Southeast Asia is at a crossroads. The region has enjoyed strong economic growth, but – as elsewhere in the world – this growth model has relied on unsustainable natural resource exploitation, resulting in environmental degradation. The region’s leaders face a choice: continue to pursue a short-sighted, grow-now-clean-up-later model that has proven disastrous, or adopt a far-sighted green growth strategy that can sustain long-term growth without hampering the wellbeing of future generations.

Southeast Asia’s booming economy presents tremendous growth potential, but also big interlinked economic, social and environmental challenges. The region’s current growth model is based in large part on natural resource exploitation, which exacerbates these challenges. Policy makers and leaders from the private sector and civil society across the region are aware of these problems and are seeking a more sustainable growth model. It will take visionary leadership to implement the structural changes needed to simultaneously achieve economic growth, reduce poverty, protect the environment and improve well-being. This report provides evidence that, with the right policies and institutions, Southeast Asia can pursue green growth and thus sustain the natural capital and environmental services – including a stable climate – on which prosperity depends.

The ten member countries of the Association of Southeast Asian Nations (ASEAN) will need to shift to a more sustainable development path in order to sustain economic growth, reduce poverty and achieve durable gains in well-being. Natural capital accounts for more than 20% of total wealth, well above the 2% average in OECD countries. Yet the rapid economic growth the region has enjoyed in the recent past has relied on intensive resource exploitation and is leading to the depletion of natural capital. Growing rates of pollution threaten health and productivity and, though still relatively low, ASEAN countries’ share of global greenhouse gas emissions is expected to surge. The chapter outlines a set of framework policies for greening growth in the region, ranging from improving governance, tax reforms and the removal of fossil fuel subsidies to upgrading competition and labour market policies. It proposes a set of green growth indicators that can help policy makers to track progress towards green growth and evaluate policies.

Countries’ efforts to pursue green growth are most effective when guided by a national strategy, ideally designed through stakeholder engagement and championed by top national officials. But to enhance effectiveness and promote coherent policies, green growth objectives should also be integrated into existing national development plans and budgets. This chapter reviews the status of ASEAN countries in terms of their preparation of green growth strategies, their integration of green growth objectives into national planning, and their mechanisms for co-ordinating multiple levels and sectors of government. So far, only two countries – Cambodia and Viet Nam – have a green growth strategy in place. However, all ASEAN countries have integrated at least four green growth objectives into national development plans and improved co-ordination. Greater coherence and co-ordination are needed to build on this progress and create synergies between green growth objectives and other national priorities.

Natural resources contribute substantially to the wealth and growth of ASEAN countries. Yet the rate of natural resource depletion across the region is worrying and may eventually prove unsustainable. The precautionary principle dictates the need for a change in current exploitation practices to avoid triggering irreversible damage to the environment that could have large negative long-term consequences for the economy and human welfare. This means finding ways to halt forest loss and degradation, to promote sustainable fisheries and replenish fish stocks, to reverse the increasing reliance on coal and other fossil-fuel based sources of energy and fully exploit the large potential of renewable energy sources, and to encourage the more sustainable exploitation of minerals. The chapter reviews these challenges, and for each provides recommendations for practical ways forward to ensure that key aspects of natural capital are preserved and that their use contributes to long-term economic growth and improvements in well-being. The development and effectiveness of the array of policies and institutions required will hinge crucially on a set of indicators that monitor the quantity, quality and value of natural resources and that will facilitate the implementation of natural capital accounting.

ASEAN countries are becoming ever more urban – by 2050, 65% of the region’s population (over 500 million people) are expected to be living in urban areas. Poorly managed and unsustainable urban development will have many negative economic, environmental and social implications for the region. This chapter focuses on three specific urban challenges with serious implications for national green growth: 1) air pollution from urban transport; 2) vulnerability to climate change; and 3) the growth of informal settlements. It argues that national leadership is needed to make sure urban action is effective and consistent with national green growth objectives. This includes improving national-local policy coherence and building local capacity.