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Modelling


4.1 Defining investments and methodology


It is worth noting that a variety of policies are simulated together with the allocation of investments to green sectors. In fact, our scenarios account for both public and private investments, and assume that the total amount allocated is effectively spent across sectors. For this reason, when we refer to investment, we consider both public and private expenditure. The former can be represented by fiscal policies to stimulate the purchase of more efficient capital (e.g. tax rebates for purchasing a fuel efficient car, or a refrigerator) and the latter is the actual private expenditure to make the purchase. In addition, investment is generally referred


to here in its economic sense as increases to fixed capital, including infrastructure.9


to develop criteria and indicators that can be used to monitor relevant investments under eventual green investment scenarios.


In the modelling exercise, the source of funding for green investments is not explicitly defined. This is due to the fact that different governments, facing different constraints and being characterised by very heterogeneous contexts, may prefer to rely on different policies and schemes to support the transition to a green economy.


It will be important


Sector


Agriculture Buildings


Energy (supply) Fisheries Forestry Industry


Tourism


Transport Waste Water Total


Power and fuel efficiency*


Share of green investment


G1 10


10


15 10 3 6


10 16 10 10


100 33


G2 8


10


26 8 2 3


10 17 8 8


100 35


Share of GDP G1


G2


0.1 0.1


0.15 0.1


0.03 0.06


0.1


0.16 0.1 0.1 1%


0.33


0.16 0.2


0.52 0.16


0.06 0.2


0.34 Increase nutrition levels to 2800-3000 Kcal/person by 2030 (FAO 2009).


Increase energy efficiency to reach energy consumption and emissions reduction targets set in IEA’s BLUE Map scenario (IEA 2008).


Increase the penetration of renewable energy in power generation and primary energy consumption to reach targets set in IEA’s BLUE Map scenario (IEA 2008).


Restore fish stock to potential reach the maximum sustainable yield set by FAO by 2050.


0.03 Phase in a 50% reduction in deforestation by 2030, and increase planted forests to sustain forestry production.


Increase energy efficiency to reach energy consumption and emissions reduction targets set in IEA’s BLUE Map scenario (IEA 2008).


Expand public transport and increase energy efficiency to reach energy consumption and emissions reduction targets set in IEA’s BLUE Map scenario (IEA 2008).


0.16 Reducing 70% of waste that goes to landfill through proper implementation of 3Rs.


0.16 Attain the MDGs for water and reduce water intensity (reduce consumption and increase supply) (see McKinsey 2010).


2% 0.71


Table 2: Allocation of investments across sectors in the G1 and G2 scenarios as a share of total investment and GDP (2011 – 2050 average) and sectoral targets of green scenarios8


* This category includes all energy efficiency investment (both fuel and power) implemented across sectors. These include most, but not all, investments allocated to buildings (residential, commercial and agriculture), industry, tourism and transport. In addition, the impacts of the green investment scenario for sectors for which the investment concentrates exclusively on energy efficiency - buildings, industry - are not presented separately below, but are captured under energy.


Sectoral targets


8. Investments allocated to cities are not presented in this table. Modelling work on cities has proven difficult to carry out do to the lack of data on a variety of key variables, including water and energy consumption. Emphasis was therefore put only on transport, as indicated in the Cities Chapter, given its relevance to urban development.


9. For some sectors, including natural-resource based sectors, such as agriculture, forestry and fisheries, investments included under the green investment scenarios do have a broader character, including expenditure on programmes (both capital and operating costs) to restore or maintain natural capital. These can also be considered as investments in natural capital in an economic sense, even though such investments have an indirect nature.


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