UNEP’s flagship publication, Towards A Green Economy: Pathways to Sustainable Development and Poverty Alleviation, is the result of two year’s work, involving about 500 people from several UN agencies and numerous institutions from around the globe. This includes about 150 contributing authors, who are experts in their field, and a robust scientific peer review process. Today’s presentation, however, focuses on the findings of the report. It will cover some background information on what is a green economy, the sectors studied and the modeling. Then it will cover the key findings and provide a few examples, before concluding.
What is a Green Economy? A Green Economy is one that results in increased human well-being & social equity, while significantly reducing environmental risks & ecological scarcities. There is no one approach to a green economy. A green economy does not favour one political perspective over another; it is relevant to all economies. However, for UNEP’s purposes, it defines a green economy as one that results in human well-being and social equity, while significantly reducing environmental risks and ecological scarcities.
In Other Words… A Green Economy is one whose growth of income and jobs is driven by investments that reduce carbon emissions and pollution, enhance efficiency and sustain biodiversity and ecosystem services. In a green economy, growth in income and employment are driven by public and private investments that reduce carbon emissions and pollution, enhance resource and energy efficiency, and prevent the loss of biodiversity and ecosystem services. Moreover, these investments need to be catalyzed and supported by targeted public expenditure and policy reforms. And, a green economy recognizes natural capital as a critical economic asset.
Why a Green Economy? It was born out of multiple crises and accelerating resource scarcity. A Green Economy is the economic vehicle for sustainable development. A Green Economy has strategies to end the persistence of poverty. It is a new economic paradigm that can drive growth of income and jobs, without creating environmental risk. The concept of a green economy does not replace sustainable development, but nearly 20 years after the first Earth Summit in Rio, there is a growing recognition that in order to achieve sustainable development, we must get the economy right. Several concurrent crises have sprung up or accelerated during the last decade: crises in climate, biodiversity, food, fuel and water, and more recently, the financial crisis. Although these crises vary, they all share a common feature, the gross misallocation of capital. Existing policies and market incentives have contributed to the problem. Therefore, we know in order to achieve sustainable development, we are going to need a new economic paradigm.
Green Economy in Action
Asia – Pacific: 23% of global green stimulus investments, originated in this region China: investing US$ 468 billion in greening key sectors by 2015; >double past five years. Indonesia: national development plan has a goal of a “green and everlasting Indonesia” by target. (7% GDP increase; 41% GHG reduction by 2030) Japan: 3R and waste minimisation policy Republic of Korea: Green New Deal policy. 2% of GDP invested in Green Growth. Countries throughout the world are actively promoting a transition to a green economy. See examples of strategies and initiatives underway. UNEP’s Green Economy Initiative is also working with about 20 countries to develop such plans.
UNEP’s Green Economy Report
Investing or reallocating just 2% of global GDP in 10 key sectors can kick-start a transition to a low-carbon, resource-efficient economy. UNEP’s report found investing – or reallocating – 2% of global GDP to green 10 key sectors is enough to kick-start a transition to a low-carbon, resource-efficient economy.
BAU vs. a Green Scenario Green Scenario Business as Usual
2 % of GDP or 1.3 trillion USD per year invested in greening 10 key sectors from Policies adopted to help reduce harmful CO2 emissions and subsidies, and incentives created to increase investments, i.e., in natural capital and energy efficiency. Business as Usual Current trends assumed to continue with 2% of GDP per year allocated in a BAU across 10 key sectors from Policies continue to support investment in non-green infrastructure, harmful fossil fuel and fishing subsidies, etc. The report uses a macroeconomic model to compare a 2% of global GDP investment under a BAU scenario to 2% of global GDP under a GE scenario, applying it to “green” 10 key sectors. The report measures the results not only in terms of GDP, but also the impacts on employment, resource intensity, emissions and ecological impact. We estimated that the annual financing demand to green the global economy was in the range of US 1.05-$2.59 trillion (Annex 1), and took an annual level of $1.3 trillion (i.e., 2% of GDP) as a target for reallocation from “brown” investments to green investments. Under a BAU scenario, it is assumed that policies would continue to support carbon-intensive infrastructure and harmful subsidies. For example, production and price subsidies for fossil fuels exceeded US $650 billion in 2008, which adversely affects a transition to renewable energies. Under a green scenario, policies would be adopted to reduce harmful subsidies and incentives would be created to increase investments in natural capital and energy efficiency, for example.
Key Findings Investing in natural capital, resource and energy efficiency can lead to: Higher rates of GDP growth over time and enhanced wealth Natural capital stocks Reduced poverty Decent employment
Results by 2050 GREEN ECONOMY can… NATURAL CAPITAL …create employment
… While preserving NATURAL CAPITAL …create employment … ensure economic growth …alleviate poverty … outperform BAU GREEN ECONOMY can… Moving Towards a Green Economy argues that a reallocation of public and private investments – spurred through appropriate policy reforms and enabling conditions – can generate as much growth and employment as our current brown economy, and outperforms the latter in the medium and long-run, while yielding significant environmetnal and social benefits.
Examples: Green Employment
Agriculture: Over the next decade, global employment could increase by as much as 4%. Forests: Forest conservation and reforestation could boost formal employment by 20% by 2050. Transport: Improved energy efficiency across all transport modes combined with modal shift would increase employment by about 10% above business as usual. Energy: employment that is 20% higher than business as usual by 2050, while delivering robust economic growth and reduced emissions. 10
Example: Energy Sector
This graph shows total employment in the energy sector and its disaggregation into fuel and power, and energy efficiency under a 2% green investment scenario. Employment would be 20% higher than BAU by 2050, while delivering robust economic growth and reduced emissions. 11
Enabling Conditions Innovative and imaginative public policies create incentives for markets and direct private sector investment. Prioritize green investments Regulatory frameworks Capacity-building, Training Taxation, Smart market mechanisms International Governance Prioritize green investment is essential to a green economy. Establishing sound regulatory frameworks; building capacity through training and technology transfer; removing harmful subsidies in energy, water, fisheries and agriculture – which could save 1-2% of global GDP a year alone; and utilizing smart market mechanisms and taxation will all help create an enabling environment for a green economy.
Financing Investments in the range of $1.3 trillion year are less than 1/10 of total investment in physical capital. Investment in green sectors is growing: Investments in clean energy of $ billion in 2010, are up from $162 in 2009 and $173 in 2008. Importance of smart public policy to leverage private capital. Need for innovative mechanisms Innovative mechanisms include Green Climate Fund and REDD+, for example.
Key Finding: A Green Economy Stimulates Growth & Exceeds BAU Over Time…
This shows how a green economy would stimulate economic growth and acutally exceed growth compared to a business as usual scenario over time. GDP growth (%) 14
…while Reducing Ecological Scarcities & Environmental Risks
A green economy would reduce ecological footprint by nearly 50 per cent in 2050, as compared to business as usual 15
Success Stories Organic Agriculture in Cuba
A public oprganic agriculture program in Cuba resulted in 350,000 new well-paying jobs, 4 million tons of organic fruits and vegetables produced annually in Havana (up tenfold in a decade) and a city of 2.2 million agriculturally self-sufficient inhabitants.
Success Stories Renewable Energy in China
Only in 2009 RE investments resulted in new jobs The additional generating capacity from wind power has exhibited an annual growth rate of more than 100% from 2005 to 2009 More than 10 per cent of Chinese households rely on the sun to heat their water
Success Stories Rural ecological infrastructure in India
India’s National Rural Employment Guarantee Act (NREGA) is a guaranteed wage employment programme. Water conservation accounts for about half of the total projects supported under NREGA, with 850,000 water conservation works funded and completed from 2006 to 2008!
Towards a Green Economy
Economic growth, social development and environmental sustainability can be mutually compatible Not a single «recipe» for all countries but financing is the key A Green Economy comprehensively challenges the myth of a trade off between environmental investments and economic growth. The report also shows that a green economy is not only relevant to more developed countries but also a key catalyst for growth and poverty eradication in developing ones too.
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