Even when there is a clear economic case for green investments, enabling conditions are generally needed. This chapter has identified five key policy-making areas which could feasibly be introduced by government at all levels in the short-to-medium term, with a view to driving the innovative and transformational change which could arise from collaboration between different sectors on the green economy in the longer term.
The first of these, public investment and spending, can be important in the short term to attract green investment and promote the development of green markets, especially where alternative policy tools are practically or politically impossible. A second key area of policy-making is the use of environmentally related taxes and other market-based instruments to address environmental externalities and market failures. A number of innovative measures, including tradable permit schemes and feed-in tariffs, have been successfully used by governments in recent years to speed the transition to a green economy.
The chapter also discusses the importance of reforming government subsidies that are environmentally harmful. Although reforming such subsidies is challenging, a number of good practice examples exist, illustrating that reform is clearly possible. The two other key areas for policy-making – improving regulatory frameworks
and strengthening international governance – focus on the importance of national and international laws and regulations in stimulating green economic activity.
The chapter makes clear that capacity building is needed for the effective implementation of policy tools, such as in the areas of research, data collection, data management, consultation and enforcement, with the role of institutions being particularly important to the effectiveness of policy. Support is also needed to ensure that workers are fairly treated, that the labour market is prepared to meet the demand for green jobs, and that the groups most vulnerable to change receive adequate compensation.
Overall, it is clear that a wealth of policy options
exist for governments to enable the greening of key sectors and that implementing strategies for greening the economy will involve a broad suite of measures and appropriate indicators to measure progress. The challenge now is to set priorities at the country level and to identify strategies for how to green key sectors in ways that are aligned with existing commitments to sustainable development and poverty eradication. The need for detailed policy design – based on the lessons of experience, a deep knowledge of local context and full consultation – should not be underestimated, but neither should the breadth of areas for action and the ultimate rewards.