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Towards a green economy

Perhaps the most prevalent myth is that there is an inescapable trade-off

between environmental

sustainability and economic progress. There is now substantial evidence that the greening of economies neither inhibits wealth creation nor employment opportunities. To the contrary, many green sectors provide significant opportunities for investment, growth and jobs. For this to occur, however, new enabling conditions are required to promote such investments in the transition to a green economy, which in turn calls for urgent action by policy makers.

A second myth is that a green economy is a luxury only wealthy countries can afford, or worse, a ruse to restrain development and perpetuate poverty in developing countries. Contrary to this perception, numerous examples of greening transitions can be found in the developing world, which should be replicated elsewhere. Towards a Green Economy brings some of these examples to light and highlights their scope for wider application.

UNEP’s work on green economy raised the visibility of this concept in 2008, particularly through a call for a Global Green New Deal (GGND). The GGND recommended a package of public investments and complementary policy and pricing reforms aimed at kick-starting a transition to a green economy, while reinvigorating economies and jobs and addressing persistent poverty (Barbier 2010a). Designed as a timely and appropriate policy response to the economic crisis, the GGND proposal was an early output from the United Nations’ Green Economy Initiative. This initiative, coordinated by UNEP, was one of the nine Joint Crisis Initiatives undertaken by the Secretary-General of the UN and his Chief Executives Board in response to the 2008 economic and financial crisis.

Towards a Green Economy – the main output of the Green Economy Initiative – demonstrates that the greening of economies need not be a drag on growth. On the contrary, the greening of economies has the potential to be a new engine of growth, a net generator of decent jobs and a vital strategy to eliminate persistent poverty. The report also seeks to motivate policy makers to create the enabling conditions for increased investments in a transition to a green economy in three ways.

First, the report makes an economic case for shifting both public and private investment to transform key sectors that are critical to greening the global economy. It illustrates through examples how added employment through green jobs offsets job losses in a transition to a green economy.

Second, it shows how a green economy can reduce persistent poverty across a range of important sectors


– agriculture, forestry, freshwater, fisheries and energy. Sustainable forestry and ecologically friendly farming methods help conserve soil fertility and water resources. This is especially critical for subsistence farming, upon which almost 1.3 billion people depend for their livelihoods (UNEP et al. 2008).

Third, it provides guidance on policies to achieve this shift by reducing or eliminating environmentally harmful or perverse subsidies, addressing market failures created by externalities or imperfect information, creating market- based incentives, implementing appropriate regulatory frameworks, initiating green public procurement and by stimulating investment.

1.2 What is a green economy? UNEP defines a green economy as one that results in

“improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities” (UNEP 2010). In its simplest expression, a green economy is low-carbon, resource efficient, and socially inclusive. In a green economy, growth in income and employment are driven by public and private investments that reduce carbon emissions and pollution, enhance energy and resource efficiency, and prevent the loss of biodiversity and ecosystem services.

These investments need to be catalysed and supported by targeted public expenditure, policy reforms and regulation changes. The development path should maintain, enhance and, where necessary, rebuild natural capital as a critical economic asset and as a source of public benefits. This is especially important for poor people whose livelihoods and security depend on nature.

The key aim for a transition to a green economy is to enable economic growth and investment while increasing environmental quality and social inclusiveness. Critical to attaining such an objective is to create the conditions for public and private investments to incorporate broader environmental and social criteria. In addition, the main indicators of economic performance, such as growth in Gross Domestic Product (GDP) need to be adjusted to account for pollution, resource depletion, declining ecosystem services, and the distributional consequences of natural capital loss to the poor.

A major challenge is reconciling the competing economic development aspirations of rich and poor countries in a world economy that is facing increasing climate change, energy insecurity and ecological scarcity. A green economy can meet this challenge by offering a development path that reduces carbon dependency,

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