Globalization of Asian Trade and Demand for Natural Resources
In 2006, Africa received $250 billion in natural resources payments and yet little development has occurred. Much of that money has gone to expensive cars and designer clothes for the elite, said Patrick Alley, corruption is driving poverty. Many of those payments go to unsustainable natural resource extraction, and thus the resources and the wealth could quickly dry up before any development has occurred.
One option—and perhaps the best chance for payments for forests that we have—for distributing the wealth from natural resource payments is Reduced Emissions from Deforestation and Degradation in Developing Countries (REDD). Whatever mechanism is developed with $35 million a year in climate mitigation/payment for forests, every person on the planet will want some of that money and corruption will play a large role unless it is carefully addressed in the program design.
Impact of the Financial Crisis
In the short term, Asia's prospects get a thumbs down from Frederik Balfour, largely because most economies have been exports led. For example, Cambodia's GDP was expected to grow by 4.5 percent in 2009, yet now it is experiencing a half percent contraction. Thailand, Malaysia and Vietnam are also contracting. The difference between this and the 1997 crisis is that Asian economies and banks are very strong, so governments can inject money and liquidity to bolster domestic demand. Partially because of this ability, China will still grow between 6 and 7 percent in 2009 and that will benefit the region to a certain extent. Although U.S. demand is still the most important economic engine in the world, Asia will recover sooner than rest of the world due to some increase in intraregional trade generated by China.
Depending on the assumptions, Pradeep Tharakan predicts a 15 - 350 percent increase in demand for biofuels. Currently, 3 percent of fuel demand in Asia comes from biofuels, but most of the demand comes from the U.S. and EU. Between 2004 and 2008, Asia went from producing 30 billion liters to 90 billion liters of biofuel, only slumping in late 2008 and early 2009.
A major concern is converting forest to biofuels under new country biofuels targets. For example, with oil palm planted on existing cropland or severely degraded land, you will have a one year CO2 payback time, but if oil palm is planted on peat forest or rangelands the payback time can be in the hundreds or thousands of years. In general, biofuels are cleaner in terms of particulates, but release greater amounts of ozone and NOx. Additionally, biofuel crops do not necessarily create new jobs, as they are often mechanized.
Although there is little data, studies in the U.S. indicate that biomass electricity could be more efficient than biofuels for transpiration. Instead of promoting international trade and wide use of biofuels, Tharakan suggests small-scale operations to supply energy to areas that do not yet have it.