By TungYu Lu, Project Executive of RSPRC, and Shu-Suan Wu, Assistant of RSPRC
Session Four with the theme "Multiple Global Crises - Key Analysis of 2023 World Economic Forum" was kicked off with a lecture by Sophie Heading, a representative of the World Economic Forum. Based on the Global Risks Report 23, Sophie discussed the concept of multiple crises and pointed out that current global risks are interconnected. When a set of risks fluctuate simultaneously and spread in various spheres, there will be a cascading effect, triggering multiple crises. Therefore, it is important to understand the trend of the overall structure and how geopolitical and economic conditions drive the occurrence of multiple risks. Sophie stated that due to changes and conflicts in geopolitical dynamics, we may witness rapid outflow of funds and technology in the next two to ten years. In addition, rapid inflation, natural disasters, extreme weather events, and commodity price volatility are also among the top five risks for countries. Sophie also cautioned in the risk report that as global economic dynamics have the potential to catalyze many risk issues, countries need to strengthen regulations and controls to prevent further exacerbation. For example, geopolitical conditions have an impact on debt dynamics; if the global debt burden approaches or even exceeds the global commodity value, it will pose risks such as debt distress and increased capital and financing costs to the economy.
In the latter part of the speech, Sophie highlighted the potential disasters that the world will likely face in the near future. She emphasized that today's crises can fuel tomorrow's calamities, underscoring the significance of risk management. Among these risks, prioritization becomes a critical issue. For instance, the prioritization of military expenditures may sacrifice progress in green transition and mitigating climate change. Consequently, significant mitigation of climate change is unlikely to occur in the next two years. During this period, it is crucial for us to undertake climate-change adaptation measures and comprehend the actual risks posed by climate change. Additionally, natural losses are closely intertwined with climate change. The collapse of ecosystems exacerbates the impacts of natural disasters, further affecting food supplies in vulnerable economies around the world. Sophie concluded by sharing her insights that despite the complex and interconnected nature of global risks, we can utilize such interrelationships to envision and contemplate the causality of these risks, as well as their potential impacts on various dimensions such as society, economy, and ecology.
The second speaker was Shiuh-Shen Chien, Distinguished Professor and Director of the International Degree Program in Climate Change and Sustainable Development (IPCS) at the Department of Geography, National Taiwan University. Professor Chien pointed out that within the market-oriented economic model of capitalism, particularly for vulnerable entities that bear the brunt of risks, various crises can emerge in social, economic, and public health dimensions. However, the goal of addressing contemporary issues is not to eradicate capitalism, but rather to provide an alternative way of life that emphasizes socio-economic aspects. Using the examples of learning English and working in exchange for accommodation, Professor Chien underscored the importance of transforming mutual challenges into resources for each other. This serves as a framework for developing more solutions and cooperative models. He then broadened the discussion to encompass topics on multi-party dilemmas, resource matching and exchange, such as interaction and communication among farmers, communities, and relevant platforms. Furthermore, he mentioned the importance of forging socio-economic and responsible production and consumption modes, which will be a crucial solution for society in the face of multiple crises in the future. This entails transforming commodities from mere goods into entities that encompass various local connections and foster symbiotic sharing relationships.
Furthermore, Chien pointed out that many current renewable energy transition strategies actually replicate the traditional urban-rural dichotomy. To address this issue, he advocated for community-scaled, low-carbon, short-distance production, distribution, and storage systems as a more creative and responsible approach to production and consumption. Lastly, Chien illustrated Taiwan's current international involvement and highlighted Taiwan's proactiveness in establishing cross-border partnerships for achieving the Sustainable Development Goals (SDGs) in the future. He posed a thought-provoking question: While discussions revolve around the vision of SDG 2030, the next SDGs may already be approaching. As such, does Taiwan have the capacity, at least concerning Asian issues, to initiate new global sustainable visions and advocate for relevant agendas. Perhaps, now is the opportune moment to take the first step.
The third speaker, Dr. Wei Luo, Chief Economist of Fubon Financial Holdings, analyzed the crises currently faced by the global economy and financial markets from three perspectives: international geopolitics, natural environment, and macroeconomic environment. Luo began by noting that rising protectionism due to geopolitical issues has resulted in a decline in global trade volume and increased production costs. Meanwhile, the increased frequency of natural disasters and extreme weather events underscore the scarcity of natural resources, intensifying competition among countries. In addition, the post-pandemic era has brought about physical and psychological issues, as well as a global labor shortage. These crises contribute to rising production costs, exacerbated inflation, and heavy debt burdens for countries. If these crises is coupled with further natural disasters, the vulnerability of national economies will be aggravated, and therefore, addressing structural inflation effectively becomes a significant issue that requires careful consideration.
Luo then elaborated on the causes and cycles of inflationary expectations. Each economic entity naturally seeks maximum profit, leading to price increase. Nevertheless, when central banks take measures to combat inflation by raising interest rates, it may actually exacerbate the situation. This is because rising production, wage, and funding costs can result in stagflation, which in turn leads to a significant increase in unemployment rates. Furthermore, Luo explained the three main objectives of central banks: controlling inflation, maintaining financial stability, and supporting the real economy. These objectives are interconnected. When central banks attempt to curb inflation by increasing interest rate, it may lead to the risk of negative interest rate spreads for banks, thereby affecting their lending willingness and ability. Once small- and medium-sized enterprises (SMEs) are unable to access loans, it will have a significant impact on the economy. Therefore, Luo warned that in the current high inflation and high-interest rate economic environment, central banks' objective of supporting the real economy faces challenges.
The final speaker of this session was Mei-Lien Chan, Distinguished Professor from the Institute of Environmental and Occupational Health Sciences, National Yang Ming Chiao Tung University. She shared her insights on the topic of "Analyzing Multiple Global Crises and Human Health Risks from a Human-Centric Perspective". In her presentation, Chan focused on five aspects: geopolitics, environment, technology, society, and economy, discussing both the crises and opportunities individuals currently face in terms of physical, mental, and external pressures. For instance, the application of artificial intelligence (AI) in process automation can be seen as a solution to the challenges of an aging population. However, it also poses a threat of unemployment for workers, leading to issues such as the shrinking of private spaces and increased mental stress. Additionally, remote work, while effectively controlling the spread of pandemics, can also bring a sense of isolation among employees and raise concerns regarding information security of the company. Chan also mentioned that the occurrence of an aging society and environmental problems will particularly impact vulnerable populations, exposing them to even greater risks. Therefore, finding ways to achieve a sustainable and healthy social structure will be the future direction for all countries.
In the discourse surrounding the issue of extreme climates, Chan expounded that elevated temperature not only leads to heatwaves and fatalities but also exacerbates existing ailments among the elderly and patients; moreover, it accentuates the problem of inequality for vulnerable groups. Continuing the discussion on the crises and opportunities stemming from extreme climates, Chan cautioned that while green economy creates employment opportunities, it concurrently poses certain risks to safety and health in processes such as solar energy production and solar system installation. Consequently, special attention must be paid to mitigating these health risks during the pursuit of green energy development. As platform economy strategies expand, associated risks such as traffic accidents and unstable working hours become imperative concerns that demand serious attention. Therefore, it is imperative to formulate and implement policies and regulations pertaining to occupational safety and prevention. Chan redirected the focus back to the crises and opportunities in an aging society, noting the symbiotic relationship between climate change and digital transformation, which predicts an increase in future labor costs as a result of the aging workforce. However, we must timely capitalize on the rich knowledge and expertise of the elderly, developing a cross-generation learning framework to transform risks into opportunities.
In the final discussion of this session, Kuei-Tien Chou, Director of BTU RSPRC, posed a question to Sophie regarding the World Economic Forum's next steps and how global governments can further tackle potential risks posed by pandemics and climate change through collaborative governance. Sophie expressed that the collaboration between national and local governments, as well as the public and private sectors, is merely the minimum standard for collective action. She also emphasized that, apart from collective cooperation, individual actions and the connection and expansion of subsequent responsibility networks are crucial issues, whether in social, economic, ecological, or emotional aspects.
Continuing the discussion initiated by Chou and Sophie on how collective governance actions should be planned at the international level, in response to the international community's increasing recognition of natural disasters and pandemics as major risks, the final session of this forum, titled "Turning Crises into Opportunities -- Systemic Risk Challenges in Taiwan under Extreme Climate", was opened by Chien-Hsin Lai, Director-General of the Water Resources Agency (WRA), Ministry of Economic Affairs. From the government's perspective, Lai pointed out the importance of awakening the public's localized memory of disasters and systematically implementing preventive adaptations in the face of extreme climates. As highlighted in the Global Risks Report 2023, the risks associated with climate action failure are the most severe; and water resources are recognized by international experts as the first major backlash that must be borne globally. As heatwaves, droughts, and floods become the new normal, Lai further referenced the concept of "loss and damage" that was closely discussed in COP27 climate change adaptation agenda, explaining how the Water Resources Agency is deploying sustainable goals in the management of water resources in three key directions.
The first direction addresses the risk of water scarcity. To achieve the sustainable recycling of water resources while ensuring food security and energy development, the Water Resources Agency has been implementing the strategy of decentralized waste water recycling treatment, in addition to efficient storage of short-time heavy rainfall. Developing small-scale and decentralized recycled water supply systems can reduce technology and transportation costs while enhancing water resource resilience. Furthermore, Lai mentioned concerns regarding the establishment of desalination plants due to potential issues in energy distribution. In this regard, Lai proposed cross-domain and cross-carrier energy storage methods, inspired by the current trend of renewable energy development by Taiwan Power Company (Taipower). This approach not only reduces reliance on reservoirs for summer peak electricity demand but also leverages the adaptability of desalination plants, effectively addressing water supply pressures under extreme climates. Regarding the relationship between agriculture and water resource utilization, Lai suggested that we adjust our irrigation strategies in agricultural practices by drawing inspiration from Japan's meticulous cultivation of rice. Instead of solely growing rice in paddy fields, we can diversify and incorporate dryland crops such as soybeans, wheat, and corn, thereby enhancing the irrigation efficiency of rice fields. In recent years, the Water Resources Agency has collaborated with the Chianan Management Office and Taiwan Semiconductor Manufacturing Company (TSMC) to develop smart irrigation technologies through digital transformation, achieving nearly 5% water savings compared to manual irrigation. In order to enhance water resource sustainability and resilience, it is also crucial to address domestic water usage. To reduce water leakage in the water supply network and move toward the advanced standards of 10% as developed nations by 2032, the Executive Yuan has taken measures to modernize water treatment plants and promote small-scale water conservation projects. Additionally, they have authorized the establishment of 17 backup trunk pipelines, allowing for the replacement of aging pipelines. This will expedite the process of reducing leakage in a swift manner.
The second direction addresses adaptive measures during flood events. Lai pointed out that if land is acquired and reservoirs are constructed for flood control purposes as per usual, there will be a need for reassessment in terms of the frequency of utilization and the capital investment, especially in cases where there is inactive rainfall in the rainy season or an entire year passes without the occurrence of typhoons. Therefore, in July 2021, the Water Resources Agency embarked on a plan to encourage local farmers to raise the height of their field dikes to increase the capacity for storage while achieving flood reduction. This local approach to flood control can also replenish groundwater reserves. Moreover, whether it is through the creation of a composite water environment in Yuliao or the integration of urban aesthetics with waterfront areas, these approaches not only break away from the carbon emissions and management costs associated with the traditional way of creating water-friendly environments, but also foster resilience in human-water relationships. By leveraging public-private collaboration, they facilitate the exemplary transformation of water-friendly spaces.
Finally, Lai emphasized the importance of public-private collaboration and effective social communication mechanisms in alleviating the estrangement in human-water relationships. He expressed the hope that the people of Taiwan can "reconnect with water in their hearts."
In continuation of Lai's vision for resolving the estrangement between people and water, the second keynote speaker, Fu-Tian Chien, Deputy General Manager of Taipower, focused on how the company, amidst climate risks, can establish a resilient relationship between people and electricity and turn crises into opportunities. Chien, in his speech, highlighted that as net-zero carbon emissions become a global trend, it not only affects industrial supply chains and markets but also necessitates a shift in our lifestyle. As a nation driven by exports, Taiwan must inevitably join forces with the government, private sector, and companies to embark on this journey. From the standpoint of Taipower, the primary objective is to ensure a stable power supply. To achieve this, the company's foremost strategic path is transitioning from high-carbon emissions to low-carbon emissions. As for the strategies and methods employed by Taipower in this process, Chien declared that amidst the challenges posed by extreme weather conditions, Taipower faces continuing risks in stable electricity supply. In this regard, Taipower has laid out two key strategies: firstly, providing low-carbon and stable electricity to enhance grid resilience; and secondly, leading users toward smart living. Regarding the first strategy, the company has formulated short, medium, and long-term targets, beginning with low-carbon emissions and ultimately achieving comprehensive net-zero emissions by 2050. Chien mentioned that currently, Taiwan's predominant renewable energy sources are wind and solar power, which have unknowingly achieved one-third of the total electricity supply to the grid. Consequently, as the proportion of renewable energy in the grid increases, many management strategies and models reduce the reliance on sources of dispatchable baseload power such as coal and natural gas. Furthermore, the development of smart grids has facilitated the transformation of power ancillary services. This enables the integration of privately invested electricity into the grid and thereby improving energy efficiency. In terms of demand-side management, time-of-use pricing and demand-responsive sales strategy not only reduces peak demand, but also enables customers to adjust their preferred energy-saving methods for optimal benefit.
Under the premise of achieving net-zero emissions as an operational strategy, how can Taipower strengthen the resilience of the grid while ensuring a stable power supply and addressing the needs during natural disasters? As the proportion of renewable energy in the grid increases, Chien emphasized the need to adjust the traditional centralized distribution mindset of the grid toward a decentralized and location-specific approach to mitigate the risk of power dissipation. Meanwhile, robust grid infrastructure, underground cabling, and the design of microgrids all contribute to ensuring the resilience of the grid during times of disaster.
The implementation of smart grid systems has also led to the emergence of intelligent lifestyles for users. Chien revealed to us the effectiveness of Taipower's promotion of smart meters and expressed the expectation to install 2.5 to 3 million smart meters this year nationwide. He believed that as mobile phones transition from analog to digital, the integration of the grid with mobile technology enables smart management, reinforcing the stability and efficiency of the grid structure. This transformation aims to change our electricity consumption habits and create a sustainable urban landscape.
The final speaker in this session was Wan-Yu Shih, Associate Professor of the Department of Urban Planning and Disaster Management, Ming Chuan University. She primarily discussed the systemic risks that Taiwan may face under extreme weather conditions. Shih pointed out that many climate scientists have recently issued warnings regarding the combined impact of the El Niño phenomenon and human-induced climate change, indicating that within the next five years, we will witness the breach of the 1.5℃ temperature threshold set by the Paris Agreement. Furthermore, referencing last year's climate change science report released by the Intergovernmental Panel on Climate Change (IPCC), Shih reminded us that future climate-related disasters will no longer be isolated incidents but rather complex, interconnected, and systemic events resulting from the combination of climate risks with non-climate risks stemming from social, cultural, and economic factors. In the context of daily exposure to multiple complex risks, the process of global urbanization driven by globalization trends exposes additional potential hazards. This includes the vulnerability of cities in facing extreme disasters as well as the deprivation of life and related rights for socioeconomically disadvantaged groups.
Therefore, when we reevaluate past climate-change adaptation plans through the lens of IPCC reports, we find that the climate risks caused by urban-rural disparities are closely intertwined with the injustice in adaptation and mitigation actions. In other words, the vulnerable groups that should have been prioritized for protection by the government against climate risks are instead subjected to potential exclusion due to the conflicts arising from urban development and climate-change adaptation measures, leading to the sacrifice of their rights, including the right to housing. Shih further pointed out that this kind of urban governance mindset that sacrifices vulnerable groups in the name of nature-based solutions is what is known as "green climate gentrification", which has strayed from the original intent of equitable nature-based solutions. In response to this, Shih cited the IPCC reports again and emphasized the importance of sharing both the "benefits" and "burdens" in sustainable actions, with particular emphasis on social justice and climate justice. The procedures and distribution inherent in climate justice, as well as the justice implication of acknowledging various local and grassroots knowledge, are indispensable elements of Taiwan's path toward developing climate resilience. Lastly, Shih reflected on the lack of discussions on the relationships between individuals and communities in past adaptation action plans in Taiwan. She also presented an alternative perspective on thinking about climate risks: natural disasters, perhaps, are not inherently natural but rather vulnerabilities woven together by complex socio-economic aspects that only become disasters when faced with climate change.
In the comprehensive panel discussion, Chou, as the moderator, first delved into his firsthand experience of Israel's remarkable seawater desalination technology. This effectively tied in with the overarching theme of "turning crisis into opportunity", showcasing the means of survival in the adversity of climate risks. Continuing, Chou pointed out that both resilience and vulnerability serve as mediators for social processes, referring to Taipower's resilience in the face of extreme weather as mentioned by Chien and bridging the vulnerability emphasized by Shih. Faced with the global climate transition challenges, Taiwan has long lacked external pressures to drive energy and industrial transformation. However, with the global momentum toward net-zero carbon emissions, the European Union's imposition of carbon tariffs, carbon inventory, and climate-related financial disclosures (TCFD), Taiwan's transformation has become urgently imperative. Echoing Shih's considerations on procedural justice, Chou emphasized that had these transformations begun fifteen years earlier, the overall social structure might have been different. This is because the fairness, communication, and resistance aspects of transformation need to be continuously and meticulously integrated into our perspective.
During the comprehensive discussion, Chih-hung Tsai, Chairman of Taiwan Water Resources Conservation Union (TWRCU), consulted with Lai and Chien on the potential blind spots in seawater desalination and wind power utilization. Tsai highlighted the geographical differences between Taiwan and the Middle East, raising concerns about the current high cost of seawater desalination in Taiwan. He also pointed out the lagging development of electric vehicles in our country compared to advanced nations and expressed worries about the future prospects of wind power storage. Tsai further provided suggestions regarding the government's overall sustainable water management plan, stating that the government currently invests excessive resources in reservoirs, which only contribute to 24% of the overall water supply, while neglecting the management of underground water reservoirs, which account for 33% of the total supply. Therefore, he hoped that the Water Resources Agency would expedite the formulation of policies to balance the usage of reservoirs and groundwater, in order to achieve sustainability at its core. Following Tsai's remarks, Professor Ching-Cheng Chang from Academia Sinica posed a question from an economic standpoint. As the trend toward net-zero emissions is driving the need for technological and managerial improvements in both public and private sectors, this implies corresponding increases in water and electricity expenses. The question raised was whether we could develop a more rational system for water and electricity fees, beyond relying solely on tax revenues, to cope with energy transition.
In response, Lai drew inspiration from Shi's discussion on procedural and distributive justice. He stated that the Water Resources Agency's current approach tends toward gradual progression by encouraging large water users to invest in water recycling through the imposition of water consumption fees. As for the management of underground water, the Water Resources Agency has dug numerous wells along the Gaoping River during the drought this year, and the monitored groundwater levels have returned to their initial state at the beginning of the year. Lai reflected on the previous approach of "using without replenishing" and embraced the mindset of "using and replenishing" when it comes to groundwater. Consequently, this year, the Water Resources Agency will focus on replenishing groundwater in the Shuoshui River alluvial fan area. Additionally, the transformation of reservoir catchment areas inevitably requires extensive social communication and finding alternative paths for local farmers, in order to achieve a just transition. Regarding the issue of seawater desalination plants, Lai expressed that the Water Resources Agency will strive in terms of energy recovery efficiency and cost-effectiveness. Chien candidly explained to Chang that with new technologies and management for achieving net-zero carbon emissions, there will inevitably be additional costs. Moreover, in line with the electricity market pricing mechanism established by the Electricity Price Review Committee of the Ministry of Economic Affairs, an increase in electricity prices will be an unavoidable process. Envisioning a scenario of net-zero carbon emissions by 2050, it is imperative for future public and private sectors to collaboratively address the issue of establishing and reviewing a rolling framework for emissions management from the source to distribution strategies at the end.
In conclusion, Chou summarized the Fubon Forum on Sustainable Future. In the face of emerging external pressures, Taiwan's advantage lies in being a vibrant democratic society. Through this forum, he expressed delight in the development directions proposed by relevant government agencies and scholars. At the same time, he hoped that this forum would serve as a bridge for social communication and inject vitality into the exemplary transformation.
2023 Fubon Forum on Sustainable Future Session 4 -- Multiple Global Risks and Taiwan's Crises and Opportunities - Sophie Heading
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