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1、APEC EconomicPolicy Report 2022Structural Reform and a Green Recovery from Economic ShocksAPEC ECONOMIC POLICY REPORT 2022 Structural Reform and a Green Recovery from Economic ShocksAPEC Economic Committee November 2022 Prepared or printed by Asia-Pacific Economic Cooperation Secretariat 35 Heng Mui
2、 Keng Terrace,Singapore 119616 Tel:(65)6891 9600|Fax:(65)6891 9690 Email:infoapec.org|Website:www.apec.org 2022 APEC Secretariat APEC#222-EC-01.8 ISSN:0218-9763 Note:The terms“national”,“nation”used in the text are for purposes of this report and do not imply the“political status”of any APEC member
3、economy.Cover photo:Empowering the Rural Community by Mohammad Reza Gemi Omandi/APEC Photo Contest 2022APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks i PREFACE The world today faces many environmental challenges which have increasingly put into risk the
4、sustainability of our planet.In recent years,there has been growing awareness of issues such as climate change;air,water and soil pollution;waste generation;deforestation and forest degradation;and depletion of natural resources,as well as a wide range of other environmental issues.Undeniably,they a
5、re global problems and require global solutions.At the same time,APEC economies are focusing on recovering from the adverse economic and social impacts of the COVID-19 pandemic.By mid-August 2022,more than 590 billion cases of COVID-19 and more than 6 million deaths related to COVID-19 had been shoc
6、kingly recorded.Moreover,the pandemic disrupted lives across all economies and hampered global economic growth.Many companies had to adjust their operational plans or close down,which caused job and income losses,leading to increasing inequality among and within economies.There is a sense of urgency
7、 in addressing effectively both the COVID-19 pandemic and the environmental challenges.Structural reforms could not only facilitate social and economic recovery,but also ensure environmental sustainability at the same time.This years APEC Economic Policy Report(AEPR)aims to support APEC member econo
8、mies efforts in addressing these challenges by analyzing policy approaches in the response and recovery phases from the pandemic;identifying structural reforms through green recovery lens;and providing a general framework which outlines policy instruments and processes that are essential to effectiv
9、ely contribute to a green recovery.In addition,it provides recommendations on areas where capacity-building and knowledge-sharing activities could be accentuated within APEC to facilitate a smooth transformation towards a green economy.This report was made possible through generous funding provided
10、by Australia and New Zealand.I would like to express my gratitude to the AEPR 2022 Core Team members:Australia;Canada;China;Indonesia;Japan;New Zealand;Russia;Chinese Taipei;Thailand;and the United States,and especially to New Zealands Annette Gittos for taking the role of Core Team Lead.I also woul
11、d like to thank the APEC Secretariats Program Director for the Economic Committee,Felicity Hammond,for her valuable advice throughout the process,and the APEC Policy Support Unit for managing the production of the main report.The report was written by a team at Sapere Research Group comprising Veron
12、ica Jacobsen,Corina Comendant,Kevin Woock and Rory McLeod,and Carlos Kuriyama from the APEC Policy Support Unit.Sylwyn C.Calizo Jr.provided excellent editorial and research assistance.This report has also benefited from inputs of members of the APEC Economic Committee,and the peer-review by the Inte
13、rnational Monetary Fund,in particular by Florence Jaumotte,Carlo Pizzinelli,Hugo Rojas-Romagosa and Sneha Thube.The AEPR 2022 provides a positive contribution to the discussion of structural reforms and the need to bolster a green socioeconomic recovery,advancing the Enhanced APEC Agenda on Structur
14、al Reform(EAASR)as well as the Aotearoa Plan of Action to implement the Putrajaya Vision 2040.It is my hope that this report encourages a broader discussion on this matter and serves as a useful reference to policymakers in the design and implementation of policies to support a green transition as a
15、 path to achieve sustainable growth.James Ding Chair,APEC Economic Committee TABLE OF CONTENTS Preface.i List of figures iv List of tables iv List of boxes iv Abbreviation list v Key messages.vi 1.Introduction.1 Purpose 1 The twin challenges of COVID-19 and climate change 1 Structural reform in APEC
16、 7 Structural reform and a green recovery from economic shocks 10 Guide to the report 12 2.Structural reform and recovery from economic shocks.13 Economic shocks 13 Structural reform 14 Green structural reforms and economic shocks 15 3.Sustainability issues facing APEC.21 Climate change 22 Waste and
17、 pollution(air,water and soil)23 Deforestation and forest degradation 24 Public health issues 25 Natural resource depletion 26 Energy security 27 Structural reform in APEC economies to tackle sustainability challenges 27 4.Implementing green structural reforms.30 Environmental complexity and uncerta
18、inty 30 Political economy 31 Public sector governance 35 Policy coherence 37 5.Green structural reform instruments.41 Supporting well-functioning markets 41 Competition policy and law 42 Regulatory reform 44 Corporate law and governance 52 Strengthening the economic legal infrastructure 54 6.Complem
19、entary enabling instruments.55 Innovation 55 APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks iii Investment 58 Information 60 Skills 62 Green industrial policy 63 International cooperation 66 7.Key findings and policy recommendations.69 Pursuing a green r
20、ecovery from the COVID-19 economic slowdown 69 Implementing green structural reforms 69 Framework for green structural reforms:market-based instruments,regulations and complementary supporting policies 70 Recommendations 71 Appendices.73 Appendix A.Key lessons from economic crises 74 Appendix B.Gree
21、ning the fiscal stimulus response and recovery 80 Appendix C.Green policy instruments 83 References list.90 LIST OF FIGURES Figure 1.1 Cumulative COVID-19 cases and deaths worldwide.2 Figure 1.2 Year-on-year real GDP growth(%).2 Figure 1.3 Inequality after an event.3 Figure 1.4 Total damages caused
22、by natural disasters in the APEC region,19892021.5 Figure 1.5 Total GHG emissions(CO2 equivalent),19902019.5 Figure 1.6 Economic impacts of flooding under baseline scenario.6 Figure 2.1 Fiscal stimulus measures worldwide.17 Figure 3.1 Number of natural disasters in the APEC region,19892021.21 Figure
23、 3.2 APEC CO2 and GHG emissions,2018.23 LIST OF TABLES Table C.1 Possible constraints on green growth and recovery.84 Table C.2 Considerations for choice of policy instruments.85 Table C.3 Examples of green policy instruments.86 Table C.4 Examples of structural policy instruments to support green re
24、covery.88 Table C.5 Sequencing options to overcome barriers in pricing policy.89 LIST OF BOXES Box 2.1 Plans to promote economic recovery.16 Box 2.2 American Recovery and Reinvestment Act 2009.18 Box 4.1 Carbon pricing.33 Box 4.2 Microgrids in regional and remote communities.34 Box 4.3 Public sector
25、 skills for sustainability.37 Box 4.4 Brunei Darussalams Economic Blueprint.38 Box 4.5 Green Growth Strategy.39 Box 5.1 Green taxes.46 Box 5.2 Farming without subsidies.48 Box 5.3 Sakhalin emissions trading system pilot.50 Box 5.4 Recycling and Extended Producer Responsibility Law.52 Box 5.5 Financi
26、al Markets(Climate-related Disclosures and Other Matters)Amendment Act.53 Box 6.1 Electric and hydrogen vehicles.56 Box 6.2 Powering Australia plan.56 Box 6.3 Green public procurement.57 Box 6.4 Incorporating green elements in financial frameworks.58 Box 6.5 Green Finance Action Plan 2.0.59 Box 6.6
27、Water-efficiency labelling and standards.61 Box 6.7 Green factory label.61 Box 6.8 Private sector skills for green innovation.63 Box 6.9 Koreas New Deal.64 Box 6.10 Krabi Goes Green.65 Box 6.11 Australias National Hydrogen Strategy.66 Box 6.12 Green Economy Agreement.67 Box 6.13 Joint Crediting Mech
28、anism.68 APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks v ABBREVIATION LIST ABAC APEC Business Advisory Council ADB Asian Development Bank ADR Alternative Dispute Resolution AEPR APEC Economic Policy Report ANSSR APEC New Strategy on Structural Reform AP
29、EC Asia-Pacific Economic Cooperation BCG Bio-Circular-Green B2B Business to Business COVID-19 Coronavirus Disease 2019 CO2 Carbon Dioxide EAASR Enhanced APEC Agenda for Structural Reform ECIPE European Centre for International Political Economy ESG Environmental,Social and Governance ETF Exchange-Tr
30、aded Funds FMP Finance Ministers Process GDP Gross Domestic Product GEA Green Economy Agreement GEI Green Economy Indicators GHG Greenhouse Gas GPP Green Public Procurement GRP Good Regulatory Practice GSI Global Subsidy Initiative HDI Human Development Index ICC International Chamber of Commerce IE
31、R Individual Economy Report IISD International Institute for Sustainable Development IMF International Monetary Fund IPCCC Intergovernmental Panel on Climate Change ITQ Individual Transferable Quota JCM Joint Crediting Mechanism kWh Kilowatt Hour LAISR Leaders Agenda to Implement Structural Reform M
32、RV Measurement,Reporting and Verification MSME Micro,Small and Medium Enterprises ODR Online Dispute Resolution OECD Organisation for Economic Co-operation and Development PSU Policy Support Unit(APEC)R&D Research and Development RAASR Renewed APEC Agenda on Structural Reform REP Recycling and Exten
33、ded Producer Responsibility ROW Rest of the World UNEP United Nations Environment Programme WHO World Health Organization WELS Water Efficiency Labelling and Standards KEY MESSAGES APEC members face two key challenges.The first is to repair the economic damage caused by the COVID-19 pandemic,particu
34、larly in terms of slower growth and higher economic inequality.With fiscal and monetary policy responses potentially reaching safe limits,governments should seek to implement policies aimed at structural reform to achieve these objectives.The second challenge is to respond to climate change and othe
35、r environmental threats.The main purpose of this report is to begin a discussion among APEC members about how structural reform policies,which are aimed at improving the conditions for growth,could also be used as an effective response to environmental threats and provide for the greening of our eco
36、nomies.These policies should continue to be useful in the longer term as APEC members seek to formulate responses to future economic shocks.Economic shocks have many causes(e.g.,financial crises,pandemics and natural disasters),and can broadly be categorised as supply shocks,which make production mo
37、re costly,and demand shocks,which suddenly reduce consumer spending and business investment.The economic shock caused by COVID-19 is unusual in that it is simultaneously a supply shock and a demand shock.The Asia-Pacific region faces a long list of environmental challenges,including climate change,w
38、aste and pollution(air,water and soil),deforestation,public health issues,natural resource depletion and uncertain energy security.In the vital area of climate change,the region as a whole is responsible for massive emissions,even as many APEC members,particularly developing members,are among the mo
39、st exposed to the effects of climate change.As APEC economies seek to recover from economic shocks such as those emanating from the effects of COVID-19,the opportunity to embark on green structural reforms has never been more timely and critical.However,APEC members,both developed and developing,are
40、 only just beginning to carry these out.This is because the area involves significant complexity and uncertainty;and sound analytical frameworks as well as reliable data are only now starting to be developed.While green structural reforms will need to be tailored to the specific circumstances and pr
41、iorities of individual economies,there are many areas where APEC economies can learn from each other as they seek to meet the challenges involved.In the area of public sector governance,a major challenge is creating a favourable political environment for reform in the face of vested interests,public
42、 opposition and the fact that many of the benefits of reform would only be realised over the longer term.The discrepancy between the long-term benefits of green structural reforms and the short-term adjustment costs and investments suggests that delivering on the reform would require strong politica
43、l commitment and significant institutional and capability development within governments.In terms of structural reforms,governments increasingly seek to improve the functioning of markets to support greater environmental sustainability.In particular,APEC Economic Policy Report 2022:Structural Reform
44、 and a Green Recovery from Economic Shocks vii governments aim to address externalities and public good issues in markets involving natural resources through legislation,fiscal incentives and programs.In addition,governments need to provide the necessary conditions to encourage capital and infrastru
45、cture investments moving forward in terms of innovative,circular and net-zero solutions to help advance green economic recovery and climate action.Each policy area covered by the APEC Economic Committee can make significant contributions to such reforms.Competition policy and law,by focusing on effi
46、ciency and innovation,could seek to improve competition in markets so that resources are consumed more efficiently and barriers facing competing new,green technologies are removed.Competition agencies could,in particular,deal with arrangements between firms interested in cooperating to improve envir
47、onmental outcomes.And,consumer protection law could ensure that consumers make an informed choice on the sustainability attributes of the products they consume.Regulatory reforms and regulatory stewardship have a central role to play in improving the functioning of markets.Markets should provide pri
48、ce signals that better reflect the true costs of environmental externalities and public goods.A range of instruments could be employed toward this goal,including but not limited to green taxes,reduction of environmentally harmful subsidies(particularly fossil fuel subsidies)and improvements to prope
49、rty rights,particularly in such areas as emissions trading,land access,water management and the rights to fisheries resources.Price signals could also be complemented by non-price measures such as pollution or resource use limits and performance standards.Regulatory systems and well-designed regulat
50、ions create spaces for innovation and the emergence of novel industries aligning better with environmental objectives.Corporate law and governance could contribute by ensuring that governments,businesses and consumers work together to reward the greening of the economy through increased demand for s
51、ustainable products and services and more favourable finance.Strengthening the economic and legal infrastructure could greatly improve the efficiency of economic processes and catalyse new green supply chains and enterprises in which businesses and consumers are involved,thereby reducing pressure on
52、 resource use.For structural reforms to succeed,there is a need for the different parts of government to work more coherently and cohesively.Government officials in charge of structural reforms will need to work together and coherently with those in charge of government policies in specific fields,i
53、ncluding innovation and public procurement;investment and access to financing;information provision;and skills development.Many of these reforms could also support the emerging area of green industrial policy,which seeks to transform the economy by supporting domestic industries that produce green o
54、r greener goods and use greener production methods.There will also be a need to employ just transition policies to support those members of society that are disadvantaged by the reforms,particularly over the shorter term.Over the longer term,however,the benefits of this mix of policies will be immen
55、se.It has been argued that there are tensions and trade-offs between growth and environmental sustainability.This report supports the contrasting view that structural reforms to promote sustainable outcomes can also promote higher rates of growth.This makes meeting the shorter term policy challenges
56、 all the more important.Recommendations Implementing green structural reforms requires the utilisation of multiple instruments,covering several areas under the responsibility of different government institutions.The complexity of the process in the context of climate change makes it essential to hav
57、e a whole-of-government approach,where policy decisions are properly coordinated inter-institutionally to ensure a higher rate of success.Any structural reform process includes trade-offs.The success of structural reforms would rely on suitable management of the political economy to maximise utility
58、,resource utilisation and consultation with affected groups,and to prevent interest groups from stopping,slowing down,or reversing the reforms.Sequencing of policy measures is very important.Governments need to build up a pro-reform constituency and work to maintain the momentum by implementing poli
59、cies with short-term deliverables that could help achieve medium-and long-term objectives.A solid communication strategy,married with transparent,evidence-based policy,is essential to explain the benefits of reform and the costs of inaction to relevant constituencies.Starting with structural reforms
60、 that could be developed and implemented more readily,and meet with early success,could boost the push for reform.However,governments have to avoid a situation wherein those benefiting from the initial reforms would not push for further reforms for fear of losing the gains from the first wave of ref
61、orms.Continuous,consistent and predictable policies are needed for effective green structural reforms.The participation of the business community and consumers is important to transform the economy into a greener one.Resolving environmental challenges is a long-term process and policy uncertainty is
62、 one of the main barriers to transitioning into a green economy.Skills are also required,in government as well as the private sector,to effectively implement the green structural reforms that are integral to the transition toward a low-carbon economy.In this sense,capacity building is an essential s
63、tructural reform component and this is where APECs comparative advantage resides.APEC could emphasise core capacity-building and knowledge-sharing activities in areas where more work is needed to transform toward a green economy.Based on the findings of this report,potential capacity-building progra
64、mmes relate to topics mainly within the purview of the Economic Committee and Senior Finance Officials,among others.Examples include:Learning how to develop pricing schemes(for instance,carbon pricing).Getting a better understanding on the process to develop and implement green regulatory measures,i
65、ncluding complementary enabling policies.Strengthening collaboration with the private sector.Strengthening inter-institutional collaboration within and across economies.Reducing information asymmetries among different actors(for instance,government and industries,firms and consumers,and inter-sector
66、al firms).Mobilising finance toward green investments,keeping in mind competitive and well-structured green investment projects.APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks ix In addition,APEC provides the stage for economies to exchange information on
67、 their experience with implementing measures to transition toward a green economy.Economies could learn from each other in areas such as identifying proven technologies and business models toward which investments should be focused.Capacity-building efforts could encourage regulatory cooperation and
68、 labour mobility agreements to help growing sectors that are becoming more relevant in this transition.These include renewable energy,recycling and product stewardship services.APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks 1 1.INTRODUCTION PURPOSE Struc
69、tural Reform and a Green Recovery from Economic Shocks is the topic of this 2022 APEC Economic Policy Report(AEPR)report.1 It is designed to assist APEC member economies in their individual consideration of structural policies and tools that will promote a more sustainable recovery from future econo
70、mic shocks.Given the current context,the report pays particular attention to the structural reforms that would allow member economies to promote recovery from the economic slowdown caused by COVID-19,while at the same time creating the market conditions to effectively combat the shock of climate cha
71、nge and other environmental challenges.APEC Leaders gave the highest priority to future APEC work on economic recovery from COVID-19 and on tackling climate change in their 2021 Declaration(APEC 2021c).Until recently,there had been an assumption that tensions and trade-offs exist in seeking to promo
72、te progress in both these areas at the same time.This report will show that this assumption is increasingly open to challenge and that structural reforms to promote sustainable outcomes will also deliver higher rates of growth.This is because such reforms can provide for consistent pricing of enviro
73、nmental damage,market signals that will promote innovation and the adoption of cleaner technologies,and increased certainty for market participants,particularly over the longer term.Given that fiscal responses to the current economic slowdown are under pressure and limited in providing macroeconomic
74、 stability against these challenges,there are increasingly calls for structural reform to ensure that growth does not occur at an unacceptable cost to our natural systems.The situation,therefore,represents a unique opportunity for APEC member economies to undertake such reforms in a manner that woul
75、d also contribute significantly to the fight against climate change.THE TWIN CHALLENGES OF COVID-19 AND CLIMATE CHANGE COVID-19 COVID-19 has been the most significant pandemic event in the past century and has caused massive suffering and disruption.As of 14 August 2022,there have been more than 590
76、 million cases of COVID-19 worldwide along with over 6.4 million COVID-related deaths(WHO n.d.;see Figure 1.1).The pandemic has disrupted lives across all economies and communities and negatively affected global economic growth beyond almost anything experienced in nearly a century.In 2020,global GD
77、P fell by 3.4 percent before beginning to recover,although still at lower rates of growth than prior to the pandemic(World Bank 2020b).1 In this report,green refers to the potential to combat the impacts of climate change and other environmental challenges.Green objectives include reducing greenhous
78、e gas(GHG)emissions,decreasing environmental pollution,implementing sustainable management of environmental resources,and increasing resilience to the impacts of climate change.2 APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks Figure 1.1 Cumulative COVID-
79、19 cases and deaths worldwide Source:Our World in Data,using Center for Systems Science and Engineering(CSSE)at Johns Hopkins University COVID-19 data,accessed 16 August 2022,https:/ourworldindata.org/.Figure 1.2 Year-on-year real GDP growth(%)Source:APEC PSU(2022).In terms of growth,the APEC region
80、 has fared better than the rest of the world.Growth fell by 1.8 percent in 2020 before recovering to 5.8 percent in 2021.Forecast growth for the region is 4.2 percent in 2022 and 3.8 percent in 2023(see Figure 1.2).But a report by the APEC Policy Support Unit(APEC PSU 2022)notes that these forecasts
81、 have been revised downwards and that significant downside risks persist.These include:Significant uncertainty around the trajectory of COVID-19.With the rapid spread of new variants across the region,public health measures are being either maintained or adapted in response.These have caused ongoing
82、 disruption to supply chains.Growing limits on the ability of APEC member economies to apply fiscal policy instruments to the crisis.Many economies have applied a massive fiscal response to mitigate the health and economic repercussions of COVID-19,but this has resulted in-3.15.94.43.8-1.85.84.23.8-
83、4.86.04.63.9-6-4-20246820202021 est2022 forecast2023 forecastPercentageAPECRest of the WorldAPEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks 3 higher debt.In the APEC region,the average general gross debt incurred by governments rose to around 65 percent o
84、f GDP in 2020,significantly higher than the pre-pandemic 10-year average of 49 percent.In the near-term period,gross government debt could increase again to 6667 percent.This points to the need for a much more targeted approach to fiscal policy in the context of tapering of overall support.Growing l
85、imits on the ability of the central banks of APEC member economies to apply monetary policy instruments to the crisis.To date,expansive monetary policies have been applied to combat the crisis in terms of lower benchmark interest rates and expanded money supply.However,in 2021 and early 2022,commodi
86、ty prices have risen rapidly,particularly for energy and food.This has fed into increased inflation with a doubling of APECs inflation rate to an estimated average of 3.0 percent in 2021 from 1.5 percent in 2020.Some central banks have already started to tighten monetary policies in an attempt to en
87、sure that inflationary expectations do not become entrenched.However,this strategy carries with it the risk of economic downturns and possible recession.There is also preliminary evidence that the economic slowdown caused by the pandemic is leading to increased income inequality both between and wit
88、hin member economies.Developing economies were initially particularly vulnerable to the crisis given in many cases lower accessibility to vaccines,as well as more limited fiscal and monetary options to combat the crisis.The decline in global trade has exacted an especially heavy economic toll on tra
89、de-dependent developing economies.Preliminary evidence from a literature review of 32 studies on inequality after an event such as epidemics,recessions and financial crises also indicates that the pandemic is causing inequality within member economies to rise because of particularly severe job and i
90、ncome losses among lower income groups(see Figure 1.3).Over the medium term,rising food price levels as well as significant disruptions to education services may further raise levels of inequality(World Bank 2020b).As APEC members emerge from the health crisis,they will be under pressure to put in p
91、lace productivity-enhancing structural reforms both to support future growth and to address growing inequality.These reforms will need to target providing employment and opportunities for poorer and disadvantaged groups in order to improve the economic resilience of member economies in the future.Fi
92、gure 1.3 Inequality after an event Source:World Bank(2020b).4 APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks Climate change The environment is essential for every economic activity and for life itself.Current patterns of economic activity are characteris
93、ed by the mismanagement and depletion of natural capital,creating risks of further environmental and atmospheric damage.Maintaining the ability of the natural world,including resource stocks,land and ecosystems,to support economies and human well-being in the face of future environmental shocks(such
94、 as natural disasters)or economic shocks(such as spikes in commodity prices)is a key motivation for policies that support green growth.In this regard,governments have an important role in providing predictable and stable long-term policy frameworks that reduce uncertainties and related investment ri
95、sks for the private sector in developing new sources of growth from green markets and activities.The November 2021 APEC Regional Trends Analysis(APEC PSU 2021)states that:Climate change is an existential threat not only for the APEC region,but for humanity as a whole.The discussion is no longer abou
96、t how to prevent climate change;the world has done too little too late for that.The question now is how to keep anthropogenic climate change that is,climate change due to human activity within levels that will allow our species to survive on this planet in the long term.According to the Sixth Assess
97、ment Report published in 2021 by the Intergovernmental Panel on Climate Change(IPCC 2021),Asia has seen an increase in surface temperature in recent years beyond the range measured in 18501990.This means heatwaves,wildfires,extreme weather events and heavy precipitation will be more frequent and int
98、ense over much of Asia in the coming years(IPCC 2021).Based on data from the Emergency Event Database(EM-DAT),since APECs inception in 1989,the APEC region has been affected by 36 percent of the total natural disasters in the world;and disaster-related losses in the APEC region amounted to an averag
99、e of USD 111 billion annually(see Figure 1.4).2 Because of its location and geographic diversity,the APEC region is heavily exposed to the impacts of climate change3.2 Natural disasters are geophysical,meteorological,hydrological,climatological or biological events that have fulfilled any of the fol
100、lowing:(1)10 or more people deaths;(2)100 or more people affected/injured/homeless;or(3)declaration by an economy of a state of emergency and/or an appeal for international assistance.3 Climate change is not just one of many environmental threats,but also a complex global issue including both enviro
101、nmental and non-environmental components.APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks 5 Figure 1.4 Total damages caused by natural disasters in the APEC region,19892021 Source:Emergency Event Database(EM-DAT),accessed 2 August 2022,https:/www.emdat.be;
102、APEC PSU calculations.Figure 1.5 Total GHG emissions(CO2 equivalent),19902019 GHG=greenhouse gas;GtCO=billion tonnes of carbon dioxide.Source:APEC PSU(2021).The APEC region is also a key contributor to climate change(see Figure 1.5).Between 1990 and 2018,the regions greenhouse gas(GHG)emissions incr
103、eased from 16.5 to 27.8 gigatonnes of carbon dioxide equivalent,an annual average growth of 1.9 percent.During the same period,GHG emissions in the rest of the world grew at an average rate of 1.1 percent annually.As a result,APECs share of GHG emissions increased from 55 percent in 1990 to 60 perce
104、nt in 2018.6 APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks Such developments point to a considerable economic cost.Drawing on existing modelling,the World Bank(2020a)has estimated the growth effects of climate change for APEC economies.Across APEC,losse
105、s of 7.3 percent of GDP are expected under the baseline scenario by 2100.Developing economies near the equator are likely to experience the largest economic losses,primarily due to coastal flooding(see Figure 1.6).Indonesia;Singapore;Thailand;and Viet Nam could each experience losses of more than 20
106、 percent of GDP by 2100.Developed member economies located in higher latitudes,including Australia;Canada;the Republic of Korea;New Zealand;and the United States,are expected to see lower losses,of less than 5 percent of GDP by 2100.Figure 1.6 Economic impacts of flooding under baseline scenario Sou
107、rce:World Bank(2020a).Many of the economies with the largest losses are developing ones.However,there is considerable variation across APEC as to the source of losses and relative exposure to impacts of flooding.While coastal flooding in China;Hong Kong,China;and Singapore could result in losses of
108、more than 15 percent of GDP,river flooding is likely to cause the larger impacts in Australia and Papua New Guinea,with losses of 2 percent and 0.8 percent of GDP by 2100 respectively(World Bank 2020a).The World Bank(2020a)forecasts that the key causes of GDP losses will be:Reduced labour productivi
109、ty,particularly in the manufacturing and agricultural sectors,from higher average temperatures.The rise in temperatures also increases the disease burden,making labour less productive.The economic implications are likely to be greatest in member economies with larger agricultural and manufacturing s
110、ectors and those with higher baseline temperatures.Reduced agricultural yields,since yields are sensitive to climatic variables,including temperature,precipitation patterns and drought.Agricultural production is likely to be negatively impacted in most APEC member economies because of climate change
111、.The expected impact varies across crops and economies,with the expected effect greatest for APEC economies nearest the equator.Agricultural output in the temperate zone economies may yet increase.APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks 7 Inundati
112、on of low-lying coastal lands from higher average temperatures which are virtually certain to cause rising sea levels.The most severe reductions in available land are expected in the territorially small coastal economies of Singapore(7.7 percent of land lost)and Hong Kong,China(4.4 percent of land l
113、ost).The impacts could be larger or smaller,with uncertainty in the response of polar ice sheets to climate change.While developing economies are likely to suffer more from climate change,disproportionate impacts will also be felt by poor and marginalised groups in all economies(APEC PSU 2021;Kartha
114、 et al.2020).Compared to men,womens mortality risk during disasters is 14 times higher,and the impacts are more pronounced for poor women who are more vulnerable to climate-sensitive health risks(African Development Bank et al.2002;Neumayer and Plmper 2007;Peterson 2007;Uji 2012).Indigenous peoples
115、and those living in rural and remote areas like mountains,and deltaic and coastal regions,are also more likely to suffer from more severe consequences of climate change,such as sea level rise,desertification,landslides,fires and loss of biodiversity(Inter-Agency Support Group on Indigenous Peoples I
116、ssues 2008).APEC economies are implementing policy reforms to respond to these challenges,including reducing fossil-fuel energy consumption and fostering renewable energies to reduce emissions;promoting ocean and forest conservation;adaptation planning policies;and helping communities adapt to chang
117、ing weather patterns.STRUCTURAL REFORM IN APEC Structural reforms seek to make markets work more effectively A question that is perennially asked in APEC circles is what exactly is meant by structural reform?While definitions differ,it is generally agreed that structural reform refers to changes to
118、domestic policies,rules and institutions that address impediments to the efficient operation of markets and the capacity of businesses to access markets and operate more productively.The impediments can take the form of poorly designed or outdated regulatory systems and competition and governance fr
119、ameworks.Close to the time that it began work on structural reform issues,the APEC Economic Committee defined structural reforms as measures that change the institutional and regulatory framework in which businesses and people operate to help the market work efficiently(APEC Economic Committee 2006)
120、.Such measures include:improvements in regulation and institutions to enhance the efficiency with which markets operate,e.g.,through good regulatory processes that encompass the views of key sectors of society.reducing transaction costs of market activity.regulation of product and service markets,e.
121、g.,licensing fees and other costs.regulation of labour markets.addressing limits on competition by reducing entry barriers and market structure.improved public sector administration,e.g.,through better policy advice,sound laws and legal frameworks.8 APEC Economic Policy Report 2022:Structural Reform
122、 and a Green Recovery from Economic Shocks Structural reform is key to APECs work programme Right from its inception,APEC has recognised that policies to promote free and open trade,and investment and structural reform,are necessary complements in achieving regional economic integration.But a key fe
123、ature of structural reform is that it must be developed in a manner that is specific to the circumstances of each individual APEC member economy and,as such,is dependent on unilateral action.Such reform can also be politically difficult,particularly as structural reform is not always distributionall
124、y neutral in its effects.APEC economies have proceeded on the basis that all economies can learn from each other in this field by sharing their experiences.They have also recognised that there is scope for assisting each other through individually tailored capacity-building programmes.Although the 1
125、995 Osaka Action Agenda mandated work programmes in such areas as competition policy and deregulation,a major step forward took place in 2004 when APEC leaders agreed to the Leaders Agenda to Implement Structural Reform(LAISR).The APEC Economic Committee was repurposed to take forward the new work p
126、rogramme.The LAISR identified five work areas:regulatory reform,strengthening economic and legal infrastructure,competition policy,corporate governance,and public sector management.A sixth work area,ease of doing business,was added in 2009 when APEC leaders endorsed a target of achieving a 25 percen
127、t improvement in selected indicators on ease of doing business by 2015.The mandate extended by the Leaders under this agenda expired in 2010;and they agreed on two new instruments to further advance APECs structural reform work programme.These instruments widened the focus of APECs structural reform
128、 work to include a range of issues that were also starting to be considered under APECs trade and investment work programme.They were:The 2011 APEC New Strategy on Structural Reform(ANSSR).This widened the focus of APECs structural reform work to focus on such areas as labour market opportunities,so
129、cial and safety net programmes,and womens and small to medium enterprise development.The 2015 Renewed APEC Agenda on Structural Reform(RAASR).While stressing the importance of existing work areas such as regulatory reform,the RAASR further widened APECs structural reform agenda to focus on new areas
130、 such as innovation(as the forerunner of digital policies),services,and the links between structural reform and inclusive growth.Since its inception,APEC has been successful in providing a platform for the consideration of sensible structural reform policies within its member economies.It has also f
131、acilitated the development of specific structural reform policies and institutions,particularly for developing members in such areas as competition policy and law,good regulatory practice,and ease of doing business.Almost all APEC members have today put in place competition laws and enforcement stru
132、ctures.Most have also put in place many of the institutions,processes and mechanisms associated with good regulatory practices,such as regulatory impact analysis.Many have had clear success with APEC-sponsored cooperation aimed at improving the ease of doing business in developing economies(McLeod 2
133、020).Within APEC,the support given to structural reforms has been reinforced with the APEC Putrajaya Vision 2040,in which APEC member economies reaffirm their commitment to the pursuit of structural reforms to promote innovation as well as improve productivity and APEC Economic Policy Report 2022:St
134、ructural Reform and a Green Recovery from Economic Shocks 9 dynamism(APEC 2020).The continuation of structural reform efforts is very important,as APEC has been less successful in encouraging its members to reform heavily restricted sectors,where there is potential for significant productivity gains
135、.For example,APEC itself has identified services and the digital economy as two areas where significant reforms are required:Services.A seminal APEC PSU econometric study examined the effects of structural reforms to remove barriers to competition in air,maritime and road transport,electricity and g
136、as,and telecommunications across all APEC economies(APEC PSU 2011).The study outlined a package of reforms which,across the APEC region,would have the effect of creating USD 175 billion in additional real income(in 2004 dollars).These gains alone would have been almost twice as high as the total gai
137、ns that could have been achieved from the complete liberalisation of mercantile trade at that time(APEC PSU 2011).The findings were backed up by the 2016 AEPR on Structural Reform and Services,which showed high levels of restrictiveness in such services as air and maritime transport,logistics and co
138、urier,and telecommunications and broadcasting(APEC Economic Committee 2016).Furthermore,between 2008 and 2016,there was little evidence that APEC members had moved to reduce these restrictions,with most of the restrictions staying at about the same level and remaining high.Digital technologies.The 2
139、019 AEPR on Structural Reform and the Digital Economy found a number of structural challenges,including the market power of digital platforms;regulations that inhibit competition between technologies;network and natural monopoly issues around telecommunications,spectrum and broadband;and lack of cro
140、ss-border interoperability or harmonisation of regulatory approaches to data flows,data privacy and cybersecurity(APEC Economic Committee 2019).Meanwhile,the European Centre for International Political Economy(ECIPE)digital trade restrictiveness index shows that in the context of a rapidly rising nu
141、mber of restrictions,some APEC members maintain the most restrictive digital frameworks in the world(Ferracane,Lee-Makiyama and van der Marel 2018).From APECs inception,many APEC economies have enjoyed high growth rates based on the rapid rise of the production and export of manufactured goods.There
142、 are no clear signs that that process has run its course.For some time now,there has been a consensus within APEC that member economies will require market incentives to promote an equally rapid growth of key services sectors and harness the productivity benefits of the digital economy.APECs own evi
143、dence base shows that structural reform would be required to achieve such outcomes(APEC PSU 2011).However,the International Monetary Funds(IMF)2019 World Economic Outlook presents empirical evidence that the pace of structural reform in emerging markets and developing economies had slowed markedly i
144、n the past decade,and that this was having real implications for growth and convergence.Furthermore,the rate of the slowdown had been greater in the Asia-Pacific region than in other regions in the world other than sub-Saharan Africa.Overall,the study suggests that a structural reform package in are
145、as such as governance,domestic and external finance,trade,and labour and product markets,might double the speed of convergence,raising annual GDP growth by about one percentage point for some years(IMF 2019).10 APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Sho
146、cks STRUCTURAL REFORM AND A GREEN RECOVERY FROM ECONOMIC SHOCKS A key question now facing APEC economies is what role structural reform should play in responding to the economic challenges posed by COVID-19.Eventually fiscal responses to the crisis will hit natural limits as government budgets and b
147、orrowing capacity are depleted.Similarly,there appear to be limits to the stimulus that monetary policy can provide.There is little doubt,then,that structural reform will come to be seen as an important part of the toolkit for governments in responding to the crisis,particularly as public health res
148、trictions are removed.Structural reform has the advantage in that it seeks to improve the efficiency of markets and the productivity of factors of production.It was employed widely as part of the response to previous economic crises,such as the Asian financial crisis in 1997 and the global financial
149、 crisis in 2008.It was these crises that allowed governments to confront the political challenges of structural reform,in that they created winners and losers.Crises induce high public anxiety and uncertainty,which reduce part of the resistance to change(OECD 2009a).The collective stress during cris
150、es helps to unfreeze powerful,institutionalised perceptions,and to challenge the status quo(Boin and t Hart 2022).In addition,Douglas(1990)notes that individual groups lose their own privileges,but simultaneously the aggregate cost of paying for the privileges of other groups in the economy is remov
151、ed from them.It is hard to complain about damage to your own group when everyone else is suffering at least as much and you benefit from their loss,in the medium term.Clearly APEC Economic Leaders and Ministers want the future structural reform agenda in APEC to incorporate work to tackle climate ch
152、ange,as well as address other environmental challenges.In agreeing to Aotearoa Plan of Action to implement the Putrajaya Vision 2040,APEC Leaders put structural reform as one of the first among the list of collective actions to be taken to combat climate change and other environmental challenges(APE
153、C 2021b).The APEC Structural Reform Ministers met in 2021 to adopt APECs current structural reform instrument,the Enhanced APEC Agenda for Structural Reform(EAASR)(APEC 2021a).In doing so,they also stressed the importance of structural reform to combat climate change and other environmental challeng
154、es.In the context of the need for structural reform efforts in response to the economic slowdown caused by COVID-19,they instructed that the 2022 AEPR should be on the topic of Structural Reform and a Green Recovery from Economic Shocks.Green structural reforms can be good for the environment and fo
155、r growth APEC work on structural reform and a green economic recovery should be seen as complementary to,rather than competing with,existing structural reform work on services and on the digital economy.Both have the potential to assist APEC members with the greening of their economies through innov
156、ation and the adoption of cleaner technologies.4 Green structural 4 Clean technologies refer to any product or service that contributes to green objectives.For example,clean technologies include those that significantly enhance energy efficiency,the sustainable use of resources,or the protection of
157、the environment.APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks 11 reforms facilitate the adjustment to economic activities that will cause less damage to the environment,in addition to creating conditions for improved growth in member economies.But struc
158、tural reform work on the greening of the economy will entail new challenges.It will require work on measures that will ensure that markets for environmental services in APEC member economies provide price signals and other incentives to ensure that economic activities reflect the long-run value of e
159、nvironmental resources to society.It will also need to work in support of government policies to create circular economies,or regenerative and nature-based solutions.Earlier work on the matter in 2012 was developed by the Organisation for Economic Co-operation and Development(OECD),World Bank and UN
160、 in a report for G20 members on the types of measures that green structural reforms should include.Examples are:Reforms of the structure of taxes and charges and environmentally harmful subsidies,with due attention to the pricing of negative environmental externalities such as polluting emissions an
161、d the inefficient use of scarce natural resources.Reforms that improve the working of product markets,as price signals need well-functioning markets in order to provide incentives for reducing such externalities and to spur innovation and investment in cleaner activities.Other policies,such as regul
162、ations and standards,and other approaches to address information failures,measurement issues and behavioural biases to complement price-based instruments.Putting a price on externalities is an important element,but that alone will not be sufficient because under certain conditions pricing will be di
163、fficult to implement or the price signal may be weak.Conditions for assuring the right policy framework for greening infrastructure provision.An appropriate mix of market and non-market instruments is especially important in the network infrastructure sectors,which are critical for delivering green
164、growth and sustainable development.Innovation policies,as technological progress is a key lever for fostering green growth and sustainable development.In this context,the rapid diffusion of green goods,services and technologies worldwide will be particularly important.Therefore,there is a crucial ro
165、le for trade and international investment policies.Broader social policies,to better harness the synergies and minimise the possible trade-offs between social,economic and environmental objectives,including reviewing labour market policies that can facilitate the transition to a greener and more inc
166、lusive economic structure.A key message from the OECD/World Bank/UN report was that green structural reforms that promote efficient markets for environmental services should not be seen as an adjunct to structural reform,but rather as long-term structural reforms that provide for superior outcomes f
167、or both growth and the environment.This 2022 edition of the AEPR will embody comparable advice for APEC but in the modern context where structural reform would be required as a response to the economic slowdown caused by COVID-19,and where action to combat climate change has become significantly mor
168、e urgent.12 APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks GUIDE TO THE REPORT The rest of the report proceeds as follows.Chapter 2 will provide an overview of green structural reforms in supporting recovery from economic shocks.Chapter 3 will outline th
169、e sustainability issues facing APEC.Chapter 4 will discuss key issues facing governments in implementing green structural reforms.Chapter 5 presents the core components of the reforms in improving the performance of the market and facilitating the allocation of resources to low-carbon activities in
170、response to price signals,while Chapter 6 outlines the complementary enabling instruments.Chapter 7 concludes with key findings and recommendations as well as identifying areas for reference to the Economic Committee on further work.APEC Economic Policy Report 2022:Structural Reform and a Green Reco
171、very from Economic Shocks 13 2.STRUCTURAL REFORM AND RECOVERY FROM ECONOMIC SHOCKS Wars and terrorist events,financial crises,natural disasters and pandemics can induce supply and/or demand shocks in the economy.They can turn into economic crises,defined as cumulative declines in consumption or GDP
172、by at least 10 percent,if they are large,long-lasting and poorly managed.Governments,in responding to economic shocks,typically seek to limit the negative impacts by stabilising the economy and initiating rapid recovery.But response and recovery packages could also be used as a springboard for green
173、 structural reforms to build a more inclusive and sustainable economy(OECD 2009a).The rest of this chapter discusses economic shocks and their impacts,and how recovery measures could be used to accelerate the movement toward a green economy.ECONOMIC SHOCKS Economic shocks have widespread,substantial
174、 and long-lasting effects on measures of economic performance,such as growth,unemployment,consumption and inflation.Because markets and industries are interconnected,large shocks can have repercussions throughout the economy,and in addition to their economic effects,have profound social and environm
175、ental impacts.International interconnectedness through trade and financial flows brings benefits to economies,but it also makes them vulnerable to economic shocks originating abroad.The term contagion is used to describe how adverse events elsewhere reverberate across economies in a globally connect
176、ed world.Economic shocks could be categorised as supply shocks or demand shocks.Supply shocks make production more costly,and occur as a result of,for example,natural disasters,severe weather,wars or terrorism.Demand shocks suddenly reduce consumer spending or business investment,and occur as a resu
177、lt of,for example,a downturn in a major export market or a crash in asset values.The Individual Economy Reports(IERs)and case studies submitted by APEC members for this report cover a range of economic shocks including economic and financial crises,earthquakes and tsunamis,and adverse weather events
178、.Unlike most other shocks that affect either demand or supply,COVID-19 is simultaneously creating both supply and demand shocks.Lockdowns and quarantines reduce industrial activity,generating shortages of materials and industrial inputs,creating a supply shock that impacts global value chains rangin
179、g from electronics to cars and biopharmaceuticals.In turn,lost jobs and lockdowns reduce demand for services ranging from entertainment to retail and tourism,creating a demand shock that reaches back to reduced manufacturing.Short-term responses to shocks,such as the USD 19.8 trillion spent by end o
180、f May 2021 alone on stimulus packages during the COVID-19 pandemic,can help to soften the immediate negative impact(Pigato,Rafaty and Kurle 2021).But shocks can reveal structural weaknesses that need to be addressed through fundamental changes to the economy.The aim of such changes is not only to re
181、cover from the shock,but also to drive long-term,enduring improvements in economic performance,improve social and environmental outcomes,and build resilience to better weather future shocks(OECD 2021c).14 APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks Ec
182、onomic shocks can turn into crises if they are large and long-lasting.Economies that start out in a stronger economic position,with sound institutions,stable inflation,manageable government debt,robust economic growth and reliable banks tend to weather shocks better.Crises can provide an opportunity
183、 for structural reforms Structural reforms are often initiated in response to economic crises.Crises can create pressure for governments to act and can reduce public resistance to change.Unsustainable economic conditions,and the fear that they could deteriorate further,serve as a catalyst for econom
184、ic reform(Ranciire and Tornell 2016).The initial social,economic and environmental conditions in an economy,how well the shock is being managed(a well-managed shock may not turn into a crisis)and public perception of the need for change(not just the existence of a shock)affect the political decision
185、 to undertake reforms.But the crisis itself does not predict what form the response will take(Rodrik 1996).Crises appear to be a significant factor in the push for structural reforms and its components(Lora 2000).Evidence of crisis-led reforms abound:Southern Europe in the wake of the Eurozone crisi
186、s;the trade reforms of Latin America in the 1980s and 1990s;or the French Revolution(Ranciire and Tornell 2016).However,there is also a contrasting view in the literature that the crisesreforms nexus is unfounded(Gokmen et al.2021).Lessons for structural reforms from past crises are discussed in App
187、endix A.STRUCTURAL REFORM The primary objective of structural reforms has traditionally been to promote economic growth,for example,through improved competition,greater efficiency,and ultimately,through their influence on employment and productivity(Haraguchi and Weiss 2017).However,measures promoti
188、ng economic growth could be considered outdated if they do not take into account any economic or social challenges.Some economies are developing frameworks to support public institutions to consider the issues that matter to the population.For example,New Zealands Treasury has developed a Living Sta
189、ndards Framework that includes environmental amenities as among the factors to consider when providing policy advice.5 Structural reform provides the framework conditions for green recovery Structural reforms contribute to removing barriers to the smooth and efficient functioning of product,capital
190、and labour markets and can generate significant economic and employment gains,increase competitiveness,and encourage innovation at the same time as opening up opportunities for women and vulnerable communities(Hernando and San Andres 2015).Structural reform policies also explicitly recognise that go
191、vernments may pursue other policy objectives,such as economic inclusion,environmental protection,or better health and safety outcomes.And,structural reform policies seek to allow governments to achieve such objectives 5 The Living Standards Framework defines the environmental amenity domain as peopl
192、e having access to and benefiting from a quality natural and built environment,including clean air and water,green space,forests and parks,wild fish and game stocks,recreational facilities and transport networks(Treasury 2021).APEC Economic Policy Report 2022:Structural Reform and a Green Recovery f
193、rom Economic Shocks 15 either in tandem with or through the improved functioning of markets(Furman 2014;OECD 2016;Reed 2013;Stiglitz 2012).Structural reform policies can provide the framework conditions for promoting green growth(OECD,World Bank and UN 2012).Well-functioning capital,labour and produ
194、ct markets can facilitate the efficacious functioning of market-based environmental policy instruments through their impacts on supply and demand(Marin and Mazzanti 2021)and can facilitate the reallocation of resources to sustainable,low-carbon activities(Adalet McGowan,Andrews and Millot 2017;OECD
195、2017b).GREEN STRUCTURAL REFORMS AND ECONOMIC SHOCKS The immediate response to shocks is often fiscal stimulus The immediate government policy response to shocks is typically to deal with the crisis and save lives and livelihoods.Another key priority is to minimise the negative impact on the economy
196、by supporting firms and employment and sustaining demand(OECD 2020a).Fiscal stimulus spending can be used on green initiatives,and there is strong evidence that green stimulus policies are economically advantageous when compared with traditional fiscal stimulus(Allan et al.2020).However,evidence fro
197、m the global financial crisis of 20082009 and the COVID-19 pandemic shows that the proportion of fiscal stimulus spending on green initiatives is fairly small,and that most of the stimulus packages focus on business-as-usual activities.Economies have mobilised unprecedented funding to tackle and rec
198、over from COVID-19 The Asian Development Bank(ADB)COVID-19 Policy Database estimates the total amount of spending by ADB members to combat COVID-19 as USD 31.735 trillion by November 2021(ADB 2022).The objectives of fiscal policy actions adopted by governments in response to the COVID-19 pandemic fa
199、ll into three broad groups:(1)to deal with the health impacts;(2)to support households;and(3)to bolster businesses.Governments pursue these objectives by using the whole range of fiscal instruments,including tax and expenditure measures,credits and guarantees(Lacey,Massad and Utz 2021).There are num
200、erous databases of fiscal stimulus measures by economy and assessments of the greenness of COVID-19 fiscal policies(see,e.g.,Carbon Brief 2020;Engel et al.2020;Hughes 2020;IMF,n.d.;OCallaghan et al.2021;OCallaghan and Murdock 2021;OECD,n.d.;Pigato,Rafaty and Kurle 2021;UNDP Data Futures Platform 202
201、1).By May 2021,at least USD 16.85 trillion of fiscal stimulus had been provided by governments.About 85 percent of total global spending during the COVID-19 pandemic was aimed at rescuing the economy(see Figure 2.1).Assessments of the greenness of fiscal stimulus measures show that green considerati
202、ons and recovery plans were not incorporated into the design of stimulus packages,and that economies have preferred shorter-term,business-as-usual support,including for environmentally damaging industries or investments in current or traditional infrastructure.(Aylward-Mills et al.2021;OCallaghan et
203、 al.2021;Smith and Gonzlez 2021;Vivid Economics 2021).Most stimulus spending has focused on rescue measures rather than on long-term economic recovery and has been broadly blind to green considerations,or,as characterised by Pigato,Rafaty and 16 APEC Economic Policy Report 2022:Structural Reform and
204、 a Green Recovery from Economic Shocks Kurle(2021),overwhelmingly light brown(78.2 percent)and brown(4.4 percent)(refer to Figure 2.1;see also Larsen et al.2021).Box 2.1 Plans to promote economic recovery Source:Individual Economy Report(IER)from Chile.IER and case study from China,2022.Chiles Presi
205、dential Step-by-Step Plan focused on supporting the displaced workforce and small and medium enterprises(SMEs)affected by the COVID-19 pandemic.It contributed USD 4.5 billion to the wider Public Investment Plan for 2020/2021,investing in public projects(2,544)with capacity to create 250,000 addition
206、al jobs.These investments were targeted toward strengthening infrastructure,social need and quality of life,and productivity.Thirty percent of the investments contributed directly toward sustainability,including water source resilience and irrigation efficiency;extension of public transport and cycl
207、e path;thermal conditioning and energy efficiency in homes;planting of suitable trees;and improvements in waste management.In 2022,an Inclusive Recovery Plan was launched with the intention of supporting vulnerable groups who have been struggling with the economic crisis,by recovering wage earners j
208、obs,tackling rising living costs,boosting SMEs and public investment,and providing economic and social protection mechanisms.Within this framework,green measures are being considered,such as the transition to low-carbn electricity systems and the establishment of quality standards for biofuels,which
209、 could reduce greenhouse gas emissions by five times.In China,to alleviate the impact of the pandemic on the economy,the government introduced a comprehensive set of measures to boost the real economy,For example,in 2020,the Chinese government issued one trillion-yuan worth of special anti-pandemic
210、treasury bonds,and cut the tax and levy burden on enterprises by more than 2.6 trillion yuan throughout that year.In 2021,the government established a mechanism of regular transfer of direct fiscal funds.2.8 trillion yuan were transferred,which guaranteed full coverage of the central governments liv
211、elihood subsidies.In 2022,the national general public budget expenditure is expected to increase by more than 2 trillion yuan compared with 2021,and transfer payments from the central to local governments will expand by roughly 1.5 trillion yuan.In addition,China has implemented relevant science-bas
212、ed measures to achieve stable economic growth,maintain stable employment,and meet energy conservation and emission reduction targets.For example,the reduction in interest rates and reserve rate requirements;the maintenance of stable supply and prices concerning key products;the support of entreprene
213、urship and innovation to drive large-scale employment;and the acceleration of green transformation by expanding green investments and developing carbon market trading.Moreover,China also put in place science-based and targeted measures in epidemic prevention and control,such as the use of digital te
214、chnology to speed up the resumption of work,school and production,as well as to implement pandemic prevention and control.Regarding MSMEs,China has increased its support for MSMEs struggling with difficulties during the pandemic.The government reduced the financing costs of MSMEs by lowering down th
215、e banks required reserve ratio and offering medium-term lending facility loans,among others.Financial support to companies affected by COVID-19 through interest subsidies,guaranteed start-up loans and reduced guarantee(and re-guarantee)fee rates.A portion of micro and small businesses in the service
216、 industry has obtained temporary rent concessions.Furthermore,China has taken various measures to support MSMEs innovative development.The government implemented the Action Plan for Digital Transformation Partnership and the Special Action for Digital Empowerment of SMEs to promote the research and
217、development of key technologies and products for digital transformation,and to establish a cross-industry digital ecosystem that integrates the upstream and downstream of the industrial chain.Finally,the government has created a more favourable environment for MSMEs by eliminating obstacles that hin
218、der market competition.APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks 17 Figure 2.1 Fiscal stimulus measures worldwide Note:Light brown stimulus in the context of COVID-19 recovery refers to spending that supports the economy with wage and employment sub
219、sidies,value-added tax(VAT)reductions,and liquidity injections for businesses without any green conditions attached,keeping alive economic activities that otherwise would have stopped or been reduced in absence of these policies.Given most economies rely heavily on fossil fuels,this type of stimulus
220、 increases emissions,although it is not intentionally aimed at doing so.Brown stimulus refers to new investments and activities with large associated greenhouse gas emissions(compared to a situation in which they would not have taken place),such as coal mines,oil infrastructure and traditional trans
221、port infrastructure.Source:Pigato,Rafaty and Kurle.(2021).The COVID-19 pandemic is not the first time fiscal stimulus has been used to recover from an economic shock.Analysis of the stimulus packages during the 20082009 global financial crisis suggests that short-term response measures need to be co
222、mbined with longer term structural reforms to bake in the impact of the stimulus and bring about lasting change(see Appendix B;OECD 2020d).For example,the clean energy investment component of the 2009 American Recovery and Reinvestment Act contributed to the subsequent significant growth in clean en
223、ergy in the US(see Box 2.2).18 APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks Box 2.2 American Recovery and Reinvestment Act 2009 Source:Case study from the US,2022.but stimulus needs to be backed by green structural reforms Transient fiscal stimulus pac
224、kages must be accompanied by structural reforms in order to lock in the long-term benefits of the investment and make the gains enduring and successful(see Appendix B;Gawel and Lehmann 2020;PRI 2020).Green recovery programmes should be integral to creating a green transition and making economies mor
225、e resilient(ADB 2020;Aylward-Mills et al.2021;Buckle et al.2020;Burger,Kristof and Matthey 2020;Gonzlez et al.2021;Hughes 2020;Lim,Ng and Zara 2021;OECD 2021d;Smith and Gonzlez 2021;Whitley et al.2018).Just as structural reforms promote efficiency by creating well-functioning markets to ensure resou
226、rces are used where they are valued most highly,green structural reforms involve measures to promote the efficient use of natural resources and shift investment and decision-making to green activities by:attaching an explicit price to environmental goods and services through taxes or cap-and-trade s
227、ystems;removing environmentally harmful subsidies;and subsidising green activities and investments(e.g.,implementing emissions taxes,removing agricultural subsidies for fertilisers or pesticides,providing subsidies for electric vehicles)The American Recovery and Reinvestment Act 2009 was a fiscal st
228、imulus measure to deal with the global financial crisis of 20082009.Its immediate goal was to stabilise the economy,preserve and restore jobs,and assist deeply suffering industries.The Act consisted of USD 787 billion in spending(later raised to USD 831 billion)in tax cuts/credits and unemployment b
229、enefits for families.It also earmarked expenditures for healthcare,infrastructure and education.Of the initial allocations,USD 90 billion,or about 11 percent,was allocated toward investing in a cleaner,more sustainable energy future.The clean energyrelated funding made up roughly one-eighth of the t
230、otal,representing a substantial direct boost.The Act focused on four major categories of energy-related investments:energy efficiency,the electric grid,transportation and clean energy.These investments addressed multiple market failures,such as environmental externalities and innovation market failu
231、res.Major targets included about USD 25 billion to promote renewable electricity generation through investment grants,production tax credits and loan guarantees.Another USD 20 billion funded energy efficiency and conservation through tax credits,rebates and block grants to state and local government
232、s.The funding reached nearly every aspect of the value chain for numerous key clean energy technologies,including advanced vehicles,batteries,carbon capture and sequestration,and technologies to enhance energy efficiency.The clean energy policies in the Act laid the foundation for a longterm transit
233、ion to a cleaner economy by improving clean energy markets,unlocking private capital,helping drive down clean energy technology costs,and expanding research and development of new technologies.They led to the growth in clean energy in the US that occurred between 2009 and 2016.Solar electricity gene
234、ration increased over 30fold and wind generation increased over threefold from 2008.A key element of the clean energyrelated investments is that while they were designed to provide longterm benefits,the allocations focused as much as possible on projects that were shovelready and could be deployed r
235、elatively quickly,in order to take advantage of resources in the economy that were underutilised due to the global financial crisis.In short,the allocations aimed to put people back to work and contributed to both the recovery and reinvestment goals of the legislation.APEC Economic Policy Report 202
236、2:Structural Reform and a Green Recovery from Economic Shocks 19 imposing an implicit price on environmental goods and services through direct regulation(e.g.,introducing bans to distribute certain types plastic bags in shops,or establishing environmental product standards).Green structural reforms
237、are complemented by enabling policies,such as information provision,support for innovative green technology,capability building,public procurement and international cooperation,which are discussed further in Chapter 6(OECD 2017a;2017c).that are integral to the structural reform agenda Green structur
238、al reforms should be seen as integral to overall structural reform policies that aim to promote economic growth and foster sustainable,low-emission and socially inclusive development through removing barriers,such as distorted pricing,to well-functioning markets(OECD 2011a;World Bank 2012).Integrati
239、ng economic,environmental and social objectives in structural reforms brings challenges,and policymakers need to take care that green growth and environmental sustainability are not achieved at the expense of greater equity,poverty alleviation and other priorities such as food security.At the same t
240、ime,governments need to ensure that measures to tackle shocks do not undermine their efforts to address pressing environmental challenges(OECD 2020d).The four pillars of structural reform sound public sector governance;competitive products and services markets;flexible labour markets;good regulatory
241、 policy are critical to the effective implementation of green structural reforms,because residual distortions or underperformance in these areas can undermine their effectiveness and thwart the achievement of environmental objectives.Sound public sector governance is fundamental to the design,implem
242、entation and enforcement of green policies.Competitive product and services markets are important to foster innovation and remove barriers to entry,particularly for small,innovative firms.Flexible labour markets provide people with the ability to move to sectors and firms where their skills are more
243、 valued.Good regulatory policy ensures that regulation is enabling,performance-based,coherent and adaptive and does not hamper the use of new green technologies and processes.Green structural reforms can contribute directly to economic growth and inclusion Policymakers have often assumed that there
244、are tensions between the achievement of environmental objectives and other objectives such as improved economic growth and inclusion.Increasingly these assumptions are being questioned as positive synergies between these objectives are uncovered.An understanding of such synergies is particularly imp
245、ortant as economies look to use green structural reforms to recover from economic shocks.For example,emissions taxes and the removal of environmentally harmful subsidies could provide governments with fiscal headroom for initiatives such as increasing green investments or incentivising green activit
246、ies.Green policies could stimulate private sector innovation through regulation or public procurement that drives demand for new green products and services.Trade in green technologies could spur international diffusion and export growth.20 APEC Economic Policy Report 2022:Structural Reform and a Gr
247、een Recovery from Economic Shocks Green investments such as renewable energy,low-emissions transport,energy efficiency and nature-based mitigation and adaptation solutions could provide higher employment intensity,better financial and economic returns and wider social benefits than policies that see
248、k to prop up archaic,polluting means of production(Aylward-Mills et al.2021).For example,Batini et al.(2021),in estimating multipliers for renewable versus fossil fuel energy investments,find that the difference in the two multipliers is non-zero,with very high probability in favour of renewables.Ko
249、reas Green New Deal stimulus package(see Box 6.9)includes investments in advanced green technologies to create jobs;expansion of solar panels and wind turbines;as well as investments in smart grids and microgrid communities.Recent analyses suggest that implementing green strategies for pandemic reco
250、very along with ambitious climate policies can have positive short-run and long-term effects in terms of jobs,poverty reduction,GDP growth,and social and equity goals(Hepburn et al.2020).Green policies can increase resilience(the ability of a system to deal effectively with change)to future environm
251、ental shocks(such as natural disasters)or economic shocks(such as spikes in commodity prices)(Schultz 1975).Green policies aimed at building resilience in land,water and biodiversity could ensure that the resources are plentiful when they are most needed,such as in response to shocks,thereby reducin
252、g natural-resource price volatility and bottlenecks,and allowing the system to recover.APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks 21 3.SUSTAINABILITY ISSUES FACING APEC In assessing the role of structural reform in promoting a green recovery from cur
253、rent and future economic shocks,it is important to outline the types of sustainability challenges faced by APEC member economies.APEC economies(and the region itself)are particularly exposed to such challenges given their geographic diversity and geographical locations(APEC PSU 2021;World Bank 2020a
254、;see Figure 3.1).Coastal zones are particularly threatened by the risk of rising sea temperatures and levels that will cause permanent submergence of land,more frequent or intense coastal flooding,more coastal erosion,loss and change of coastal ecosystems,salinisation of soils,ground,and surface wat
255、er,and impeded drainage(causing surface flooding)(Oppenheimer et al.2019).The APEC region is prone to experiencing natural disasters,and cumulatively disaster-related losses for APEC economies is estimated to be around USD 111 billion annually(APEC 2021c).Successful management of environmental issue
256、s is therefore a priority for APEC while still ensuring there are opportunities for economic growth and development in member economies(APEC 2015).Figure 3.1 Number of natural disasters in the APEC region,19892021 Source:Emergency Event Database(EM-DAT),accessed 2 August 2022,https:/www.emdat.be;APE
257、C Policy Support Unit(PSU)calculations.This chapter outlines some of the major environmental issues facing APEC economies,from climate change,to waste and pollution,deforestation,public health issues,natural resource depletion,and energy systems and resiliency.It also introduces the range of example
258、s of structural reforms to respond to economic shocks provided in the Individual Economy Reports(IERs)and case studies submitted by APEC member economies.22 APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks CLIMATE CHANGE Climate change is one of the bigges
259、t environmental issues that APEC economies face because of increasing emissions activity over time.As shown in Figure 3.2,which is based on analysis by the APEC Policy Support Unit,global greenhouse gas(GHG)emissions have been steadily increasing since 1990 and APEC economies are driving that growth
260、(APEC PSU 2021).Energy generation is the main source of carbon dioxide(CO2)in the APEC region(APEC Economic Committee 2022).It accounts for 40 percent of emissions,driven by a heavy reliance on coal-based electricity(60 percent of the regions energy mix).Manufacturing plays an important role in econ
261、omic growth in the APEC region,and manufactured goods represent the largest share of APECs intra-regional and inter-regional trade(APEC PSU 2019).Intra-APEC trade in manufactured goods has been increasing 6 percent annually since 1996 and represented around USD 5.6 trillion in 2021(WITS 2022).These
262、increases in manufacturing activity likely contribute to the increase in GHG emissions from the APEC region.Agricultural activity is another significant source of emissions globally(Lynch et al.2021).Agricultural activity generates non-CO2 emissions through crop and livestock activities as well as C
263、O2 emissions through conversion of natural ecosystems(such as forest and peatlands)for agricultural land use(FAO 2020).Livestock are responsible for roughly 32 percent of human-caused methane emissions(UNEP 2021)and 14.5 percent of total global GHG emissions(Quinton 2019).Population growth,economic
264、development and urban migration are further driving demand for animal protein(UNEP 2021),with demand for beef products in Asia alone expected to increase by 300 percent by 2050(Quinton 2019).Such numbers and trends make agricultural activities prime candidates for focused mitigation technologies and
265、 policies in the battle against climate change.For example,there is an array of work being done to identify low-methane traits in livestock for future selective breeding(e.g.,Kittlemann et al.2014;Negussie et al.2017;Roehe et al.2016)as well as methane reduction by adding additives or supplements to
266、 livestock feed(Department of Primary Industries and Regional Development 2022).In addition,conservation agriculture,which includes reduced or no-till practices along with crop residue retention and mixed crop rotations,offers multiple benefits for soil health and reducing GHG emissions(Somasundaram
267、 et al.2020).Figure 3.2 shows further that APEC economies collectively produce more CO2 and GHG emissions than the rest of the world,particularly when considering the population and GDP of the two groups(APEC PSU 2021).Emissions are a key contributor to climate change.There are many flow-on effects
268、from climate change,particularly for APEC economies given their vulnerabilities to climate events(World Bank 2020a),including:More extreme weather events,which APEC economies are particularly exposed to,given their geographic locations and geographic diversity.Impacts on economic activity,as a resul
269、t of environmental changes such as sea level rise,precipitation increases(and increased flooding)and drought.This could cause APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks 23 lower agricultural yields and food insecurity in vulnerable regions,and povert
270、y because of food price increases when there are bad yields6.Migration(both internal and international),as people move away from areas more susceptible to climate events(Hauer,Evans and Mishra 2016).Population decreases could have productivity and wealth implications for the area.Potential for econo
271、mic shocks that could fuel conflict in economies with fragile social and political systems(Brck and dErrico 2019;Mach et al.2019).Economic inequality within and between economies,since lower income groups are typically more exposed to the adverse effects of climate change,more susceptible to the dam
272、age caused by climate change,and less able to cope and recover from climate change induced damages(Islam and Winkel 2017).Severe impact on biodiversity and complex ecosystems,which is likely to pose additional negative risks to economic activity(Newbold 2018).Health impacts through air pollution,cha
273、nges in extreme temperatures,mortality through flooding,and disease.Figure 3.2 APEC CO2 and GHG emissions,2018 CO2=carbon dioxide;GDP=gross domestic product;GHG=greenhouse gas Source:APEC PSU(2021).WASTE AND POLLUTION(AIR,WATER AND SOIL)Waste and pollution,including plastic pollution,are big environ
274、mental threats to the APEC economies.Land-based waste mismanagement leads to debris entering the ocean.Global plastic production has increased to 322 million tonnes annually(APEC Oceans and Fisheries Working Group 2020).Marine waste pollution is problematic for APEC economies.The marine economy in t
275、he APEC region amounts to USD 2.06 trillion,or 4.7 percent of APEC GDP(APEC Oceans and Fisheries Working Group 2020).Marine pollution affects economic and food security by damaging the coastal ecosystem;the tourism industry also suffer economic losses from tourists who choose to spend their vacation
276、s away from polluted marine environments.Marine pollution is estimated to cost APEC economies USD 10.8 billion annually(APEC Oceans and Fisheries Working Group 2020).6 As different crops will react differently to the effects of climate change,nutrition could also be impacted.0%10%20%30%40%50%60%70%G
277、DPPopulationCO emissionsGHG emissionsAPECROW24 APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks Soil pollution is another environmental impact of certain economic activities that will continue to pose as an issue for APEC members.There are many sources of
278、soil pollution,including:Misuse of heavy metals,excessive use of fertilisers,and pesticides used in agriculture,which can cause soil pollution and damage surrounding ecosystems,including the health of people.Poorly managed waste disposal from both municipal and industrial sources that contaminates t
279、he soil.Soil pollution reduces the soils capacity to act as a filter,resulting in further pollution of water bodies(which has negative health impacts for humans and ecosystems).It leads to biodiversity loss,overuse of water resources,loss of soil fertility and quality,air pollution and the inability
280、 of the ground to drain properly which can cause floods(EEA 2021a;FAO 2018b).Air pollution similarly is a product of economic activities such as manufacturing and transportation.Air pollutants are generated from mostly the same sources as GHG emissions(Gao et al.2018).In addition to the impact of ai
281、r pollution on climate change,there are also a range of health impacts such as cardiovascular and respiratory diseases that are caused and exacerbated by higher levels of air pollutants(Manisalidis et al.2020).Additionally,higher air pollutant levels also affect the geographical distribution of infe
282、ctious diseases(Manisalidis et al.2020).DEFORESTATION AND FOREST DEGRADATION Deforestation refers to the permanent removal of forest area,typically to use the land for other productive purposes.Forest degradation refers broadly to a reduction in the ability of a forest to produce ecosystem services
283、such as carbon storage and wood products as a result of anthropogenic and environmental changes(Thompson et al.2013).This has impacts on carbon sequestration(and climate change upon release of CO2),soil erosion,and flooding,among others(Domroes 1991).The key drivers of deforestation and forest degra
284、dation in APEC economies(APFNet and FAO 2015;Lin et al.2019)and elsewhere(Houghton 2012;Kissinger et al.2012;Rudel et al.2009;Weatherley-Singh and Gupta 2015)are recognised as:Agricultural expansion.In 2012,commercial and subsistence agriculture were the direct drivers of more than 70 percent of def
285、orestation in developing economies(Hosonuma et al.2012).Forest product extraction.Logging and fuelwood are major direct drivers of forest degradation(Hosonuma et al.2012).Infrastructure development.Biophysical factors,such as climate and weather events,forest fires,and pests and diseases may result
286、in temporary,and in some cases,permanent forest loss(APFNet and FAO 2015).Indirectly,poverty,population increases,wood product demand,governance factors,urbanisation and urban sprawl,and a lack of coherent cross-sectoral policies are also drivers of deforestation in APEC economies(APFNet and FAO 201
287、5).As such,areas with lower income,higher poverty,and higher population and economic growth may see more deforestation,and/or at quicker rates.It was expected leading up to the review of the APEC Forest Cover Goal in 2020 that forest area would increase in East Asia,the Americas,Russia and the Pacif
288、ic,but decline in Southeast APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks 25 Asia.The review in fact found that forest areas increased in nine APEC economies and decreased in 10 while the goal overall was achieved and the region in total increased fores
289、t cover by 27.9 million hectares between 2007 and 2020(APEC SOM Steering Committee on Economic and Technical Cooperation 2021).PUBLIC HEALTH ISSUES Public health issues are threats to the APEC region because of their potential to significantly impact the welfare of society as well as the economy,tra
290、de and security.APEC member economies recognise that there needs to be cooperative and ongoing engagement to manage the development and spread of contagious diseases(such as COVID-19);aging populations and the growing complexity of care required;spiking non-communicable disease rates and more comple
291、x disease management requirements for people;and natural disasters due to climate change(APEC 2014).Rising temperatures and therefore exposure to extreme heat Rising temperatures pose a public health risk(Romanello et al.2021).Exposure to extreme temperatures is an acute health hazard,with people ov
292、er 65 years old,living in urban areas,and/or with health conditions being most at risk(Basu and Samet 2002;Kovats and Hajat 2008;Li et al.2015).Risks to health because of extreme temperatures are further intensified by low availability of cooling mechanisms and urban greenspace(Romanello et al.2021)
293、.Populations in economies with low and medium scores in the UN-defined human development index(HDI)have seen the biggest increases in heat vulnerability in the past 30 years(Romanello et al.2021).Rising temperatures also have impacts on productivity and the economy.In 2020,295 billion potential work
294、 hours were lost due to heat(Flouris et al.2018;Romanello et al.2021),half of which fell on agricultural workers in economies with low and medium HDI.Increased disease transmission Environmental conditions are increasingly favourable to the transmission of many water-,air-,food-and vector-borne path
295、ogens(Caminade,McIntyre and Jones 2019;Romanello et al.2021;Semenza et al.2012).For example,dengue virus infections are driven majorly by climate change,along with global mobility and urbanisation(Iwamura,Guzman-Holst and Murray 2020;Vos et al.2020).Other diseases influenced by changing environmenta
296、l conditions include malaria,vibrio pathogens and mosquito-borne diseases(Romanello et al.2021).Environmental stresses linked to mental health The connection between planetary and human health also extends to mental health.Increasing rates of climate-related hazards are intensifying existing mental
297、health problems,leading to psychological distress,and contributing to onset of new episodes of mental illness(Beaglehole et al.2018).Climate change and climate-related hazards can cause human(im)mobility,social tensions and conflict,and livelihood loss and economic hardship all of which have impacts
298、 on mental health(Hayward and Ayeb-Karlsson 2021;Kelman et al.2021;Royal College of Psychiatrists 2021).26 APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks Extreme weather events and natural disaster leading to mortality There has been a statistically sign
299、ificant increase in the number of extreme weather events in the past 30 years(Romanello et al.2021).However,only the low HDI group of economies saw a statistically significant increase in the number of people affected by these events.The extreme weather events include:Wildfires.Sixty percent of econ
300、omies had an increase in the number of days people were exposed to very high or extreme fire danger in 20172020 compared with 20012004(Romanello et al.2021).Seventy-two percent of economies had increased human exposure to wildfires across the same period(Romanello et al.2021).Flooding.Climate change
301、 is expected to increase the burden of mortality from coastal flooding and increase storm surge-associated mortality in many regions of the world,in particular south Asia,North America,Oceania,and east and west sub-Saharan Africa(WHO 2014).Food security and undernutrition Food security,and sustainab
302、ility of supply of nourishing foods,is an increasing concern as the climate changes.Increases in average sea surface temperatures globally represent a growing threat to marine food productivity and security,particularly for coastal tropical economies(Allison et al.2009;FAO 2018a;Lynn et al.2014;Roma
303、nello et al.2021).In terms of land crops,rising temperatures are shortening the time taken for crops to reach maturity and therefore reducing crop growth and seed yield potential(Craufurd and Wheeler 2009).Climate change is also increasing the frequency,intensity and duration of drought events,which
304、 has an impact on crop yields(Romanello et al.2021).Causes of undernutrition are complex and extend beyond food availability alone,and include factors such as poverty,access to services,social conditions and underlying population health(WHO 2014).Nevertheless,climate change is expected to cause a si
305、gnificant increase in the number of children with severe stunting,regardless of socioeconomic scenario(WHO 2014).Some of this may be driven by reduced average food yields and crop productivity.NATURAL RESOURCE DEPLETION Around 70 percent of all mining output is produced and consumed in the APEC econ
306、omies(APEC 2022).Resource extraction provides a growth opportunity for some remote areas in the APEC region.However,unsustainable management of resources can undermine any long-term benefits to be gained from resource extraction(APEC PSU 2018).Resource extraction and processing always has an impact
307、on the environment,causing soil degradation,water shortages,biodiversity loss,and damage to ecosystem functions,and exacerbating global warming(Zinsius 2019).The issue is therefore how to maximise the effective output of natural resources while managing the resources and the environment sustainably
308、for long-term use and benefit.This requires innovation and the development of new technology,as well as effective management practices.It is necessary to improve access to,and sustainable management of,natural resources to provide ample opportunities for the local economy and to benefit the poor(and
309、 the remote areas of APEC that rely on resource extraction most for growth)(Lee et al.2009).APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks 27 ENERGY SECURITY The resilience of energy systems in the APEC economies has significant climate change implicatio
310、ns.APEC economies make up 60 percent of world energy demand and the APEC region has four of the worlds five largest energy users(China;Japan;Russia;the US)(APEC 2021e).Additionally,over 80 percent of the regions primary energy demand in 2050 is expected to be met by fossil fuels if APEC economies we
311、re to continue with a business-as-usual approach(APEC 2021e).Since fossil fuel usage directly contributes to emissions output,this would make it nearly impossible to meet the Paris Agreement aspirations of limiting global temperature rise to below 2C,let alone meet the 1.5C target.Significant action
312、 will be needed from all APEC economies if there is to be a global transition to net zero economies by around mid-century in order to avoid the worst impacts of climate change.Other environmental effects because of climate change,such as droughts affecting hydroelectric power generation,have impacts
313、 on energy supply and security,which can flow on to have economic impacts for APEC economies,particularly given the regions high share of energy demand.There are well-studied risks to traditional energy supplies(e.g.,oil),such as the main concentration of source in the Middle East where there are ge
314、opolitical risks,potential for price fluctuations and sea commerce reliance(APEC Energy Working Group 2019).At the same time,the movement to renewable energies(e.g.,hydro,solar and wind electricity)means an inherent reliance on the climate,and therefore as the climate changes and there are more extr
315、eme weather events(such as droughts and other natural disasters),economies face greater exposure to volatility in energy production(Solaun and Cerd 2019).This may flow on to volatility in energy prices and have impacts on productivity and energy poverty.Noting these challenges on the need of securin
316、g a cleaner mix of energy sources to avoid global temperature rise to reach unsustainable levels,an option for reducing CO2 emissions and gradually transiting toward a net zero situation is for some economies is to consider the use of natural gas7 and/or nuclear,and for all economies to allocate res
317、ources to develop and enhance the use of low-carbon sources of energy,such as renewables and hydrogen.STRUCTURAL REFORM IN APEC ECONOMIES TO TACKLE SUSTAINABILITY CHALLENGES Individual Economy Reports and case studies provide examples of recovery measures 20 APEC economies submitted IERs with exampl
318、es of recovery measures that they have taken to address economic shocks,including financial shocks,natural disasters,climate change and COVID-19.Case studies from 10 economies provided more in-depth information.Boxes throughout this report are mostly drawn from the IERs and case studies submitted as
319、 of May 2022 to illustrate the types of policy measures available for recovery from economic shocks.Not all recovery packages are designed primarily to deliver environmental benefits(Aguilar Jaber et al.2020;Maas and Lucas 2021).Some,such as fiscal stimulus packages,are typically directed at socioec
320、onomic recovery and only incidentally generate green co-benefits.7 Natural gas combustion produces at least 25 percent less CO2 than that from oil derivatives such as gasoline and diesel(US Energy Information Administration,2022).28 APEC Economic Policy Report 2022:Structural Reform and a Green Reco
321、very from Economic Shocks Economies have mobilised unprecedented funding to tackle and recover from the COVID-19 crisis.Most stimulus measures have not been aimed at improving environmental outcomes;however,socioeconomic stimulus measures can create green co-benefits even if they are not the primary
322、 objective.For example,in New Zealand,responses to the economic crisis of the early 1980s included a wide range of reforms to liberalise the economy.Among the reforms,agricultural subsidies were eliminated,income tax rates reduced,and controls on wages,prices,interest rates and foreign exchange lift
323、ed.Although environmental sustainability was not the intention of the removal of inefficient agricultural subsidies,there were environmental benefits in terms of reductions in animal numbers and the area of pasture,increases in the area of planted forest,reduced erosion,and decreased contamination o
324、f rural waterways(see Box 5.2).In this sense,policy packages to recover from economic shocks can include a range of policies aimed at generating environmental benefits and improving sustainability alongside an economic recovery agenda(Aguilar Jaber et al.2020;Maas and Lucas 2021).These can include g
325、reen structural reforms such as carbon pricing to improve the functioning of environmental markets as well as complementary policies such as investment in innovation.Some APEC economies are already implementing green structural reforms and complementary policies.For instance,Canada has implemented c
326、arbon pricing(see Box 4.1).In Chile,a carbon tax,a tax for local pollutants,and a tax for new vehicles were introduced in 2017(see Box 5.1).Russia is piloting a cap-and-trade system in the Sakhalin region(see Box 5.3).Complementary measures include innovation and technology policies,such as Australi
327、as Powering Australia,with its focus on renewable energy(see Box 6.2),green public procurement in a number of economies,including Thailand(see Box 6.3),and green finance.As economies emerge from COVID-19 lockdowns and plan their recovery,attention has turned to addressing the climate crisis and buil
328、ding resilience(Shearing 2021).Since the outbreak of the pandemic,a number of APEC member economies have developed and published strategies and plans for green recovery from economic shocks.The strategies reflect the circumstances in each economy,including its environmental challenges and its overal
329、l goals of economic adaptation or transformation.Several strategies reflect long-term commitment to the green transformation of their economies as a response to economic shocks(ADB 2020;Aguilar Jaber et al.2020;Barbier 2020a;Lim,Ng and Zara 2021;Maas and Lucas 2021).For example,Koreas New Deal 2.0 i
330、s aimed at carbon neutrality and accelerating the transition to a low-carbon and eco-friendly economy by accelerating digital and green energy transitions(see Box 6.9).The Brunei Economic Blueprint advances an economic diversification agenda,to move from being an economy highly dependent on oil and
331、gas,which was negatively impacted during the pandemic,to one that is dynamic and sustainable(see Box 4.4).Japans Green Growth Strategy is an industrial transformation agenda that reflects the view that responses to global warming and the goal of net zero GHG emissions by 2050 present an opportunity
332、for economic growth,rather than being a constraint(see Box 4.5).Green structural reforms are needed to promote sustainable outcomes The previous discussion illustrates that APEC economies face a wide range of sustainability challenges.There is however little evidence from the IERs and case studies s
333、ubmitted that APEC economies have developed comprehensive structural reform strategies to tackle these challenges and promote a green recovery from economic shocks.Chapter 1 illustrated how APEC Economic Policy Report 2022:Structural Reform and a Green Recovery from Economic Shocks 29 progress with structural reform per se in APEC has weakened in recent years.With a few notable exceptions,the IERs