the big economic infrastructure
projects and mining plants from which the local rural communities can not get the
most benefit. Therefore, although substantial resources have been invested in this
region, the well understood vicious poverty and degradation of natural resources
cycle can not be broken. Meanwhile, the construction and operation of these
infrastructures and mining industries adds new risks to the natural environment.
Without preventive and proactive polices and strategies, degradation of natural
resources, which in turn will impact on the life expectancies and utilization rate of
the infrastructures, will be intensified. A qualitative system dynamics model,
focusing on feedback analysis is built to analyzes the effectiveness of the
implemented and proposed development strategies in Lancang River Basin.
Key Words: Lancang River Basin; dual structure; development policies and
strategies; degradation of natural resources; system dynamics model; feedback
analysis
1. Problem identification:
The normal total proposed planning area in Lancang River Basin is around 142,000
km2, which accounts for 37.2% of Yunnan Province. The total population in the basin
was 9.60 million in 1997, which was 23.5% of the total provincial population. There
are 18 minorities in this basin. In 1992, there were 4.698 million minorities in the
basin, which was 47.65% of the basin’s population of that year. In 1994, there were
592 countries which were categorized as the poorest counties in the country, 22
counties in the Lancang River Basin fell into this category.
Lancang River is rich in water resource. The average water resource per capita is
110,000 M°, which is 1.6 times of the average provincial level. The potential
electricity capacity is 22.74 million kW. The good geographic locations for these
potential hydro-power stations make the hydro-energy the cheapest energy supply in
the region. The area is also rich in mineral resources, especially in lead, zinc, copper
and tin. The lower basin of Lancang River Basin is the second largest forestry base of
Yunnan Province, one of the four forestry bases in China. The lower basin of the river
accommodates the most valuable tropical vegetation in China. The well preserved
natural environment attracts the tourists in this region.
1.1. Natural resource based development patterns
The development of Lancang River Basin has been based on the exploitation of the
natural resources due to their richness. The traditional local economy also depends on
the natural resources. The agricultural sector is the dominant sector in terms of both
employment and value of production. In 1992, there were 8.966 million people in the
agricultural sector, about 90% of the total population in the region. Compared with
the average level across Yunnan province, the industrial and construction sector is
very poorly developed. However, service sector has been developing more rapidly
than average at the Y unnan provincial level, especially in the tourist sector. Following
the development strategy of Lancang River, major attention has been given to the
construction of large infrastructure and industrial plants.
In 1985, Middle Basin of the Lancang River was identified as one of the major
national development areas for hydro-power and black mineral resources. Following
on this, the Yunnan Provincial Government has set the development of the Lancang
River Basin as the basic strategy for the development of Yunnan Province.
The construction of Manwan hydro-power station began in 1986 and the first
operation started in 1993. The total capacity is 1.35 million KW. The construction of
Da Cao Shan hydro-power began in 1997 and the first stage operation is expected in
2001. The total capacity is 1.35 million KW. Xiaowan hydro-power station is under
preparation. The construction of the high standard road from Cu Xiong to Dali loaned
by ADB was initiated in 1996 and finished by 1998. Si Mao, Jing Hong and Guan Lei
ports were completed during 1990s. The Lanping Lead mining and processing factory
were established in early 90s and the construction of Simao paper mill loaned by
ADB started to produce in 1996.
These development strategies have already led to the rapid economic development in
this region. However, the ecological environment has been degrading. The ecological
degradation is perceived to be very serious. Soil erosion, degradation of grassland and
the reduction of the bio-diversity are perceived to be the most serious issues in
Lancang River Basin although the forest cover in this region is higher than the
average level across Y unnan Province.
1.2. Degrading natural environment
The generic vicious cycle between the poverty, population pressure and the
degradation of ecological environment is especially applicable in this region where
steep mountains account for majority of the land areas (Table 1).
Table 1 land distribution patterns
Slope of land [Percentage of land areas
<=8 4.78%
etween 8-15 8.25%
etween 15-25 44.57%
>25 42.7%
(Data source Y unnan Environmental Commission 1997)
Yet, the newly development has brought new risks to environmental degradation and
depletion of natural resources. According to the research done by Yunnan
Environmental Commission (1997), the resources based development strategies in the
past have brought substantial environmental changes in Lancang River Region. The
most seriously ecological damaged area is in the middle basin of the Lancang River
where most of the development projects have been implemented, such as the
construction of paper mill at Simao and the construction of two hydro-power stations,
are located.
The building of large dams and the construction of the hydro-power stations can lead
to positive and negative environmental and social changes of the river basin. The
excavation and processing of mineral resources, one of the major development
strategies, discharge of the wastewater, air pollution and solid wastes into the river
basin. Tourism also can bring the negative environmental impacts on the Lancang
River basin. Development of infrastructures for tourism and the activities of tourists
directly threat the ecological environment. The exploitation of bio-resources, one of
the major development strategies, is manifest in agro-industries as the biggest
polluting industry sector in the region. For example, sugar and paper mills are the two
largest polluting sources in the region.
2. Duality of the development strategies
It can be argued that adopted development policies and strategies can promote the
regional economic growth and increase the income of the rural people by providing
infrastructure service in the region, creating employment opportunities in
infrastructure construction and in mining industries. The developed economy can
break the vicious cycle and stop further environmental degradation. Yet, the
development strategies failed to achieve the expected patterns due to the duality of
infrastructure services and duality of mining industries embodied in the dual structure
between rural and urban sector and between the local majorities and external
investors.
2.1. Dual access to infrastructures
Many researchers have pointed out that one reason for the inefficiency of
infrastructure investment is the lack of attention paid to accessibility of the
infrastructure (Howe and Zille 1987; Barwell et al. 1985; ILO 1998 a and b). A focus
on access is important, as it is a common theme which can be applied to all types of
tural infrastructure (ILO 1998). As suggested by Eberts and Biehl (1986), Nadiri and
Mamuneas (1994), the stock of public capital must be adjusted by an appropriate
index to demonstrate the degree of usage by the producers. ILO (1998 a and b) points
out that heavy investment in roads may in any case not be the only — or evena
priority — solution to the problem of access. Few rural people in developing countries
either own a motor vehicle or can afford to pay for motorized transport services.
Therefore, the accessibility, defined as the ability to reach, visit or use is more
important to the peasant or small producers.
In this region, Lancang river is running deep in the valleys and thus water resources
are difficult to be accessed for drinking and irrigation. In the early 90", about 3° of
the population in the River Basin could not get access to drinking water. Irrigated
cultivated land was only a small percentage of the total cultivated land. Although
large hydro-dams have been built, the energy sources for the rural areas still depend
on the woodfuel because of the transmission network has not been built up and the
majority of the rural people can not afford to use electricity. Y et, more than 50% of
the rural people in this region, who are facing the shortage of woodfuel, have brought
damages on the forestry and grassland. The rural roads have been built by raising the
local money. Although the statistical data shows that the construction of Xiang to
Xiang roads have been dramatically increased in recent years, the quality of these
roads are extremely poor and most of them can only accessible during the dry
seasons.
2.2. Dual technological level
Mining companies in this region have no real connections with the local regions. The
mining companies normally only need to employ semi-skilled or unskilled workers
from the local rears. The development of human resources in the mining industrial is
very slow and the kills developed in mining industries are very specialized. The
workers who are employed in the mining usually will have difficulties to get another
job once the extraction of the resources finishes. Environmental registration usually
forces the companies to use modern technologies to clean the pollution. As the result,
the companies are not under direct pressure to acquire local knowledge or expertise
about the environment. The local community may only experience a short-term
economic boom but end with a huge area of waste land. Similar development patterns
have been observed in the mining industries in Ireland.
Any policies which neglect this dual structure give unexpected results as has been
borne out by experience. Due to the duality, not only regional economy can not
developed in a balance way, the effectiveness of the formal infrastructure and industrial
projects can hardly be achieved in this duality.
The degradation of the ecological environmental has shown its feedback on economic
growth in this region. For example, ADB loaned the paper mill project at Ximao in
the lower basin in 1996. It was expected that the surrounding forestry can guarantee
the raw material supply. Now the consumption rate of forestry in that region is
beyond the regeneration rate. The paper mill has been facing the shortage of raw
material supply.
3. Feedback and dynamic analysis of the effectiveness of the development strategies
We also feel that the major problem of the formerly formulated development
strategies was due to the lack of a systematic and dynamic perspective. For example,
because of the lack of a systematic analysis, the impact of the poverty of local
community on big infrastructures has not been adequately considered. The
degradation of natural environment shortens the effective life expectancies of
hydro-dams and transportation infrastructure. Dynamic perspective is extremely
important in policy analysis regarding infrastructure construction and natural
resources degradation. Infrastructure usually involves a long delay in planning,
construction and in service. It takes a long time for the investors and regulators and
consumers to see the effectiveness of infrastructure investment (Xu 1999). The
degrading of the natural resources is more difficult to be perceived because there is a
lack of effective monitoring system. There is usually no definite criterion for
evaluation of natural system which usually leads to an eroding target for protection of
natural system.
A formal system dynamic model can help to understand existing structure of the
development in the Lancang river basin and to effectively improve policy and strategy
formulations which requires the explanation of the occurrence and changes in system
behavioral patterns over the long run. The procedures for building a system dynamics
model requires the explanation of the system behavior based on the model’s structure.
A system dynamics model has two important aspects: (1) feedback structure
emphasizing the circular causal linkages of system elements, and (2) dynamic
behavior (Forrester 1961).
A simplified version of system dynamic model of development of Lancang River
basin is illustrated in figure 1, the structure of which forms a web of causal
connections. The causal connections are denoted by the arrows that tend to ‘‘feed
back" on themselves forming circular loops. Both causal connections and feedback
loops have polarities. A plus sign next to a causal arrow denotes change in the same
direction while a minus sign indicates an inverse relationship. There are two kinds of
feedback loops, positive feedback loop and negative feedback loop. A growth
feedback loop is positive if it contains an even number of negative links. A positive
feedback usually represents a growth behavior. A growth feedback loop is positive if
it contains an odd number of negative links. A negative feedback usually represents a
constraints to growth. Figure 1 is composed with four major feedback loops, three
positive feedback loops and one negative feedback loop.
mega infra in servic
+ +
reakdown infra =
percved benefit infra infra stock
41
# LSD) ( + w | local infra service le’
initiation infra pr, inf construction
+
+ + *
local producti
natural reso edepletion
local household inco:
Figure 1 Feedback loops of development in the Lancang River basin
The feedback 1 represents the rationale behind the construction of big infrastructure
projects. This feedback loop is a positive feedback loop indicating a growth pattern or
a declining pattern. When more infrastructure projects are initiated, constructed and
put into services, more economic benefits can be obtained from the construction of the
infrastructure projects. The economic benefits include two parts: direct financial
revenue and the induced regional economic growth by an increased availability of
infrastructure services. Financial revenue consists of the sales of electricity to
Thailand, other province of Y unnan and the rest of Y unnan, user charges of the road
and of navigation on Lancang River. This growth feedback loop is constrained by a
negative feedback loop -1 which illustrates the impacts of degradation of natural
resources on construction of formal economic infrastructure in the long run. When
more infrastructures are built, more natural areas are turned into construction areas.
Since Lancang river basin is mountainous area. The degrading natural environment
can lead to an increase of natural disasters and soil erosions. Therefore, the
effectiveness of infrastructure services is reduced due to shortened live expectancies
and reduced infrastructure utilization rate.
However, since the initiation and construction of infrastructure projects usually
involve long time delay, therefore, the actual economic benefits from construction of
large infrastructure can only be perceived after a long delay and actions to manage
optimal infrastructure start up rates are further delayed. Meanwhile, the impacts of the
degrading of the natural environment on the effectiveness of infrastructure are also
difficult to be perceived and understood until the negative impacts become very
serious. Actions are taken to reduce the infrastructure construction. Since the time
delays of the two feedback loops are different and all involve long delays, over
reactive actions for the stakeholders to manage the initiation of infrastructures
frequently occur. In the long mun, it can be perceived that infrastructure either tums
into a bottleneck for the regional economy or proves a waste. Therefore, without a
systematic approach to include the negative feedback between natural environment
and infrastructure construction, proactive and long-term effective infrastructure
policies and strategies can not be formulated.
Yet, operation strategies to prevent the degradation of natural environmental can not
only limit to the impacts of infrastructure construction. The leading factor in Lancang
River region for environmental degradation is poverty. Feedback 2 is the
well-observed vicious cycle between natural environment and the natural resource
based local economy in the long run. When the local economy is performing well,
depletion of the natural resource will be reduced. Rich natural resources in turn
increase the potential for further economic growth. However, when economy is
performing badly and majority of people fall into poverty, people have to rely on the
extensive exploitation of the natural resources and their financial capacity for
rehabilitation of the environmental is poor. The natural environmental is degrading in
the face of poverty.
Feedback 3 explains the potential for using infrastructure as a policy tool to break the
vicious cycle. When the local economic growth is obtained, more financial resources
can be raised by local communities to build small scale local infrastructures and to
connect to the formal infrastructure networks. Therefore, the accessibility to available
infrastructure increases and the economy further grows.
Large part of Lancang River basin is trapped in this vicious cycle. The local economy
and local infrastructure services stay stable at low levels. Therefore, the two
te-enforcing feedback loops interact with each other and make many policies
ineffective.
4. Policy analysis
When the development strategies by prioritizing infrastructure have been
implemented, a substantial amount of resources has been invested in this area.
Feedback loop 1 is started up. Feedback 1 serves a pulling force and has the potential
to turn the local economy from a low level to a growth pattern. Construction of formal
and big infrastructures not only increase the infrastructure service levels but also job
opportunities to the local community, but also create job opportunities in this region.
Yet, due to the duality, the effectiveness of this pulling force is reduced. The local
economy may be boomed for a short-term. Yet, the vicious cycle is very difficult to be
broken through. Meanwhile, infrastructure construction accelerates the depletion of
natural resources, which potentially strengthens the vicious cycle.
Through the feedback analysis, it is proposed that further development strategies
should first focus on the development of the local infrastructures and the improvement
of the natural resources. The construction of the local infrastructures not only
generates more job opportunities than the big infrastructure (ILO 1998), but also
improve the infrastructure service level to the local rural communities more rapidly
and effectively. Although the improvement of the natural resources can not really
break the vicious cycle, it provides a good foundation for further development
policies and avoids the risks of the natural disasters on the big infrastructures.
This study is based on the feedback analysis. A simulation computer model should be
built for validate this qualitative analysis and confidence is obtained after the
validation. Experimentation with this computer model enables the exploration of
policies and policy packages.
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