Saturday, January 31, 2015

What Is Green Economics?

                                                              Comments due by Feb. 7, 2015

The concept of Green Economy is not entirely a new concept. It was first mooted by the London Environmental Economics Centre1 (LEEC) in a publication (Blueprint for a Sustainable Economy) in 1989 authored by David Pearce, Anil Markandya, and Ed Barbier. However, at that time the concept did not receive wide acceptance. With the outbreak of the financial crisis in 2007 and the failure of most countries to move onto a sustainable development path, it has become evidently clear that the current development paradigm is not yielding the desired outcomes on all fronts economic, social, and environmental. Efforts to transition to a sustainable development path and realize the objectives of Agenda 21 have been very modest. A number of reasons appear to have constrained this transition to take place. One of the reasons for lack of significant progress has been inability to clearly make the business case for investing in the environment. In order to encourage policy and decision makers to invest in the environment, they need to be convinced that such a transition would result in economic benefits as well. These benefits include additional jobs generated, increased output, creation of new market niches and increased trade, and a positive impact on GDP. It is therefore essential to demonstrate that there is a clear relationship between investing in the environment, socioeconomic and sustainable development. Since human welfare should be the ultimate goal for any development strategy, a well-designed sustainable development strategy should result in poverty eradication. Green Economy could be viewed as an approach that emphasizes these linkages. It could therefore be considered as a tool or vehicle that facilitates the transition to sustainable development. The United Nations Environment Programme (UNEP) defines the Green Economy as “one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities” (2010). Another more elaborate definition of green economy is: "The Green Economy is one in which the vital linkages among the economy, society, and environment are taken into account and in which the transformation of production processes, and consumption patterns, while contributing to a reduced waste, pollution, and the efficient use of resources, materials, and energy, will revitalize and diversify economies, create decent employment opportunities, promote sustainable trade, reduce poverty, and improve equity and income distribution." The following section will attempt to outline the main elements inherent in a Green Economy. Environment can no longer be treated in isolation from mainstream economic policy. Though integrating environment in macroeconomic policies has been long called for even as far back as the Brundtland Commission, efforts have been modest to achieve this goal. In most instances, the environment continues to be addressed as a separate component without clear linkages to the social and economic aspects. Integrated policymaking remains to be an approach yet to be adopted as the main framework for policy formulation and implementation. Lack of an integrated approach to policy formulation and implementation is therefore one of the main reasons for failing to achieve sustainable development. A Green Economy approach advocates the adoption of integrated policymaking. Adopting an ecosystem approach rather than dealing with different environmental biomes such as deserts, forests, and aquatic life as separate and isolated components of the environment. Adopting an ecosystem approach enables a better understanding and appreciation of the fact that the different biomes function as part of an integrated whole i.e. part of an ecosystem. Adopting such an approach ensures a clearer understanding of the linkages and interdependencies between the different biomes. It consequently results in a better management of the ecosystem and the services it provides. Following an integrated approach in dealing with the three sustainability dimensions and in dealing with the environment as an ecosystem enables us to better communicate the relationship between investing in the environment and the resulting positive social and development outcomes. It therefore provides a strong message to policy and decision makers of the necessity of integrating environmental, social, and  economic considerations in framing policies. Advocating the environment in isolation from economic and social objectives have in the past failed to deliver this strong message, which has resulted in considering the environment as a constraint or a liability rather than as an opportunity. Adopting a Green Economy approach highlights these interrelationships thus making a strong case for the transition. Adopting a participatory approach involving relevant stakeholders in policymaking is key in policy development and implementation. It ensures that policies reflect the concerns and priorities of the public, particularly the target group and affected communities. It also ensures the support and contribution of the general public and local communities in the implementation of proposed policies, plans, and programmes. Involvement of relevant stakeholders in policy formulation provides a better chance for the implementation and success of the proposed policies. Public participation should ensure the participation of women, youth, people with special needs, and marginalized communities. Adopting a participatory approach is particularly important in countries with a centralized decision making process. Ensuring inter- and intra-generational equity and poverty reduction is one of the main underlying principles of Green Economy. Designed policies should in the first instance ensure that the interests of the poor and marginalized communities are catered for. It should ensure that wealth generated should trickle down to the poorer segments of the population and that there is an equitable distribution of wealth between the current generation. It should also ensure that development activities now do not comprise the welfare of future generations. Green Economy advocates good governance as an essential prerequisite for achieving sustainable development. In order to encourage local and foreign investment, it is essential to have a stable and predictable macroeconomic environment. Such an environment will also need to be transparent and accountable. In the absence of a good and strong governance structure, the likelihood of moving onto a sustainable development path would be meager. Efficient institutions and governance structures are critical in ensuring the effective implementation of policies, plans, and programmes. Transitioning to a Green Economy requires a new mindset of doing business. It also requires a new caliber of skilled labour and professionals that can work across sectors, and able to work as part of multi-disciplinary teams. Transitioning into a Green Economy requires preparing these calibers through training and formal education. In order to achieve this objective, vocational training packages should be developed with focus on greening the sectors. The education system also needs to be reviewed to integrate the environmental and social considerations in the various disciplines. Investing in research, technology development, innovation, and the continuous enhancement of knowledge are essential for transitioning to a Green Economy. Countries that have allocated sufficient resources and invested heavily in research and development are countries that have managed to accelerate the pace of their economic growth. However, there is a need to clearly identify areas of research to be in line with and support sustainable development objectives. Research and technology innovation efforts need to be directed towards resource efficiency, and areas such as wastewater treatment and desalination, renewable energy, solid waste recycling and recovery, green construction and buildings, and environmentally friendly equipment and industrial technologies. In many instances government policies lack a comprehensive and holistic response to policy formulation and implementation. A suite of measures and actions are needed to achieve the goals and objectives of specific policies. These need to be designed in a complementary and supportive manner. For instance, market incentives should be designed to support regulatory measures. In many instances policy tools are designed independently and may be in contradiction to one another. Coherence and supportiveness of the different policy tools and measures should be maintained in order to support the realization of policy objectives. Subsidies for fossil fuel, for example, apart from being a burden on government budgets promote the inefficient allocation and excessive use of fossil fuel. Phasing out fossil fuel subsidies will release funds to support investment in renewable energy. Such policies may be supported by regulatory emission standards. The importance of political economy concerns should not be underestimated. Change may either be slow coming or even obstructed by those who believe that their interests may be compromised. Those may be politicians in high places and owners of large businesses and corporations. It is therefore important that when policies are formulated those who are likely to oppose change are identified and measures taken to address the hurdles they may create in the face of change. The role of the private sector in transitioning to a Green Economy and achieving sustainable development cannot be over emphasized. Constraints impeding the active involvement and contribution of civil society towards a transition to a Green Economy should be removed. Civil society being more familiar with realities on the ground, working closely with local communities, more familiar with their needs and priorities, and increased capabilities to operate on the ground can contribute effectively to achieving sustainable development objectives. Moreover, public-private-partnership consolidates efforts and enhances the potential for realizing sustainable development objectives. The financial sector both public and private should be encouraged to support financing projects and activities that contribute to sustainable development. Governments should ensure that funding provided by Central or Federal banks support government policies in pursuit of sustainable development objectives. Commercial banks should also be encouraged to support sustainable development projects through regulatory and incentive measures. Appropriate measures should be introduced to discourage banks from providing loans that encourage land speculation, or the funding of environmentally damaging and polluting activities. Governments spend large amounts of funding on its public service operations and activities. By greening its procurement, governments can demonstrate leadership and set the example for environmentally sound practices. On the physical side, this includes greening the construction of government offices, schools, hospitals, post offices, and other public buildings. Other green expenditures, include the purchase of environment-friendly office equipment and material. Greening its transport services for its employees would for example include providing buses run by natural gas or electricity, and providing incentives for government staff to use public transport and other means such as pooling and cycling. Trade policy if well formulated can be an effective tool in supporting the transition to a Green Economy. A well-designed trade policy can encourage investment in environmental goods and services, and technologies to satisfy the local market and for export. It can also encourage access to foreign environmental technologies. This can be achieved through regulations, and an incentive and tariff system that facilities access to environmental technologies. It should be emphasized that there is no one size fits all approach to sustainable development. The manner in which countries are prepared to use the Green Economy tool or vehicle for achieving sustainable development is up to countries to frame and design. This will have to be based on the pace at which countries are prepared to make the transition, their priorities, socioeconomic circumstances, and capacities. What are important are the political commitment and the will to shift to a sustainable development path. The review, selection and documentation of these articles emerged in response to the need to fill the knowledge gap on practical, concrete, and on the ground green economy country experience. It is in this spirit that the articles and excerpts included in this publication have been selected: to provide information and knowledge for policy and decision makers and practitioners on the positive implications of greening some priority sectors, including job creation, resource efficiency, and generally contribution to sustainable development.through an extensive review of scientific publications and magazines.
Hussein Abaza