As you so well know, the Asian economic crisis is taking a staggering human toll. Millions of people are being thrust into poverty as the prosperity that a short time ago dazzled the world seems to erode. For those who lack basic human resources, such as clean water and adequate sanitation, the economic turbulence of the past year must seem a cruel and unforgiving blow. President Clinton, together with the international community, is fully committed to working with you to reestablish financial stability and economic growth. And we greatly respect the courage and leadership that your government, Mr. Deputy Prime Minister, has shown in directly confronting the challenges this crisis presents.

I cannot claim to have direct experience with a crisis of this magnitude. Yet, in my capacity as President Clinton�s principal environmental policy advisor, I am mindful each day of the economic realities that shape our lives and our environment. In the United States, we are learning from some of the mistakes we made in the past. For instance, many of our communities that for so long depended on the extraction of resources such as timber and fish are now struggling and suffering the consequences of over-exploitation in years past. Human tragedy is the consequence of environmental recklessness there. Now, we are working with these communities to promote sustainable resource use, and to help diversify their economies so that they do not depend so heavily on resource extraction. And there is good news: many are discovering that conservation can be a more reliable economic base than exploitation. Parts of the American West where the land once was heavily mined and logged are now thriving on tourism and recreation, as growing numbers of people flock there to enjoy their natural wonders and enhance their quality of life.

In addition, many of these areas also are discovering new economic opportunity in the information revolution and, as they are, the connection between environmental vitality and economic vitality is becoming clearer still. Why? In the new information and knowledge-based economy, perhaps the most important key to success is human capital. To excel in the 21^st century, we must invest in our human capital�in the education and skills that foster creative, vibrant thinking. And that, in turn, depends on a clean environment. Clean air, clean water, and open space are essential if people are to be creative and productive as the information age demands. And let me underscore here an important point: I�m talking not just about high-tech industries�computers and telecommunications�but also about traditional industries, such as textiles and agriculture. To remain competitive, all industries must reinvent themselves as smart, knowledge-based industries, able to innovate and lead. And that means all countries and all kinds of economies in the 21^st century need a clean natural resource to support a creative human resource.

The fruits of innovation will be short-lived unless the imperatives of our natural environment are borne in mind. It is my firm belief�and a fundamental underpinning of my work on behalf of the President�that in the long run, we maintain economic growth only by protecting and nurturing the environment that sustains us all. This is as true in my country as it is throughout Asia and the world. And, again, it is especially true in an information-based economy. Now let me be clear: I am not suggesting merely that we must balance economic growth and environmental protection. I am arguing something further�that the two are inextricably linked�that they are mutually supportive, two sides of the same coin--that we can count on one only if we provide for the other.

A striking example of this interconnection was reported recently in the United States. The New York Times said that funds emphasizing environmentally preferable investments often outperform those that do not. Why? Because it is the same set of good, competitive management and performance skills that deliver environmental and economic productivity.

Now, if this positive interconnection is true, its converse should also be true. Namely, if we sacrifice one, we endanger the other. And, unfortunately, it is true. For example, there is ample evidence that poverty and environmental degradation do, indeed, go hand in hand. In my own country, poor communities all too often play host to waste dumps and polluting industries.

And this pollution, in turn, degrades the local economy and property values, locking the communities in a cycle of environmental and economic decay. The cycle is then accelerated as the pollution attracts crime. The statistics in the U.S. show that a dirty city is a dangerous city. And then, it is a deserted city�an economic and environmental wasteland. The situation plays itself out in many parts of the developing world too, where poverty forces desperate people to borrow from tomorrow to survive today. When a child is hungry, what parent can stop to ask whether an agricultural practice may leave the soil depleted years from now? When big business offer cash today for the right to deplete resources forever, how many poor communities can afford to say no? I point to these things, not to condemn. On the contrary, these choices are understandable. We sympathize with them. They break open our hearts. But, let them not blind our eyes. In fact, the pattern is clear: Economic desperation leads to environmental destruction. And, environmental destruction saps economic potential in turn. The environment and the economy share the same fate.

In my view, therefore, we fail future generations if we focus on immediate economic needs at the expense of our environment. And this is no less true in the face of economic crisis. Some may be tempted to suggest that in hard economic times, nations cannot afford to provide for the environment�that it is a luxury. That is a dangerous temptation. We in the United States succumbed to a similar temptation not so long ago. While Asian industries understood that quality was critical to competitiveness, many in American industry decided quality was a luxury they could not afford. We paid a heavy price, and only in the last few years have our steel and automotive industries overcome the losses we suffered because of that miscalculation. In the 21^st century, environmental performance will be of similar strategic and competitive import.

So, this is not the time to relax our dedication to restoring and protecting natural resources. Rather, I would suggest that this is a time for the countries of this region to dedicate themselves more fully to the preservation of their environments. To invest in their environments. To build environmental capital. If this is done, this crisis, I would suggest, can be an opportunity, as well. An opportunity not just for short-term recovery, but for sustained and sustainable growth.

Again an example from home: The Great Depression was a time when a virtual firesale of the nation�s resources might have seemed attractive�or at least expedient�to staunch the economic hemorrhage that was then underway. But a different vision prevailed. One that said: "If we are to cure�and not just momentarily cover�the cause of our decline, we must invest and grow our way out of the crisis at hand." And the investments made then�in built capital, human capital and natural capital�still help fuel our prosperity today.

To see how opportunity might be seized here as well, it is helpful first to examine the roots of the economic crisis. I am not an economist, and cannot pretend to fully understand the extraordinary complexities involved. Just a month ago, however, our Treasury Secretary, Robert Rubin, addressed an audience at this very university. And he cited several factors that, to one degree or another, would appear to have helped set the stage for the sudden economic downturn. One is the increased globalization of capital, which created vast flows of foreign investment into this region. A second is a lack of transparency in financial transactions and government decision-making. A third is the weakness of policies and institutions, which allowed an unhealthy pattern of noncommercial relationships among banks, governments, and industry to build. And I would add a fourth�market distortions resulting from government subsidies that favor unwise investments.

Each of these factors has, in one fashion or another, contributed not just to economics, of which Mr. Rubin spoke, but to environmental deterioration as well. In other words, the recent financial crisis and the chronic environmental dilemmas faced by nations in this region share some common roots. The increased flows of private capital have all too often driven the unsustainable exploitation of forests and other resources. A lack of transparency denies citizens vital information on government and corporate practices that affect their health and wellbeing. Weak policies and institutions are unable to enforce standards and regulations meant to protect the environment and public health. And the market distortions created by government subsidies encourage patterns of consumption that unnecessarily deplete resources and pollute the water and air.

Once we understand how these forces simultaneously undermine economic stability and harm the environment, it is possible as well to see that as we work to correct them, we can help secure the health of both the economy and the environment. It is a parallel effort. Let�s look at each of the four factors I�ve named.

Market-distorting subsidies. Here, there are very encouraging signs. Some countries, for instance, have begun to reexamine energy subsidies that encourage overuse of dirty fuels that pollute the air, threaten human health and produce carbon dioxide, the most significant of the greenhouse gases contributing to global warming. In China, for example, energy-related carbon emissions grew 300 percent from 1971 to 1993, largely as a result of the increased burning of coal for power. But starting in the 1980s, China reformed energy pricing sharply to reduce subsidies for coal and oil. Although carbon emissions continue to climb, they would be far higher today if not for these pricing reforms. And as a result of these and other policies, China today enjoys an economic growth rate three times the rate of increase in its energy use. Its environmental and economic fundamentals have significantly been enhanced.

Now, let me hasten to add here that sometimes change on this front cannot come overnight. Indonesia is a case in point: When the government, as part of its recent economic reforms, made the tough decision to reduce subsidies that currently favor kerosene and diesel over cleaner fuels, riots broke out. And so we learned: where many people of limited means rely on price supports to meet basic daily needs�such as fuel to cook their food � reforms must come gradually. But, when fully effected, the environment and the economy will both have been improved.

A second factor: the globalization of capital. Here, it is imperative to understand that environmental reform cannot be the work of individual nations alone. We must work as well to reform the international institutions that are so influential in shaping paths of development across much of the world. This is particularly true of the institutions that help steer the flow of private capital.

In the past decade, we have seen an explosion of private capital flows around the globe. Financial markets operate 24 hours a day. Private capital flows now dwarf official development assistance. And they are reshaping the environment in many ways. On the one hand, private capital can make possible expensive infrastructure projects that benefit the environment, such as wastewater treatment systems and clean energy projects. Private capital can generate wealth, bringing with it the resources to address environmental and social challenges. On the other hand, private capital invested without a view toward sustainability and future generations can deplete natural resources for short-term gain leaving the country worse off, not better. Rather than an investment in, they are just an extraction from the host economy.

That is why environmental standards are so important. Not to stop growth, but to create growth that can last. The United States has supported the World Bank in its development of environmental standards in many sectors, including forestry and power. We look forward to a special session of the World Trade Organization precisely on this matter, and we have pushed hard�in the G-8 and OECD�for multilateral environmental standards for export credit agencies. Our European partners have, unfortunately, to date refused to go along. But, President Clinton believes that industry should not do abroad what we would not tolerate at home, and we are therefore determined to continue to try to push ahead.

Now, there is some good news on this front from private industry itself. The ISO 14000 series, for example, if monitored and independently certified, promise to help deliver more sustainable investments in the years ahead.

And, in the climate talks in Kyoto, whole new and powerful funding mechanisms to bring clean, efficient energy technologies and industrial processes to the developing world emerged. The Clean Development Mechanism and Emissions Trading offer unprecedented opportunities to steer new, clean, sustainable and competitive financial flows toward those emerging economics eager to reduce greenhouse gas emissions as they grow.

The fourth common root: strengthening policies and institutions. Here, there is an immediate challenge: economic recovery efforts should not erode environmental gains already in place. As governments necessarily cut their budgets to ease the fiscal crisis, it is important that environmental programs � many of them still in their infancy, do not get dismantled. Programs that regulate industrial activity, promote sustainable practices and build critical infrastructure: water and sewage treatment plants, mass transit systems (like those the Deputy Prime Minister has spearheaded here) and clean energy must be maintained and, indeed, enhanced if the recovery is to be lasting, not just a temporary respite from an inexorable decline.

And as we think about strengthening policies and institutions, on the environmental front we have a new and important opportunity. It is sometimes said that, in building their economics, developing nations should "leapfrog" the polluting approach the industrialized economics employed. A similar opportunity presents itself when it comes to policy as well. Smarter, more efficient approaches beckon.

While regulations and strong enforcement are still important to ensure a solid "floor" of protection, technology, the empowerment of citizens, partnership with industry, decentralized and market-based approaches and, as discussed before, public disclosure of pollution types and amounts, promise levels of environmental performance exceeding that seen in the past. More will be said about these approaches in the proceedings to follow, but, addressing this root cause of economic distress can build environmental capacity and quality as well.

So a lot � certainly enough � said. It is easy, of course, to itemize goals. And difficult, I recognize, in some cases extraordinarily difficult, to achieve them. We face institutional barriers, competing needs � very legitimate needs � a lack of imagination, sometimes and simple but tenacious inertia often. But I have hope. I am hopeful that the Asia that emerges from this latest economic turbulence will be a stronger Asia, one that can help lead the world to a new paradigm based on an understanding of the fundamental interconnectedness and interdependence of our economy and our environment.

And Asia gives us plenty of reason for hope. So many times in our history, Asia has been at the forefront, leading with the wisdom, drive and ingenuity of its people. It was Asia that brought the world the "quality" revolution. Asia awed the world with the "green" revolution. Now, as the US-Asia environmental partnership would suggest, Asia stands poised to launch the "clean" revolution, as well � marching into the 21^st century with rebounding economies that promise health and prosperity not just for today and tomorrow, but for generations to come.

I thank you all for listening. And I thank the sponsors of this timely conference for the honor of addressing you. I look forward to continuing this dialogue for the sake of our environment, our economies, and our common future. Thank you.