Compared to when you began your research, how has the natural environment in South Korea and the perception of its people changed?

Professor
Jong Ho Hong It has been 43 years since I began studying economics as an undergraduate. My interest in the environment emerged in the 1980s when I was a fourth-year student. At that time, the South Korean government spearheaded economic growth by prioritizing industrialization over the environment. In 1992, the Rio Summit (Earth Summit) in Brazil greatly sparked public interest in the environment in South Korea. Under these circumstances, I was able to work on environmental issues more actively when I returned to Korea after obtaining my doctorate in 1994. Along with global trends, related governmental laws and policies as well as the activities of civic groups were gaining momentum. In retrospect, the ten-year history of environmentalism exactly spans the decade of the 90s in South Korea.

Professor
Yohan Lee The Rio Summit was monumental in that the world began recognizing the limits of a sustainable environment. When I started working at the Department of Forest Resources in 1995, citizens’ environmental awareness was already heightened. However, their recognition was limited to the idea that "nature should be protected while its resources are freely distributed as public goods." During this period, the Korea Forest Service was leading the supply and management of forest resources. My studies focused on the science of forest resources, and I developed a keen interest in the economic value of forests.

Professor Hong The current generation of youth may take for granted the dense forests in the mountains. From the 1960s to the 1970s, the country made considerable efforts to save these desolate mountains. "No Entrance" signs on mountains are examples of these efforts in forestation and conservation. You may wonder how forests and the economy are interrelated. For example, you can hike a mountain unless it is densely wooded. Hiking as a leisure activity can be perceived as an economic activity. Furthermore, mountains cannot store water without trees. Heavy rains negatively impact primary industries, such as agriculture and fisheries, when trees fail to provide a green dam. Failures in forestation are highly detrimental to overall economic activities.

Professor Lee In the early stages of industrialization, most developing countries damage their natural resources. This destruction typically accompanies economic growth; however, South Korea uniquely restored its forests in the early stages of industrialization, which is why forests are symbolic of South Korea`s success. The United Nations has acclaimed South Korea as the sole country that succeeded in both economic success and forest restoration. Many will agree that economic growth cannot be sustained based on fossil fuels. We are facing a time when traditional values must change, one of which is valuing the natural environment.

Economic studies that quantitatively explore the value of nature are increasingly prevalent.

Professor Lee The value of non-market environmental resources, developed in environmental economics, was initially conceived as economic valuation methods for non-market goods. This technique is used to estimate the economic value of forests as public spaces. In the past, people assumed that naturally occurring resources had zero value. However, the Korea Forest Service (as of 2020) reported that the public value of forests in South Korea amounts to KRW 259 trillion annually. Outwardly, nature is a place where humans can effortlessly enjoy clean water, air, and carbon storage. Over recent years, the value of environmental public goods can be measured for trading in markets. A representative example is voluntary carbon markets, where individuals buy and sell ‘credits,’ representing the removal or reduction of carbon under a certain policy scheme, such as the United Nations Framework Convention on Climate Change (UNFCCC). These carbon markets have academically and institutionally advanced to a level applicable to the real economy.

Professor Hong South Korea has a long way to go in considering how governments, companies, and citizens can sufficiently recognize the value of forests and conserve them. In the past, South Korea was all about economic growth. However, with this economic growth, large-scale nature destruction was inevitable. South Koreans began addressing the importance of nature, including air quality and forest conservation, in the 2000s, when they reached a level of economic prosperity and achieved comfortable living. Assigning monetary value to nature may conflict with some viewpoints. It may be inconvenient for environmental activists to convert the absolute value of the environment into monetary value. However, many studies in ecology, ecological economics, and environmental economics are embracing the economic valuation of ecosystems. I believe this effort conveys its significance in demonstrating Earth’s ecological value, though monetary value is more persuasive to the public and politicians.

What preparations should South Korea make for transitioning to a ‘green economy?’

Professor Hong In October 2024, 490 mm of rain fell within eight hours in southeastern Spain, where the average annual rainfall is approximately 500 mm. As a result, this incident devastated olive cultivation in the Valencia region. Natural disasters due to climate change occur in both developing and developed countries. Formidable natural disasters are directly related to human survival. Countries such as South Korea, whose grain self-sufficiency rate is low other than for rice, are highly dependent on importing agricultural produce. These countries may become more vulnerable to economic risks as climate change worsens. Leading companies in the global market are heading in the direction of decarbonization. However, decarbonization efforts in domestic industries are still falling behind. The ratio of manufacturing industries to the entire economy in South Korea is the highest among OECD countries. However, in the domestic manufacturing sector, competitive advantages based on decarbonization are weak compared to overseas. As the integration of decarbonization into regulatory requirements becomes a significant trend in international trade, South Korea should confront the demand for the greenization of the economy in global markets.

Professor Lee Along the same lines, South Korea is somewhat passive in creating value through private investment in public goods, such as forests. The greenization of the economy urgently requires innovations led by the private sector. In 2021, I partook in an online ‘tree species data in forests’ hackathon and won a prize. The theme presented by the Korea Forest Service in this contest was to discover ‘ideas for effectively managing the species of trees in forests by utilizing digital technology.’ Thus, based on artificial intelligence, I created a digital map of nationwide forest distribution. This map aimed to offer a platform for facilitating the efficient conservation of forests with a predetermined direction in forest management by providing open-source information on which region holds which species of trees. Despite being in the incubation stage, as the government has yet to implement this system, this field has rapidly evolved over several years. Recent studies published by the Korea Forest Service and the National Institute of Forest Science have mostly converted information on domestic forest resources into digital information using AI-based visual devices, such as satellites or drones. In this respect, industries and the government are conducting diverse and comprehensive research on how to systematically manage the species of trees and effectively enhance carbon absorption.

Climate change and environmental policy are closely related to various fields. There is a need to refine our responses by maximizing this interconnection. Please inform us of any directions or policies that can help generate profit while preserving the natural environment.

Professor Lee Even global leaders, such as Apple Inc. and Amazon, struggle to achieve perfect carbon neutrality as they cannot devise an optimal scenario for carbon neutrality and perform simulations. Thus, they announced their plan to reach carbon neutrality by complementing insufficiencies through forest conservation and restoration. Because industries in South Korea are heavily based on manufacturing, it will be challenging to achieve carbon neutrality.
Simply put, South Korea cannot transition to carbon neutrality by moving beyond its production and consumption system in the short term. However, it can utilize a system for trading public goods, such as forest resources, in the carbon market. Compared to the previous system, in which the value of a forest was estimated via a certificate, carbon credits can be issued to facilitate direct trading in the market. These credits involve tree planting and forestation rather than merely supporting existing forests. Carbon credits cannot be provided for existing forests as these forests cannot offset carbon emissions. The amount of credits can increase by planting new trees, restoring degraded forests, or making forests thicker, preventing natural disasters such as wildfires and landslides. Furthermore, there is a scheme considering internationally transferred mitigation outcomes through rainforest conservation. The UNFCCC recognizes and supports the efforts of developing countries to conserve rainforest reserves, resulting in the introduction of the ‘Reducing Emissions from Deforestation and Degradation (REDD+)’ framework. Although this system is not valid if the forest is well-preserved, it deserves attention as it is cost-effective and has short-term effects. The Korea Forest Service operates the ‘Forest Carbon Offset Scheme,’ thereby expanding the REDD+ project. Thus far, the government has led all efforts to achieve carbon neutrality in the forestry sector. If possible, I hope that private companies will actively participate in this project and the investment market will expand in this country, where forests account for approximately 65% of the land area, which could lead to carbon neutrality.

Professor Hong Despite the general agreement on the importance of the environment, crucial policy decisions tend to consider the environment and climate as a lower priority. The Federal Government of Germany previously changed the name of the Ministry of Economy to the ‘Federal Ministry for Economic Affairs and Climate Action,’ reaffirming its more proactive policy stance on this issue. This short history reflects the integrative viewpoint of the German government regarding the climate and economy. In the South Korean context, this practice can be understood as if the Minister of Economy and Finance led the economic policies with a focus on climate. Without any change in economic policies, greenization would be a far-off objective. The starting point may be the environment, but the ending point is economic policy. Despite the short-term challenges companies face when overhauling their management styles, emphasis on the environment will ultimately benefit companies and the economy in South Korea. The government’s implementation of consistent policies with a sense of purpose will foster consumers' and companies' active participation in the decarbonization economy.