Leveraging Natural Capital for Sustainable Development

11:15:28 AM | 6/25/2024

Natural capital comprises forests, agricultural lands, the atmosphere, oceans and mineral resources, collectively delivering essential ecosystem services crucial for human sustenance, including food, water, energy and shelter. Constituting between 20% and 55% of nations' total assets, natural capital significantly bolsters global economic advancement.

Vietnam must increase investment in safeguarding and enhancing its natural capital to achieve sustainable development goals outlined in Agenda 21

In Vietnam, we can look into three main natural resources.

Forest and agricultural land: Vietnam has approximately 70% of the population living in rural areas and nearly 90% of the total land area used for agriculture and forestry. Particularly, the Southwest region is the agricultural center of the country lying in the Greater Mekong Subregion (GMS), which includes countries and territories in the Mekong River basin: Vietnam, Cambodia, Laos, Thailand, Myanmar and China's Yunnan and Guangxi provinces.

East Sea and continental shelf: Vietnam today, with its important position on the East Sea, is always an indispensable partner in the Indo-Pacific Agenda. The country has a coastline of over 3,260km stretching from north to south; there is 1km of coastline for every 100km2 of land. Of the 63 provinces and cities, 28 have beaches and nearly half of the population lives in coastal provinces and cities. Notably, the waters under Vietnam's sovereignty, sovereign rights and jurisdiction cover about 1,000,000 square kilometers of the East Sea (3 times of the land area) with about 3,000 islands and two offshore archipelagos - Hoang Sa and Truong Sa, distributed quite evenly along the length of the country's coastline. They hold a particularly important position as a frontline defense to protect the eastern flank of the country.

Rare earth:  Currently, Vietnam has four types of minerals with reserves ranked Top 5 in the world, including rare earth, bauxite, tungsten and fluorite. In particular, according to the announcement by the United States Geological Survey in 2022, rare earth reserves and resources in Vietnam are estimated at 22 million tons, currently worth about US$3,000 billion, ranked 2nd in the world. Rare earth is the only resource used to make semiconductors and chips.

According to the US Geological Survey, rare earth consists of 17 types of materials with special magnetic and electrochemical properties. It is a special type of mineral. Rare earth elements play a very important role and are decisive materials for developing key technical and high-tech industries such as electricity, electronics, optics, lasers, superconducting materials and luminescent materials.

However, in managing Vietnam's natural capital, there are still three major weaknesses that need to be taken into account.

First, agriculture only contributes about 20% of GDP due to low labor productivity and insufficient investment. Meanwhile, developed countries such as the United Kingdom (UK), France and the United States (US) have only nearly 5% of the population working in agriculture to make up for about 40% of their gross domestic product (GDP), hence not only ensuring their food needs but also capably exporting agricultural products at high prices. Modern logistics-led technological development is one of the important factors behind that success.

Second, a vast majority of the masses approach natural capital with a common perception that natural resources are worthless or limitless simply because they are freely available. Besides, there still seems to be a misconception that protecting and investing in natural capital is too costly and does not help improve competitiveness and economic growth. In particular, agricultural and forestry sectors are very vulnerable to climate change, especially in low-lying coastal areas that play an important role in agriculture and fisheries. All these limitations have led to overexploitation of resources and long-term environmental degradation.

Third, due to its technological level and limited investment as well as qualified human resources for the mineral processing industry and high technology, Vietnam previously mainly exported raw minerals like coal and oil. Currently, Vietnam's semiconductor industry has not developed strongly and cannot create the best added value for rare earth extraction. Therefore, the government needs to seriously control the rare earth mining.

To achieve the country’s sustainable development goals under Agenda 21, Vietnam needs to invest more in protecting and enhancing its natural capital reserves through strong investments in research on four major fields:

GMS cooperation: It is necessary to actively join forces with GMS countries for effective regional cooperation and exploitation for the common benefit of the entire region.

Zero carbon: Vietnam is committed to achieving Net Zero greenhouse gas emissions by 2050. The country needs to soon have a specific strategy and plan to realize this ambition. In addition, it is necessary to plan and manage land use well and restructure production and business models in agriculture and forestry to improve land use efficiency. Increased pressure from more stringent environmental regulations in developed countries is pressing the government as well as businesses to participate more quickly and strongly in green transformation and sustainable development.

East Sea and marine economy: It is necessary to apply advanced technology to effectively carry out Resolution 36-NQ/TW on the strategy for sustainable development of Vietnam's marine economy to 2030, with a vision to 2045, to use East Sea resources for national development.

Semiconductor: Developing an appropriate semiconductor strategy in the context of international integration should focus on two core fields: (1) training high-quality human resources for the semiconductor industry, and (2) building semiconductor infrastructure to boost development and investment.

Dr. Doan Duy Khuong

Source: Vietnam Business Forum