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Towards a green economy

on marginal lands and in fragile environments is likely to be a continuing problem for the foreseeable future, given current global rural population and poverty trends. Despite rapid global urbanisation, the rural population of developing regions continues to grow, albeit at a slower rate in recent decades (Population Division of the United Nations Secretariat 2008). Furthermore, around three-quarters of the developing world’s poor still live in rural areas, which means about twice as many poor people live in rural rather than in urban areas (Chen and Ravallion 2007).

The world’s poor are especially vulnerable to the climate-driven risks posed by rising sea levels, coastal erosion and more frequent storms. Around 14 per cent of the population and 21 per cent of urban dwellers in developing countries live in low elevation coastal zones that are exposed to these risks (McGranahan et al. 2007). The livelihoods of billions – from poor farmers to urban slum dwellers – are threatened by a wide range of climate-induced risks that affect food security, water availability, natural disasters, ecosystem stability and human health (UNDP 2008; OECD 2008). For example, many of the 150 million urban inhabitants, who are likely to be at risk from extreme coastal flooding events and sea level rise, are likely to be the poor living in cities in developing countries (Nicholls et al. 2007).

As in the case of climate change, the link between ecological scarcity and poverty is well-established for some of the most critical environmental and energy problems. For example, for the world’s poor, global water scarcity manifests itself as a water poverty problem. One-in-five people in the developing world lacks access to sufficient clean water, and about half the developing world’s population, 2.6 billion people, do not have access to basic sanitation. More than 660 million of the people without sanitation live on less than US$ 2 a day, and more than 385 million on less than US$ 1 a day (UNDP 2006). Billions of people in developing countries have no access to modern energy services, and those consumers who do have access often pay high prices for erratic and unreliable services. Among the energy poor are 2.4 billion people who rely on traditional biomass fuels for cooking and heating, including 89 per cent of the population of Sub-Saharan Africa; and, the 1.6 billion people who do not have access to electricity (IEA 2002).

Thus, finding ways to protect global ecosystems, reduce the risks of global climate change, improve energy security, and simultaneously improve the livelihoods of the poor are important challenges in the transition to a green economy, especially for developing countries.

As this report demonstrates, a transition to a green economy can contribute to eradicating poverty. A

number of sectors with green economic potential are particularly important for the poor, such as agriculture, forestry, fishery and water management, which have public goods qualities. Investing in greening these sectors, including through scaling up microfinance, is likely to benefit the poor in terms of not only jobs, but also secure livelihoods that are predominantly based on ecosystem services. Enabling the poor to access microinsurance coverage against natural disasters and catastrophes is equally important for protecting livelihood assets from external shocks due to changing and unpredictable weather patterns.

However, it must be emphasised that moving towards a green economy will not automatically address all poverty issues. A pro-poor orientation must be superimposed on any green economy initiative. Investments in renewable energy, for example, will have to pay special attention to the issue of access to clean and affordable energy. Payments for ecosystem services, such as carbon sequestration in forests, will need to focus more on poor forest communities as the primary beneficiaries. The promotion of organic agriculture can open up opportunities, particularly for poor small- scale farmers who typically make up the majority of the agricultural labour force in most low-income countries, but will need to be complemented by policies to ensure that extension and other support services are in place.

In sum, the top priority of the UN MDGs is eradicating extreme poverty and hunger, including halving the proportion of people living on less than US$ 1 a day by 2015. A green economy must not only be consistent with that objective, but must also ensure that policies and investments geared towards reducing environmental risks and scarcities are compatible with ameliorating global poverty and social inequity.

1.3 Pathways to a green economy

If the desirability of moving to a green economy is clear to most people, the means of doing so is still a work in progress for many. This section looks at the theory of greening, the practice and the enabling conditions required for making such a transition. However, before embarking on this analysis, the section frames the dimensions of the challenge.

How far is the world from a green economy? Over the last quarter of a century, the world economy has quadrupled, benefiting hundreds of millions of people (IMF 2006). However, 60 per cent of the world’s major ecosystem goods and services that underpin livelihoods have been degraded or used unsustainably (Millennium Ecosystem Assessment 2005). This is because the


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