Please click on the following link in order to get to an article on Project Syndicate about Financing the Green Economy. The article was written during January 2013.
http://www.project-syndicate.org/commentary/financing-the-green-economy-by-simon-zadek
Green investment is crucial to the coming decades. 100 trillion dollars are needed by 2030 for infrastructure work around the world to happen.
ReplyDeleteBy going Green, the potential to reduce pollution and fewer natural resources is realized. We all understand Green investment costs more than conventional investment. Steadily, we have seen an increase in green investment. The main issue lies in the financing due to the extreme costs. Governments are doing all they can, but the fiscal deficit is keeping the desires at bay. The good news is that awareness is being raised about the importance. We know that everything has a cause and effect. We know what we want in terms of our cause (Green Investment), but if we want any real results we must inform the greater public about this growing dilemma.
There are many snowball-type effects that the Green Economy has revealed. Systematic risk, more inequality, and turbulence amongst up-risers are all possible bad things that can happen if we don’t go green. In fact, to promote economic growth, it is crucial for us to have Green Infrastructure. By doing this, we will not only create a great economy, but we will have equality all around the world and more win-win situations for all. Governments in developed and underdeveloped countries have to come together and create tax credits and other incentives; to ensure Green Investments from passionate investors. It is estimated that $700 million will be needed for Green Investments as opposed to traditional investments. Reduced tariffs, tax incentives, and other programs should be implemented to cover that $700 million gap, to increase Green Investments and fuel the growth of the economy.
Abraham Alvi
Investment in the greening of infrastructure is critical to the economic growth of the world and to the survival of the environment. I believe emerging or developing countries will lead the way in green technology. According to the article "total clean teach investment originating from non-OECD countries for both domestic and cross border use grew from $4.5 billion in 2004 to $68 billion in 2011." Emerging market countries see the importance of going green I would argue more so than the developed countries. Green infrastructure would be bring jobs and more equality to emerging market countries. I believe that the best way to finance green infrastructure would be from a combination of public and private investment. Yes green technology can be expensive but it is even more expensive to clean the environment from damage we are causing it. Governments have to develop the right policies and incentives in order to making green infrastructure a reality. Financial markets need to factor in long term views on the usage of natural resources and the positives of green technology.
ReplyDeleteCall me naive but I really don't understand why someone would not be on board with green investment. This might be because I am not an economist. However, it seems pretty obvious that we are doing something wrong. Why not invest a little more money into something that will benefit ALL of us for a lot longer? I don't know why it hasn't been done. We talk so much about it and weigh out the pro's and con's yet are putting into play things that are so awful for us and our earth. I know we are well on our way and it is exciting to see the major rise since 2004. This sentence has made my day, "Failure to green infrastructure investment will reduce economic growth, increase systemic risk, deepen inequality, and fuel social unrest." Hopefully, all will open their eyes and make the change.
ReplyDeleteCynthia Romero
I think you are not naive its what is real. I think they look at green investment as being too expensive. If they don't act ASAP then its going to end up costing more in the long run.
DeleteEmerging markets are more open to green infrastructure because they are not required to overhaul their entire system. It is especially difficult for large nations like the U.S., China, and Russia because they all have massive economies that run on fossil fuels as well as methods of obtaining them. Investors are naturally skeptical and, while one may argue that they are encouraging "an unsustainable increase in global temperatures," they are not doing anything that is unusual. This reminds me of the tragedy of the commons, the theory which asserts people and companies act on their own immediate interests rather than looking at the long run and overall affect of their actions. Zadek's statement, "financial markets need to take a longer view," is wishful thinking, as is the idea that governments will hinder their own economic growth during a recessions. Investors intend on making money, and if the long run of serious environmental consequences is 10 years down the line, each will prefer to make money now. Few, it seems, actually take the risk, but the moment their risk starts paying off, others will follow.
ReplyDelete$100 trillion dollars is a lot of money that needs to be allotted just to protect and keep up with infrastructures around the world, that’s not even putting a price on all of the green spaces we continue to destroy. From a local perspective, the construction of the new Tappan Zee Bridge is a good example of how much money just one infrastructure needs. It has been reported that the new Tappan Zee Bridge is going to cost $3.9 billion dollars as of right now. Moving forward one of the most positive bits of information I took from this article is that global spending on renewable energy has increased 6 fold. That’s great because it shows an increase in awareness that this subject must be addressed and it starting to gain some interest. It’s a subject that can no longer be ignored for numerous reasons. Reading the article I found it startling that Germany, United Kingdom, Spain, and the U.S. has reduced its spending and tax credits for green progress. These are countries that developing countries try to model themselves after. These are countries that should be setting the tone and paving the way for a more sustainable future, but yet they preach change and do the exact opposite. Germany, United Kingdom, Spain, and the U.S. need to understand how much impact their having on the environment, their spending habits, consumption habits and be held to higher standards, because these countries are the very root of the problem. It isn’t enough for little villages or developing countries to participate in sustainable practices, green economics, and new financial rules, countries having a bigger impact on the trends should be held accountable!
ReplyDeleteAlso, the thought of privatization on public infrastructures doesn’t really sit well with me. Although money will become more readily available I feel it will continue to give a certain few power or public right.
ReplyDeleteover*
ReplyDeleteBased on the article a lot of money to needed to move towards a green economy, The government need to realize that the longer it takes for them to make the necessary steps is the more it is going to end up costing them in the long run “ Prevention is better than having it to cure”. I understand that it might be difficult for developed markets to fix what has been gone wrong (Increase Greenhouse Gas Emission in the atmosphere, climate change) but they have to come to the point where they make a sacrifice because it is only for the best. For Emerging markets its might not be as hard since they are now aware of what is going on, why would they follow the same footsteps as the older markets, when they are aware of how rewarding a green economy can be. I also agree with Zadek’s point environmental risk should be incorporated in a company’s credit ratings to see how investors price carbon and natural resources. I believe that all these information should be known, I feel like the more it’s out there the more it will be takes seriously.
ReplyDeleteAccording to the article, within the next 16 years we will be spending $100 trillion on infrastructure, globally. The author suggests that this new infrastructure must be greener and I agree with him. So far, businesses have failed to recognize the environment as an important cog in the system that we have. There have been movements to go more towards greener options, and they have helped. But, with the addition of $100 trillion worth of new infrastructure, environmentally friendly options should definitely be at the forefront of everyone's minds. Like Shantol eluded to , it will cost more if we wait and try to fix a big problem, rather than prevent the problem from blowing up. If we take the future into account, it is obviously the better option to start setting ourselves up with environmentally friendly material and prevent the const from rising any further than it has.
ReplyDeleteAfter reading this article it's almost a confirmation that the destiny of our planet is the last thing that people care for. They let harmful happenings in the environment get out of control and then the government ignores the problem pushing it from priority to unimportance. $100 trillion dollars is an extreme amount of money but I'm sure this much wouldn't have needed to be spent if a little more was invested in the past. I mean the cycle does continue and at the end of the day all these buildings will get fixed. I believe that at the end of the day everything will even out and if it doesn't what other choice will there be but to fix the problem anyway. Unfortunately the issue isn't about how much money is spent to fix it but how unimportant climate change and going green is to most people.
ReplyDeleteI competely agree that our plantes future the least on people minds. Most people are just concerned about immediate results but are not interest in setting up the foundation to preserve our planet.
DeleteThis article gave me the same type of reaction as the previous one. It makes my opinion stronger that investers only look at the short term goals instead of the overall picture. They rather investment in immediate results than invest in a greener world which in theory protects their previous investments. Without out a sustanible environment other resources that are so heavily relied on wont strive for example like oil. For investers to invest for a greener economy, they are skeptical because they simply dont see the immediate results of their efforts. In my opinon they are not enough efforts put into creating a visual plan that makes investors more comfortable investing in a green economy.
ReplyDeleteWe keep seeing it again and again: short term, short term, short term. One of my favorite quotes from Keynes is, "In the long run, we'll all be dead." And he was right to a degree deeper than just poking fun at Classical Economists. If investment is continually viewed as a short term thing, there will be no long run for humanity. There needs to be proactive greening, and with a need for infrastructure of $100 trillion worldwide in the next 15 years, what better place to start? It is easier to "green" something new than it is to disassemble everything we currently have an re-do them "green." Although that would be ideal, it would be much easier to have to green it from the get go. This is a great opportunity to create a real green presence world wide, and hopefully such an increased presence would encourage others to jump on the bandwagon.
ReplyDeleteCourtney Baxter
ReplyDeleteIf emerging markets and growing economies do not “think green” as they invest in new infrastructure, the progress and hope to move toward a sustainable economy will be pushed further into the distance of the future. In order to bring green investment to the forefront, consumers, producers, and the government alike must realize that investing in non-renewable energy will be an essential waste. As we squander more non-renewable resources and lose the option to continue in an unsustainable economy, we will have to eventually invest in green energy. So it should go without saying that it is best to get started on buidling a stronger foundation for our future.
In a way, transitioning to a greener economy is similar to switching to eating all organic. The food is more expensive, but it is also healthier and in the longrun will be more beneficial to you. Same goes with green investment, it is more expensive to spend on renewable resources, but it is also much more beneficial. The major problem with green spending is not necessarily opposition to using renewable resources, it is the inability to come up with the proper funding. With the fragile state of the United States economy and many economies around the world, taking the green route is just not feasible. As the article states, I think that in order to truly move towards a greener and more sustainable economy, we must emphasize the need for private investment: “Rough estimates suggest that each tax dollar can be leveraged with such
In today's economy, where businesses are struggling and trying to makes investments that they understand and think they can benefit from. Unfortunately, since today's financial institutions are not well educated about the impact of un-green acts, they seem to ignore it. They have the mentality that they wont see the impact of climate change to they dont have to worry about it. When people who have for green economy tell the investors, who only think about the profits to a cheaper investment, that they should pick a a greener approach to the decision the take, the first question they would ask is the cost. When they see a higher price they dont calculate the long-term benefits into the profits, they only see the lower price and choose that. I think if the financial institutions had someone to answer to about their green-ness, they would think about it more. I agree that if their credit rating was online due to the impact they would have on our climate they would consider it more.
ReplyDeleteThese are all ideas that cannot be translated into actions until one firm that has power to influence and motivate other firms. Some firm will have to take the rudimentary step to help them, the other firms to take the same steps and our planet.
After reading the article I find it unfortunate that investors and many of the people don’t care about our planet. Unfortunately investors, from what it seems, are mostly interested in the short run goals rather than the long run. Yes, greener infrastructure is costly but it will pay off in the long run, plus better the planet we live on. Investors are skeptical with investing in a green economy because they don’t see the immediate results. The ultimate, like one of the professors at pace always say; “People respond to incentives” and the incentive for investors are immediate profit, not so much for long run. What investors need to take into consideration is what Simon Zadek stated in his article “Failure to green infrastructure investment will reduce economic growth, increase systemic risk, deepen inequality, and fuel social unrest. Today’s winning investors will eventually lose, but too late to change the course of history. Private investors need incentives to green their portfolios”
ReplyDeleteMonika Stanczyk
This article caught my attention at the mention of volatile commodity and food prices being a worse scenario compared to the 100 trillion dollars needed to be invested in to infrastructure. I do believe that there can be a difference made if this investment was made with ecological, greener efforts which reduce pollution and used fewer natural resources. This will set the stage and provide a blueprint for future projects to follow and influence other investment projects However, we all know that this would not be possible unless there was a profit to be made. Investors need to incentives before action takes place. This is where government policys and investment come in. I do agree with the author about tax dollars being used toward to close the incremental costs of going green. Government programs are used in different ways to secure social securities from healthcare to unemployment. I view investments in our future as a vital part of social security and am not opposed to tax revenue being used as a partial incentive for the private sector towards greener business practices and investment projects. This would lighten the risk and provide a stepping stone for those who are cautious of going green while making a profit.
ReplyDelete-Sharda Naitarm