ASEAN’s economic boom fuels rising carbon emissions

The rapid pace of economic expansion in Southeast Asia is fueling a surge in carbon emissions, threatening to derail sustainability goals across the region. A new study published in Sustainability warns that the current trajectory of the Association of Southeast Asian Nations (ASEAN) risks locking member states into a carbon-intensive development model.

The article, “Economic Growth, FDI, Tourism, and Agricultural Productivity as Drivers of Environmental Degradation: Testing the EKC Hypothesis in ASEAN Countries,” analyzes the long-term relationship between economic drivers and environmental outcomes across ten ASEAN nations from 1995 to 2023. The authors tested the Environmental Kuznets Curve (EKC) hypothesis, which suggests that emissions initially rise with growth before declining once higher income levels are reached. Their findings show that while this pattern may eventually materialize, current economic activities remain overwhelmingly harmful to the environment.

How growth and trade shape ASEAN’s carbon emissions

The study reveals that gross domestic product (GDP) growth is the single strongest contributor to rising carbon dioxide (CO₂) emissions in ASEAN. Economic expansion, driven by manufacturing, energy use, and infrastructure development, continues to outweigh improvements in efficiency and technology. The results show that while the EKC pattern holds in theory, most ASEAN countries have yet to reach the turning point where rising incomes trigger sustained emission reductions.

Agriculture was identified as another major source of emissions, particularly through rice cultivation, fertilizer use, and land-use change. The authors argue that without adopting climate-smart practices, the region’s reliance on traditional farming will continue to increase methane and nitrous oxide output.

Trade openness also contributed significantly to environmental degradation. As ASEAN states pursue export-led growth, carbon-intensive industries such as textiles, electronics, and processed agricultural products dominate trade portfolios. These sectors are heavily reliant on fossil fuels, intensifying emissions despite trade’s economic benefits.

Tourism, on the other hand, displayed a negative association with emissions, but the authors caution that this finding reflects a statistical anomaly. Emissions from international flights and shipping are excluded from national accounts, meaning the environmental impact of cross-border tourism is underreported. In reality, the tourism sector is unlikely to be inherently green without deliberate sustainability interventions.

What role do foreign investments and policy play?

The study provides a nuanced view of foreign direct investment (FDI). Contrary to expectations, FDI was found to have no significant overall impact on carbon emissions in ASEAN. The authors explain that this neutrality arises because polluting “brown” investments offset the benefits of cleaner “green” investments. While some inflows support renewable energy, sustainable manufacturing, and environmentally friendly technologies, others reinforce carbon-heavy industries such as coal power and resource extraction.

This finding underscores a critical policy gap. Without environmental screening mechanisms, ASEAN states risk attracting investments that erode long-term sustainability. The researchers argue that governments must prioritize FDI that aligns with climate goals, directing capital toward clean technologies and discouraging projects that deepen fossil fuel dependence.

The paper also highlights the role of environmental regulation. While policy frameworks exist, enforcement remains uneven across member states. Weak governance, inconsistent implementation, and limited institutional capacity hinder progress. Strengthening regulations and harmonizing standards across the region, the authors suggest, would create a more cohesive platform for tackling environmental degradation.

What path forward for ASEAN’s sustainability goals?

ASEAN’s growth trajectory remains carbon intensive, with the scale effects of GDP expansion outpacing technological improvements. To prevent worsening degradation, they call for a multi-pronged strategy:

• Accelerate renewable energy adoption by reducing reliance on coal and expanding solar, wind, and hydropower infrastructure.
• Promote climate-smart agriculture to reduce emissions from rice farming, fertilizer use, and land conversion.
• Implement stricter environmental standards in trade policy to reduce the carbon footprint of export-led industries.
• Screen FDI for sustainability to ensure that foreign investments support green growth rather than entrench fossil fuel dependence.
• Strengthen regional cooperation on climate adaptation, emissions monitoring, and clean technology transfer.

The findings point out that ASEAN must act urgently. With climate change impacts already threatening food security, biodiversity, and coastal stability, delaying action risks worsening both social and economic vulnerabilities. The authors stress that balancing growth with sustainability is not optional but necessary for long-term resilience.