US-AEP COUNTRY ASSESSMENT:
Republic of Korea

ACRONYMS

  1. EIA: Environmental impact assessment
  2. ISO: International Organization for Standardization
  3. MOE: Ministry of Environment
  4. MOST: Ministry of Science and Technology
  5. MOTIE: Ministry of Trade, Industry, and Energy
  6. NGO: Nongovernmental organization
  7. NIER: National Institute for Environmental Research
  8. US-AEP: United States-Asia Environmental Partnership
  9. USAID: United States Agency for International Development

1. ECONOMIC PROFILE

Demographic Conditions and Trends

Korea's population grew rapidly after World War II, from 15 million in August 1945 to 21 million in 1948 and nearly 43 million in 1989. But the 3 percent annual growth up to 1960 dropped to less than 1 percent after 1989.3 Korea's population is expected to rise to 47 million by the year 2000, of which 51 percent will live in the six largest cities.

Economic Conditions and Trends

Korea's gross national product per capita grew from $67 in 1953 to $100 in 1977, $2,000 in 1983, $5,000 in 1989, and about $11,000 today. The United States achieved that level in 1978, Japan in 1984, and Taiwan in 1992.4 Exports in 1995 increased during 1994 by 24 percent. Not surprisingly, Korea is rated the "second most aggressive" country in business after Japan.5

Economic growth of 78 percent has been experienced during most of the 1990s; reduced growth is anticipated in the late 1990s and 56 percent during the first decade of the next century. An increase in annual per capita income to nearly $20,000 is possible by 2001. Reunification with North Korea is a continuing political and economic question that, should it occur, will create needs for South Korea to devote vast new resources to finance reconstruction, including environmental cleanup, in the north.6

2. ENVIRONMENTAL PROFILE

Industrial and Environmental Development Background

Korea's rapid industrial development during the past thirty years has been astounding by any standard. Export-oriented economic policies and investment in heavy industries in the late 1960s and 1970s and policies that fostered the growth of Korean companies into large multinational corporations have made South Korea a major economic power in Asia. Its level of prosperity contrasts starkly with North Korea. Today, South Korea looks toward full partnership with the advanced industrial countries of the world.

Korea's growth has come at now well-recognized environmental costs, because environmental policy was not integrated into its industrial policies at the beginning of its development push. Korea's first environmental law, on public nuisance, came in 1963, followed by additional legislation in the 1970s; but only in the 1980s did Korea begin integrating environment into its pursuit of high growth/high export industrialization. The Korea Constitution was amended in 1987 to provide for the right to a clean environment.7 Integration of environmental and industrial policy accelerated in the 1990s. The Environmental Administration (established in 1980 under the Ministry of Health and Social Affairs) became the Ministry of the Environment in 1990, under the Basic Environmental Act. A phenol spill in the Nakdong River in 1991 and the United Nations Conference on Environment and Development in 1992 focused national attention on the need to bring environment to the forefront of Korea's economic priorities. Since then, other major ministries have increasingly incorporated environment into their structures, budgets, and policies, particularly the Ministry of Finance and Economics and Ministry of Trade, Industry, and Energy. An Environmental Preservation Committee, chaired by the prime minister, is charged with environmental planning and policy coordination with twenty-three representatives from key ministries.8

Environmental Conditions

The push for economic growth has resulted in health-endangering air in cities and industrial areas, badly polluted streams and rivers, and soil pollution from acid rain, chemicals, and chemical fertilizers.9 Addressing these problems requires attention to a number of environmental conditions illustrated by the following facts:

� Koreans consume more water per capita than most West Europeans.

� Koreans generate more solid waste per capita than citizens of any other country.

� Industrial and urban growth is rapidly changing Korean land use patterns.10

Central and other local/municipal government expenditures for environmental conservation have stayed at about 1 percent of (rising) gross domestic product (excluding nature conservation and potable water supply investment) during the 1990s. Although all pollution-related expenditures are up, the proportion for air quality, water quality, and wastes is increasing.11 The potential of the Korean market for environmental goods and services has been conservatively estimated at more than $4 billion annually or about 1.3 percent of Korea's gross national product.12

Environmental Trends and Issues

Among the key environmental trends and ongoing/planned responses during the next ten years are the following:

� Reductions in SO2 concentrations have improved in Seoul in recent years, but the number of cars in Korea, expected to increase from 7 million today to 13 million by 2000, has required stepped-up measures to reduce vehicle and industrial pollution through fuel substitution and low-emission diesel and electric vehicles.13

� Efforts to reduce per capita water use are focusing on a variety of measures to improve water use efficiency.14

� Ongoing new investment in sewage treatment aims to increase the ratio of treated to untreated water from the current 42 percent treatment ratio to a ten-year goal of 80 percent during the next ten years.15

� Ongoing actions seek to reduce per capita solid waste generation (from 1.5 kilograms per day to a ten-year goal of 1 kilogram per day); public expenditures are seeking vast increases in incineration, reduced landfill, and greater recycling (from a ratio of 2:86:12 to one of 50:25:25).16

� Programs are reducing national industrial air pollution (e.g., SO2), but increased regional pollution problems include air and water pollution from North Korea, acid rain from China, and pollution of the Yellow Sea.17

� Soil contamination and cleanup are receiving increasing attention following passage of the Soil Protection Act of 1996, which will focus on developing ways to clean up the 140 abandoned mines, 100 landfills, and 60 military storage areas in Korea.18

3. GOVERNMENT

Government has responded recently to environmental issues with evident and fast-moving integration of environmental and industrial policies, marked by cooperation and some competition between government ministries.

Key Ministries

Some fourteen central government ministries and administrations engage in environmental management. Those most concerned with industrial/urban affairs include the following:

The Ministry of Environment (MOE) has primary responsibility for environmental policies and policy implementation under the present Government Organization Act. The main duties of MOE are establishing environmental and emission standards, managing environmental facilities, overseeing treatment of toxic chemicals, conducting environmental impact assessments (EIAs), preserving natural conservation areas, and developing environment-related science and technology, including resolving environmental disputes and developing environmental pollution prevention technology.19 MOE directs its four regional offices and local government environmental departments, including inspection priorities and management of enforcement programs.20 MOE's headquarters and regional staff grew from 238 in 1980 to 1,100 in 1994; between 1984 and 1992, its budget grew from 343 hundred million won21 to 2,697 hundred million won.22

The Ministry of Trade, Industry, and Energy (MOTIE) has important environmental responsibilities, a larger budget, a larger staff, and more political influence than MOE. MOTIE's primary concern is industrial growth; it remains an advocate of industrial deregulation, while increasingly recognizing the importance of environmental issues.23

The Ministry of Finance and Economics includes functions of the U.S. Treasury Department and Office of Management and Budget. It includes the Economic Planning Board, which exerts influence through policy coordination and a budget control process. It recently established a special interministerial Committee on Global Environmental Policy.24

Other important ministries include the following: the Ministry of Construction and Transportation is responsible for master plans throughout the country, management of freshwater resources, and construction of wastewater treatment plants25; the Ministry of Science and Technology (MOST) is responsible for research and development of all applied technology and oversees the Korea Institute of Science and Technology and the Korea Advanced Institute for Science and Technology (see below); and the Ministry of Labor formulates measures to prevent occupational diseases and improvement of working conditions.

Other Key Environmental Institutions

MOE, MOTIE, and MOST draw support from an enormous network of associated nonprofit public corporations. Among those of importance to the U.S.-Asia Environmental Partnership (US-AEP)26 are the following:

� National Institute for Environmental Research (NIER). NIER does monitoring work and research related to regulations for MOE. Its major emphasis is water quality, with four labs established since 1978 on the Han, Keum, Naktong, and Yeong San rivers. In the future, NIER will be in charge of monitoring ambient water quality for Korea, employing people from MOE. A division within NIER reviews EIAs, which it and MOE are trying to improve. NIER's largest activity is the Highly Advanced National (G7) Project, designed to bring Korea's environmental technology to a level equal with that of advanced countries.27 It is concerned about increasing acid rain problems from China about which more information is needed.28

� Korea Resource Recovery and Reutilization Corporation. As strengthened in 1993 under an act of the same name, the corporation is responsible for collecting and sorting waste plastics, paper, scrap iron, and agricultural pesticide containers, as well as administration of the waste management fund and enforcement of recycling laws. Collection responsibilities are shared with local government, but the corporation's authority is expected to be strengthened.

� The Korea Institute of Science and Technology, first established by the U.S. Agency for International Development (USAID), is the only hardware-oriented research institute in Korea, doing more applied than basic research. Thirty to 40 percent of its work is industrial/environmental research, such as developing hardware for septic tanks, under contract to the private sector. Sixty to 70 percent comes from government under the Highly Advanced National (G7) Project, including funds received by proposals to NIER concerning water treatment and reuse, long-range airshed movement, and acid rain research. The institute has 1,300 people focused on (a) new materials, (b) environmental and welfare technology, and (c) basic research.

� The Korean Environmental Technology Research Institute was established in 1993 after the discharge of phenol by industry into the Naktung Rivera major pollution incident that mobilized attention to Korea's industrial pollution problem, stimulating a major shift in environmental priorities. The institute is MOE's major think tank on environmental issues. A long-term plan for 2020 is under way by the Ministry of Finance and Economics, involving all sixteen research institutes; the institute, under MOE, is the environmental policy leader.29

� The Korea Institute for Economic Policy began in 1989 as an Asia-Pacific Economic Cooperation study center to help the Economic Planning Board (now under the Ministry of Finance and Economics) to build trade and environmental coordination and to implement trade agreements and international conventions, such as the Montreal Protocol. The institute published a report that cites US-AEP as one of the most effective elements of the U.S.-Korean relationship by its promotion of the use of trade for environmental improvement.

� The Korea Academy of Industrial Technology is a government laboratory established by MOTIE to help small industry (companies with fewer than 200 staff and less than $1012 million in revenue) to be competitive and environmentally sound. The academy requires that a small industry be involved in each project, providing 10 percent of the funding. The academy will work with large companies also if they contribute at least 50 percent of the funds. The academy's Clean Technology Center, headed by a former Batelle Institute engineer, has a budget of $8 million from MOTIE, receives an additional 40 percent from private companies, and is expected to have a budget of $30 million in 1997 and a staff of sixty.

Environmental Policy

Korean policy largely centers around important multiyear programs that target certain outcomes during a specified period. Environmental issues can be a component of broader programs; more detailed five-year plans can focus on such specific initiatives as waste management. Among the key planning initiatives are the following:

The Five-Year Plan for the New Economy, 199397 includes mid- and long-range plans for environmental improvement.30 It focuses on five areas: (a) maximizing environmental protection in developing energy and other resources, (b) developing the environmental technology industry, (c) encouraging expansion of environment-related infrastructure and private investment in environmental projects, (d) increasing government investment in environmental protection and creating a special account to that end, (e) streamlining and enforcing environment-related regulations more stringently.

Ten-Year Environmental Science and Technology Development Plan. Launched in 1992 by MOE in cooperation with MOTIE, MOST, and the Ministry of Construction, it seeks to solve Korea's environmental problems and to establish an exportable Korean environmental industry. Three goals and phases are to obtain and develop basic technology (199294), apply the technology to manufacturing and industrial processes (199597), and manufacture and export the environmental technology (19982001).

MOE has also established a long-range master plan, Korea's Green Vision 21, designed to foster a sound national environment and codify sectoral environment standards to be attained by the year 2005.31

Policy implementation and management of programs of MOE have, in significant respects, been delegated to regional offices and local governments. Issues of intergovernmental coordination, local government expertise, and monitoring of environmental policy and program results were not assessed by the US-AEP team, although they are of critical importance.32

4. POLICIES AND LAWS

Korea's environmental and industrial policies and laws are affected by several competing but potentially complementary trends. These include rising public environmental concern that is accepted and acknowledged by government and industry, recognition of environment as a factor in global trade, concern about overregulation, and widespread interest in regulatory reform.

Environmental Policies and Laws

The Korea constitution provides for the right to a clean environment.33 Since 1990 Korea has enacted a series of laws on air, coastal, marine, and inland water pollution; solid wastes; toxic chemicals; EIAs; and noise.34 Opportunities for citizen engagement are increasing, as evidenced by the EIA law, which permits public review and comment.

Environmental enforcement. Although enforcement actions are not widely believed to be significant causes of environmental improvement by large industries and small industries are still considered to be highly polluting, government enforcement has steadily improved.35 In response to evident and rising public concern, the government has engaged citizens in reporting pollution through faxes, the Internet, and telephone links with the government.36

Environmental dispute resolution. Laws are guides to government action, not opportunities for litigation to force government compliance. Few tort liability cases occur. Dispute resolution issues and concepts are important because people cannot get easy access to the courts; procedures are expensive and time consuming. In 1990 Korea followed the model of the Japanese by establishing an administrative coordinating committee on environmental pollution to handle damages and give awards quickly.37

Industrial policies and laws. Various laws authorize charges for ten specified air pollution emissions and water pollution discharges designed to cover treatment and environmental costs. Charges are deposited into the Environmental Pollution Prevention Fund, which is managed by the Environmental Management Corporation. Local government receives a percentage for collection expenses; the remainder goes toward construction/operation of industrial wastewater treatment facilities, other pollution prevention projects of the government, or soft loans to industries for installation of treatment systems.38

Industrial Policies and Laws

Similarly, the government has established two charge systems for reducing wastes: a deposit-refund system (established in 1992 for seven business areas) to encourage recycling and apply the "polluter pays" principle and a waste treatment charge system (expanded to nine business types in 1994) for curbing consumption of products and containers that cannot easily be recycled and cause waste management problems. The deposit scheme allows refunds; although refund amounts have risen, at 7.8 percent, the government thinks they are far too low.39 Results of the waste treatment system are not yet clear. Revenues from the two schemes are devoted to a waste management fund managed by the Korea Resources Recovery and Reutilization Corporation.

Since 1994 the government has been actively tracking ISO (International Organization for Standardization) 14000 activities, trends in standardization, and likely requirements. Concern about ISO 14000 as a trade barrier is evident, along with recognition that ISO can help individual firms improve their images.40 Two similar Environmentally Friendly Companies Acts, one pushed by MOTIE and the other by MOE, encourage companies to enlist in a voluntary permit program under which they provide extensive information on their production input, processes, and output of materials, resources, and chemicals; if accepted into the program, they are not subjected to spot enforcement checks for three years. Compliance appears motivated largely by a desire to obtain ISO 14000 certification in the future.

Public Information Policies and Laws

Public disclosure policies are undeveloped in Korea; the issue of transparency of laws, regulations, and documents is likely to receive increasing attention, particularly as a part of regulatory reform.41

Environmental Impact Assessment Act, effective 1993. EIAs are required for sixteen specified urban, industrial, and infrastructure or public works projects of a certain size to harmonize environment and development needs. Prepared by the proponent, they must address the environmental impacts of the proposal but not alternatives. Draft documents are available for sixty days for public review; public hearings or presentations are required. Although more than 1,200 EIAs have been prepared, they are viewed largely as administrative actions carried out while other major permits (such as construction) are obtained. EIAs may have mitigating effects on project design; MOE has an interest in improving the EIA system.42 The actual availability of EIAs to the interested Korean public is problematic.

International Treaties

Korea has ratified all the major international conventions concerned with environment.43 Signed but not ratified are the Antarctic Environmental Protocol and Law of the Sea conventions.

Legal and Policy Developments of Particular Relevance to Industrial and Urban Environmental Management

� Korea has amended its environmental pollution laws to establish volume-based instead of pollution concentrationbased standards for air, water, and solid waste pollution. The new provision will be effective January 1, 1997. Use of these data in policymaking will be of particular interest to other Asian countries.

� Effluent/emission charges and environmental improvement policies and laws will continue to receive strong attention within government and by industry associations and the chaebol (Korean conglomerates). Their strong interest in U.S. experiences, within the U.S. Environmental Protection Agency and the states, is already evident.44

� EIA requirements and public review and comment practices are important in developing experiences with public information disclosure and how it can be helpful in improving environmental quality.

5. URBAN ENVIRONMENT AND INFRASTRUCTURE

Virtually all water supply and wastewater treatment facilities have been publicly owned and operated; the government is not willing to privatize. Solid waste and hazardous waste facility financing is 55 percent public and 45 percent private, but again privatization is not occurring. Cities are required to locate their own financing, but the government will still oversee the projects once they are launched.45 The government has subsidized urban environmental services, including water supply but recently announced that it would deregulate its fees for water and disposal of waste.46

Social Overhead Capital Program

The government has recently stated that it will allow foreign capital to be used by the private sector in so-called "social overhead capital" projects, such as high-speed railways, airport terminals, and power plants. The Private Capital Inducement Act of 1994 facilitates the participation of the private sector in covering budget shortfalls for needed social overhead capital improvements for the period ending in 1997 and especially for social overhead capital improvements for the new century.47 Large Korean firms are expected to take part in the infrastructure projects, but build-own-transfer projects are not envisaged, despite chaebol experience with build-own-transfer projects elsewhere in Asia.48 Construction companies are expected to benefit the most from this initiative.49

The Korean government estimates that the total investment needed to complete its environmental cleanup is more than $11 billion. In addition, the pollution control and related equipment market is expected to be $6 billion in 1995 and increase yearly. At national and local levels, governments are encouraging projects relating to remediation, wastewater treatment, air quality enhancements, and environmental efficiencies.

Water Supply

Nearly all of Korea's water comes from surface water, with few reservoirs and little groundwater due to the rocky terrain. Industrialization has dried up many rivers; water is thought to be unpotable everywhere. The government is planning to build fifteen new reservoirs and seven multipurpose dams by 2001. To help clean up rivers for drinking water and industrial needs, the government is planning to invest $1.5 billion to construct 185 treatment facilities, strengthen monitoring activities, and, by 1998, implement highly advanced purification technologies in downstream areas.50

Wastewater

Thirty-two percent of Korea's treatment facilities are operating over capacity. The pollution levels are high; innovative treatment is necessary to deal with agricultural runoff and the waste generated by pig farms. MOE is targeting primary and secondary wastewater facilities for the Han, Naktong, Keum, and Yeong San Rivers. Interregional pollution issues are critical. For example, Nagdong River wastewater pollution affects Taegue and other cities all the way to Pusan.

Solid Waste

Households generate 75,000 tons of solid waste daily; industry produces another 68,000 tons, of which 19,000 tons is hazardous. Solid waste is disposed of in 590 landfills managed by local governments. Some private solid waste operations exist outside Seoul, but all are publicly owned. Landfill costs are high, however; incineration is becoming increasingly important in Southeast Korea in particular. The government is now committed to financing 50 percent of new incineration opportunities.

Hazardous Waste

Hazardous waste problems are recognized as growing; the Environmental Management Corporation has established six regional zones in which to install an estimated fifteen public hazardous waste incinerators by 2005; the first will be installed in Kunsan. These facilities are considered too expensive for private sector participation.

6. PRIVATE SECTOR AND ACADEMIA

Chaebol

Some thirty large Korean chaebols (conglomerates) dominate Korean industry. Five of the largest chaebol are multinational corporationsHyundai, Samsung Group, Daewoo, Lucky-Goldstar Group, and Sunkyung. Many have corporate policies or "charters" that outline a corporate environmental philosophy. Among the leaders is Korea's largest chaebol, Samsung Group.51

Korean Industry Associations

Among the many industry associations in Korea,52 the two of importance to US-AEP are the Korean Environmental Preservation Association, which conducts industry training on compliance matters for about 6,000 pollution-emitting member firms, and the Korea Association of Manufacturing Industry, which represents some 1,200 firms, many providers of clean technology, and some 300 largely environmental pollution control equipment manufacturers.53

Academic Institutions

Academia/business cooperation is strong. The Institute of Environmental Science and Engineering at Seoul National University, with Doosan Glass, is researching a zero-discharge system for the crystal glass industry and, with Lucky Engineering, is researching the recovery and reuse of precious resources from oil and fat in industrial waste; both projects are funded through the Highly Advanced National (G7) Project. The Korea Institute of Geology, Mining, and Materials with Samsung Engineering Company is researching the recovery and reuse of valuable metals and water from electroplating waste.

Banking Institutions

Much of the banking industry grew out of the financial system that remained after the Japanese occupation. Following the Korean War, the government realized the existing system was inadequate to handle the economic disorder.54 Toward the end of the 1960s, the government realized the banking system was not able to meet the surging need for investment funds for further economic development. It tried to diversify the sources of investment funds by introducing various nonbanking financial institutions and fostering a securities market.55 In the 1980s, to enhance economic efficiency by assigning a greater role to a market-oriented system and promotion of competition in the financial sector, the government denationalized several banks and adopted policies to increase the number of private banks.56

Key Insurance Institutions

"Green insurance" is offered for compensation for physical harm, injury, or death caused by the pollution of Korea's environment.57

7. ENVIRONMENTAL AWARENESS AND PUBLIC INVOLVEMENT

General Public Awareness of Environmental Issues

Numerous polls show that clean water and air is the most important public issue in Korea today. As the position of the middle class has solidified and expanded, no longer are most people concerned about having enough food, clothing, and housing. As Eder notes from his study of Korean environmental management, "[n]o issue is spoken of more often than the condition of Korea's natural environment."58 In March 1996 President Kim Young-sam pledged that the government would consider environmental protection a top priority in implementing its policies and would be tough on violators of antipollution laws. "We must introduce an eco-friendly mode of production and eco-friendly way of living. This is also needed to increase our economic competitiveness," he said.59

Nongovernmental Organizations

MOE cites the existence of 160 private organizations involved in environmental activities. Of these, 84 are environmental nongovernmental organizations registered with the government, 33 are unregistered environmental groups, and 43 are unregistered with significant environmental activities.60 Key groups include the following:

� The Korea Action Federation for the Environment is registered, has an annual budget of $1.3 million and 12,000 members, and is the oldest and largest nongovernmental organization. Its roots lie in the Anti-Pollution Movement Association, Korea's first purely environmental activist group.61 It publishes Environmental Movement with a circulation of 20,000.

� The Baedal Eco-Society is an unregistered environmental group.62 With an annual budget of $600,000 and 10,000 members, it focuses on the scientific credibility of the environmental movement. It has fifteen chapters around the country with headquarters in Taejon. Its purpose is to give a greater degree of scientific credibility and "substance" to the Korean environmental movement.63

� Citizens Council for Economic Justice is unregistered. With an annual budget of $625,000 and 10,000 members, it promotes nonviolent approaches to a variety of issues, not just environmental. Its Center for Environmental Development works to put environmental issues into their social and economic context, forming the ideological parameters of the council's work.64

Media/News Organizations

Every major newspaper has at least one environmental reporter; most newspapers feature daily articles on environmental issues, In 1992, 8,884 articles dealt with the environment.65 Environmental consciousness is used in mass marketing campaigns, including "clean spring water" and "clean beer."66

8. U.S. GOVERNMENT ACTIVITIES

U.S. Agency for International Development

USAID conducts no programs in Korea.

Defense Department

The United States currently has 36,000 troops of the IX Corps, Pacific Command, in Korea, headquartered in Seoul. Another 39,000 troops are stationed in Japan, bringing the total number of troops deployed in support of Korea's defense to more than 75,000. This represents nearly four-fifths of all U.S. troops stationed throughout Asia and the Pacific and nearly 6 percent of all U.S. servicemen and servicewomen worldwide.67

US-AEP Activities in Korea

US-AEP has supported 112 environmental exchanges, processed 591 trade leads, and sponsored 23 technology grants through the National Association of State Development Agencies, in addition to initiatives through the Council of State Governments. With the U.S. Environmental Protection Agency, US-AEP has supported environmental action teams and short-term technical assistance.

9. INTERNATIONAL ORGANIZATIONS AND BILATERAL ASSISTANCE

World Bank

In 1995 Korea became a World Bank member with 0.41 percent voting powerthe first country ever to progress from being a concessional borrower from to a donor for the International Development Association and then to becoming an International Bank for Reconstruction and Development graduate.68

Asian Development Bank

Korea ceased receiving Asian Development Bank assistance in 1988 largely due to its economic growth. Korea now contributes to the bank as a 3.5 percent shareholder (compared to the United States, which contributes 10.8 percent, and Japan, which contributes 21 percent).69

United Nations

Korea became a United Nations member in September 1991. Recently, a United Nations Development Programme press release praised Korea for "significantly" increasing its contribution. Korea has received no confirmed assistance from this U.N. program or the United Nations Environment Programme.

Other Donors

From 1990 to 1992 Japan's official development assistance fell by more than 60 percent, from more than $50 million to around $17 million. Assistance from other countries, such as Germany and France, fell by 30 percent in this period, whereas others, such as Austria, increased their assistance.70

10. OPPORTUNITIES FOR CLEAN PRODUCTION AND ENVIRONMENTAL MANAGEMENT

Policy Framework

Korea's growing integration of environmental and industrial development policies is spurred as much by the chaebol in Korea as by MOE, MOTIE, and other government agencies. Increasing public awareness of and media attention to industrial and urban pollution issues is adding a new dynamic to environmental and industrial policies in the public and private sector. In the policy arena several opportunities stand out:

Environmental information and public participation. One opportunity is to improve the content and dissemination of industrial environmental performance information to various usersfinancial institutions, government, and the public. Korea's EIA requirements provide a way to address locational and clean production issues arising from new industrial estates and to provide the public with advance information on which to comment. For existing industries, the Environmentally Friendly Companies Act offers opportunities for government to engage volunteer companies in providing essential information on industrial environmental performance. The act offers a basis for exploring ways to improve industrial environmental performance standards and dissemination of information on progress and needs to government, financial institutions, and the public.

Cost-effective environmental management. Several Korean institutions have evidenced strong interest in obtaining the best available information on green accounting, cost-effectiveness of clean technology, and pollution charge systems for revenue and pollution reduction. Strong interest also exists in exchanging experiences with other countries on implementing environmental funds concerned with solid waste, recycling, and environmental improvement and on improved water conservation through demand side management.

Industrial Environmental Management

The thirty large chaebol and their environmental department heads and production managers are key targets for initiatives aiming for ever cleaner production. They will be engaged in meeting needs for new investment in Korea as the country's 20-year-old industrial plant requires replacement, requiring environmentally sound location of new industrial estates and their employment of cleaner production capabilities. Interest in the pursuit of cleaner production is also strong within the Korea Academy of Industrial Technology, Korea Association of Manufacturing Industry, Korea Institute of Science and Technology, and MOTIE.

The environmental cleanup and remediation market will remain an opportunity for U.S. firms to develop in Korea, through, for example, local agents and licensing agreements, local production, and carefully built relationships with Korean firms.

Environmental Infrastructure

The Government of Korea is planning to invest $1.5 billion to construct 185 treatment facilities, strengthen monitoring activities, and by 1998 implement highly advanced purification technologies in downstream areas. This is a $900 million market, of which 98 percent is publicly funded and 2 percent is privately funded. Project opportunities at industrial estates include four associations of industrial estates, mostly in southeast Korea. In Kyungnam Province, seven wastewater facilities worth $4.5 million are to be built on agricultural and industrial estates. New investments, estimated at $11 billion for 19942001, will focus mostly on incineration technology but also on construction of 192 landfills.71

REFERENCES

Asian Development Bank (ADB). 1994. Korea: Ports Development and Environmental Improvement Project. Manila.

Bangsberg, P. T. 1996. "South Korea Aims to Shrink Ballooning Trade Deficit." The Journal of Commerce (February 27).

Center for International Environmental Law (CIEL). 1994. "US-AEP: Final Feasibility Study." Prepared for United States-Asia Environmental Partnership. Washington, D.C.

Eder, Norman R. 1996. Poisoned Prosperity: Development, Modernization, and the Environment in South Korea. Armonk, New York: M. E. Sharpe, Inc.

Gourlay, Peter 1996. Assessment of Environmental Infrastructure in Asia. Washington, D.C.: United States-Asia Environmental Partnership.

Japan. 1994. Japan's ODA: Official Development Assistance Annual Report, 1994. Association for Promotion of International Cooperation and Economic Cooperation Bureau, Ministry of Foreign Affairs. Tokyo.

Kim, Jong Seok. 1996. "Korea's Regulatory Reform: A Critical Review." Korea's Economy, 1996. Washington, D.C.: The Korea Institute of America.

Korea. 1994. Environmental Protection in Korea. Ministry of Environment. Annual report on the environment. (This report is similar to the U.S. Council on Environmental Quality's required annual report on the environment. The 1995 annual report is expected in English in the spring of 1996.) Seoul.

. 1995a. Korea's Environmental Policy. Ministry of Environment. Seoul.

. 1995b. Korea's Green Vision 21. Ministry of Environment. Seoul.

Lee, Chi-Sun. 1995. "US-AEP Korea: Business Plan for 1995." Report to US-AEP Secretariat. Seoul: United States-Asia Environmental Partnership, Office of Technology Cooperation.

Lee, Chi-Sun and Sang-Baek Lee. 1996. "US-AEP Environmental Infrastructure Assessment Needs." Memorandum to Peter Gourlay (February 15). Seoul: United States-Asia Environmental Partnership, Office of Technology Cooperation.

Lee, Chung Hak. 1995. "Republic of Korea." In Cleaner Production for Green Productivity. Edited by Kunitoshi Sakurai. Tokyo: Asian Productivity Organization.

Lee, Sang Don and Faith Halter. 1995. Environmental Management of the Newly Industrializing Economies: Lessons from East Asia. Korea Country Study. Washington, D.C.: World Bank.

Markandya, N. and A. Shibili. 1995. "Industrial Pollution Control Policies in Asia: How Successful Are the Strategies?" Asian Journal of Environmental Management 3(2)(November).

Nahm, Andrew C. 1993. Introduction to Korean History and Culture. Elizabeth, N.J.: Hollym Corporation Publishers.

Price Waterhouse. 1992. Doing Business in Korea. Seoul.

Puschra, Werner and Chin-seung Chung, eds. 1994. Environmental Policy Toward the Year 2000. Seoul: Korea Development Institute.

Review Publishing Company, Ltd. 1995. Asia 1995 Yearbook. Hong Kong.

United Nations Environment Programme (UNEP). 1989. Environmental Data Report 198990. Oxford: Basil Blackwell, Ltd.

United States-Asia Environmental Partnership (US-AEP). 1995. US-AEP in Korea. Activity summary report. Washington, D.C.

. 1996. "US-AEP/USCS Environmental Infrastructure Strategy: Korea." Draft. Washington, D.C. (August).

U.S. Central Intelligence Agency (CIA). 1995. CIA World Factbook 1995. Office of the Director. Washington, D.C.

World Bank. 1995. Annual Report 1995. Washington, D.C.

ENDNOTES

1 In this assessment, Korea refers to South Korea or the Republic of Korea.

2 Unless otherwise indicated, all dollar amounts are U.S. dollars.

3. Nahm (1993, 227, 332).

4. CIA (1995).

5. "Korea Rated `Second Most Aggressive' in Biz Activity." 1996. Korea Times (March 21).

6. Korea has been carefully examining the German reunification experience and the costs of environmental and infrastructure development experienced in East Germany for elements that are relevant to North Korean integration. See Puschra and Chung (1994), which documents proceedings of an international symposium on environmental problems and policies of Germany and Korea.

7. Constitution of the Republic of Korea (Ch. II, art. 35, 1987).

8. The committee has not been active (based on interviews by assessment team, Korea, March 1996).

9. See Korea (1994), a comprehensive and authoritative Ministry of Environment annual report on Korean environmental conditions, trends, and activities. See also Eder (1996), which is a useful, although not up-to-date, account of environmental issues in Korea.

10. Korea's factory land prices are the highest in the world; conversion of agricultural to industrial land use was up 36 percent in 1995 ("Korea Rated `Second Most Aggressive' in Biz Activity." 1996. Korea Times [March 21, 9]).

11. Korea (1994).

12. Puschra and Chung (1994, 8). The US-AEP infrastructure assessment (Gourlay 1996, 69) estimates a $5 billion market, including central government studies, implementation projects, and industrial estates.

13. Puschra and Chung (1994, 1149).

14. Puschra and Chung (1994, 6582). The government subsidizes 30 percent of the cost of water supply. (Gourlay 1996, 76)

15. Korea (1995b).

16. Korea (1995b, 13).

17. Korea (1995b, 26).

18. The new act calls for development of criteria for soil cleanup and remediation and adoption of a "superfund" to carry out the work. It authorizes $3.5 million for the Ministry of Environment to conduct feasibility studies for the mining sites. Opportunities for application of U.S. technology and know-how are strong. (H. M. Kim, president, Contech Corporation (Seoul) in Washington, D.C. [May 28, 1996]).

19. Although the Ministry of the Environment has played a critical role in upgrading Korea's environmental standards and enforcement, it suffers from quick turnover in staff and leadership and is less powerful and well staffed than MOTIE. See Lee and Halter (1995, 70).

20. Lee and Halter (1995, 69).

21 In January 1997, 1 Korean won equaled approximately US$.0012.

22. Lee and Halter (1995, 79).

23. Among MOTIE's activities are promotion of environmental industry (shared with MOE), development of environmentally sound energy resources and energy conservation strategies, and a new program to shift from petroleum to coal and nuclear power for energy production.

24. The Ministry of Finance and Economics is considered to be the most powerful of the government ministries. A recent poll rated it first in importance, followed by the Ministry of Environment, which has, at least in public eyes and in terms of future priorities, become more prominent than the Ministry of Trade, Industry, and Energy (H. M. Kim, president, Contech Corporation [Seoul], Washington, D.C., July 1996).

25. Urban, industrial, residential, agricultural, and mountain lands are zoned under the land-use planning law under the jurisdiction of the Ministry of Construction and Transportation, which does rezoning in conjunction with local governments that do urban land-use planning.

26. Others of potential importance include:

� Environmental Management Corporation. Responsible for procurement and construction of hazardous and industrial wastewater treatment plants, landfill sites, solid waste treatment facilities, and technical assistance in design and construction of antipollution facilities.

� Central Environmental Disputes Coordination Commission. Established under MOE, the center conducts mediation of environmental pollution damage claims.

� Korea Advanced Institute for Science and Technology. Responsible for the education of scientists, researchers, and technicians in the applied technology field.

� Korean Industrial Advancement Administration Korea's member body to the International Organization for Standardization.

� Environmental Officials Training Institute. An independent education and training center designed to meet environmental personnel needs.

27. Some 231 billion won ($312 million) will support Highly Advanced National (G7) project research and development for pollution cleanup, prevention, and clean technology projects. This effort is coordinated by NIER, with a budget of $47 million in 1996 ($20 million from the government and $25 from private industry). About fifty institutions receive funds.

28. NIER monitoring functions were given to local government as part of devolution, but they were taken back within a year (NIER, Seoul, March 1996).

29. The current president is an economist from the Korea Development Institute. The current staff of forty-five includes twenty-one with PhDs, half in science and technology and half in economics and management. Support comes mostly from MOE but also from the Ministry of Finance, with whom the president has strong links (NIER, Seoul, March 1996).

30. Designed to preserve and clean up the nation's environment, it superseded the previous (seventh) five-year plan and is more liberal and tuned to free trade.

31. Korea (1995b).

32. See Lee and Halter (1995, 7279).

33. Constitution of the Republic of Korea (Ch. II, art. 35, 1987).

34. Korea (1994). See summary of laws in appendix entitled "Environmental Laws" (28992) and chapter 15, "Improvement of Related Laws and Regulations."

35. Enforcement actions attract attention in the media. See "504 Business Firms, Buildings Caught Releasing Excessive Pollutants in Jan." Korea Times (March 1, 1996).

36. The government has established dedicated telephone lines in Seoul and the provinces and has published its online address for receiving citizen complaints. See "Citizens Encouraged to Report Environmental Contamination Thru Phone, Fax, PC Lines," Korea Times (March 1, 1996).

37. Environmental Dispute Settlement Act. See Korea (1994, 28992), appendix, "Environmental Laws."

38. Korea (1994, 226).

39. Korea (1994, 126).

40. Korea (1994, 182, 183).

41. Kim (1996, 14).

42. Korea (1994, 21317). The assessment team was unable to review the practical application of EIAs in Korea, availability of EIAs to the public, effectiveness of public presentations and public hearings, and degree to which the EIA process offers a meaningful opportunity for public participation.

43. Treaties ratified are those on biodiversity, climate change, endangered species, environmental modification, hazardous waste, nuclear test ban, ozone layer protection, ship pollution, tropical timber, and whaling.

44. The Samsung Group, for example, sent Senior Economist Dr. Jin Taek Whang of the Samsung Global Environment Research Center to the United States to investigate the workings of tradable permits and other market-based incentives (Dr. J. T. Whang, Washington, D.C., April 1996).

45. Korea's six major citiesSeoul, Inchon, Pusan, Taegu, Taejon, and Kwanjuhave the means to find their own financing.

46. "Gov't to Offer Incentives to Environment-Friendly Firms, Deregulate Prices of Water, Garbage Disposal." Korea Times (March 22, 1996), p. 3.

47. Private companies participating in social overhead capital projects to be financed with more than $1.3 billion each in private capital will be allowed to introduce foreign cash loans of up to $100 million per project or up to 20 percent of the total cost for each project. They will also be able to receive long-term loans (for ten years) from domestic banks; bank loans of the nation's ten largest business groups will be excluded from the government's credit controls when the ten largest business groups obtain the bank loans for the first-class social overhead capital projects (building new roads, Seoul-Pusan high-speed railroad, port facility, new airport construction, and so on) to be financed with private capital. The Korean government has allowed private firms participating in social overhead capital projects to undertake auxiliary projects, such as development of residential areas and tourist attraction sites and tourism industrial estates (Gourlay 1996, 74).

48. Gourlay (1996, 74). The central government has financed, with chaebol assistance, construction of a variety of municipal projects including sewage systems in Kwangju and Mokpo and a new port and environmental improvement project for Pusan, presumably with World Bank assistance. The chaebol are asked to participate in large programs by building and operating a specific piece.

49. See "Social Overhead Capital in Korea," Korea Money (February 1995). Three tiers categorize these projects:

� First-class projects (12), including transportation, water supply, sewage, garbage dump, and telecommunications facilities. These will be owned by state and local governments.

� Second-class projects (18), including cogeneration power plants, gas supply, wastewater disposal plants, livestock wastewater disposal systems, recycling facilities, and urban park facilities.

� Auxiliary projects (9), including housing construction, land development, urban planning, and industrial complex facilities. These will be privately owned.

50. The Ministry of Construction/Water Resources Authority plans overall water needs.

51. In 1992 Samsung announced establishment of the Samsung Protection Charter, which commits the company to an integrated approach to manufacturing and environmental management. Samsung also made a commitment to be in full compliance by 1997 with its own global environmental standards, which are considered to be twice as restrictive as the current government domestic environmental guidelines and which Samsung believes are less strict than U.S. standards. Also in 1994 the Lucky-Goldstar Group inaugurated its "Goldstar System," which incorporates environmental conservation, management, and quality in all its corporate activities. It has established an environmental committee composed of senior managers from across the firm and chaired by a vice president. Lucky-Goldstar's company, Honam Oil, has consulted with CH2M Hill for help with environmental planning efforts. The Hyundai and Daewoo Groups have adopted similar voluntary environmental standards or charters.

52. See CIEL (1994), which in its final feasibility report to US-AEP lists the following organizations without comment: Korea Pollution Control Association, Korean Industrial Wastewater Treatment Association, Korean Scientific Research Committee, Korea Environmental Measurement Association, Korean Society of Noise and Vibration Engineers, Korean Toxic Management Association, Korean Air Pollution Research Association, Korean Environmental Research Institute, and Asia-Pacific Environment and Management Institute.

53. Korea Association of Manufacturing Industry administers a $23 million fund to give loans to suppliers and buyers of environmental equipment at 7 percent interest for a three-year period with a return during five years. Local firms are allowed to buy U.S. equipment but not from Europe or Japan.

54. KoreaNet, Bank of Korea, was established on June 12, 1950. After the war, its primary task was the financing of necessary industrial and agricultural projects for economic rehabilitation. The Korea Development Bank was established in 1958 to continue with post-war industrial/agricultural development. The Korea Agriculture Bank, established in 1956 provides loans to farmers and small business (information from KoreaNet's now inactive home page).

55. These include the Korea Long Term Credit Bank, formerly the Korea Development Finance Corporation; the Export-Import Bank of Korea, which was established to facilitate financial support of exports and overseas investment; and the Securities and Exchange Commission and Securities Supervisory Board, established in the 1970s to oversee the sound operation of the market (information from KoreaNet's now inactive home page).

56. The following were denationalized: Hanil Bank (1981), Korea First Bank (1982), Bank of Seoul and Trust Company (1982), Chohung Bank (1983), Commercial Bank of Korea (1972), Korea Exchange Bank (1989); all have passed to private hands. Newly established during the 1980s were Shinhan Bank, Boram Bank, Donghwa Bank, Dongnam Bank, and Daedong Bank, which are all private (information from KoreaNet's now inactive home page).

57. Eder (1996).

58. Eder (1996). Political response to environment, including the President's announcement of environmental priorities in the government ("Korea Rated `Second Most Aggressive' in Biz Activity." Korea Times, March 21, 1996), reinforces the changed public interest in environment.

59. Korea Times (March 22, 1996), p. 2.

60. Korea (1994, 267).

61. See Eder (1996). Founder and Secretary General Choi Yeoul is among the best known of the environmental antigovernment dissidents.

62. Eder (1996). Founded by Dr. Jang Won, who has a Ph.D. in environmental science from Drexel University. Its current president is Dr. Rho Young-Hee, the retired founder of Seoul National University's Graduate School of Environmental Studies.

63. Of relevance to US-AEP is Baedel Eco-Society's cooperation with other Korean and Asian nongovernmental organizations in a program partially funded by The Asia Foundation to inform the public about the environmental problems of the international timber trade caused by Korea.

64. Other organizations engaged in environmental activities include the following:

� The Young Men's/Women's Christian Associations' (YMCA/YWCA's) environmental efforts have included public awareness campaigns and joint river cleanup campaigns with Samsung. MOE's special advisory council of nongovernmental organizations is chaired by Kang Moon-Kyu, the chair of Korea's YMCA.

� Catholic Church efforts, similar to those of the YMCA/YWCA, center largely around public awareness and recycling/neighborhood cleanup campaigns.

65. Eder (1996). Skills in environmental investigative reporting are limited; however, it is customary for reporters to seek government approval before covering a major environmental pollution event.

66. Hite Beer captured 16 percent of the beer market by introducing its product as "clean beer" (Eder 1996)

67. DefenseLINK, (September 30, 1995).

68. That milestone was reached on March 3, 1995, with the signing of its two final loan agreements with the International Bank for Reconstruction and Development (World Bank 1995). The World Bank approved three Korean projects during fiscal 1995:

� Waste Disposal Project (December 1994) $75 million

� Pusan Urban Transport Management Project (December 1994) $100 million

� Ports Development and Environmental Improvement Project (September 1994) $100 million

69. To gain operating capital, the Asian Development Bank has issued a Korean 80-million-won public bond, the first of its kind by a foreign investor. The seven-year, liquid bond is oversubscribed by more than twice the issue amount. The bond issue not only raises capital for the bank but establishes, among other things, a framework and liquid benchmark to be used by both domestic and offshore bond issuers in the Korean won bond sector. This is a valuable step along the way to establishing an effective capital market and the opening of environmental infrastructure bond issues (information from bank press releases).

70. Japan (1994).

71. Currently, the estimated potential in Seoul is $250 million, of which 55 percent is public and 45 percent is private. A $5 billion project for the Nanji landfill is 14 kilometers outside of Seoul. Landfills will amount to $640 million in project opportunities. Eight incineration facilities are under construction in Mokdong, Ssanggye, Kangnam, Mapo, Chungdong, Ilsan, and Pundang Sanbon regions. Twenty-eight facilities are planned for several cities after 1995; Kunpo City is soliciting for a $20 million project.

 

 

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