Towards a green economy 1 Introduction

A green economy focuses on improving human well- being and reducing social inequity over the long term, while not exposing future generations to significant environmental risks and ecological scarcities. It seeks to do this in two ways. First, by increasing investment in the sustainability of ecosystem services upon which much of the world’s poor depend, it ensures that the environment can continue to be used for the benefit of current and future generations. Second, by basing strategies for economic growth on the sustainable use of natural resources and the environment, a green economy generates the long-term jobs and wealth that are needed to help eradicate poverty. A green economy also recognises that conventional economic indicators, such as GDP, may provide a distorted lens for economic performance. This is because such indicators fail to reflect the extent to which production and consumption activities may be drawing down natural capital.

The various sector chapters of this report have demonstrated that while there is a clear economic case for promoting a green economy, certain enabling conditions need to be created and maintained so that private sector actors will have an incentive to invest in green economic activity. This chapter focuses on these enabling conditions, and in particular, explores the measures that can be used to create them.

Enabling conditions are defined as conditions that make green sectors attractive opportunities

norms, international frameworks, for investors

and businesses. If the right mix of fiscal measures, laws,

know-how

and infrastructure is in place, then the green economy should emerge as a result of general economic activity. In addition to these policies, creating the right conditions in the investment environment requires a combination of capacity, information, dissemination of good policy practice, social assistance, skills, general education and awareness to make sure that green measures are well designed, implemented, enforced and understood, without causing unintended impacts or being prevented by practical or political challenges.

Enabling conditions can be created by a wide range of actors and institutions, including, first and foremost, governments, but also intergovernmental organisations (IGOs), international fora such as the Asia-Pacific Economic Cooperation (APEC) forum or the Group of Twenty (G20) Finance Ministers and Central Bank Governors,

multilateral environmental agreements

3. implementing subsidy reform in areas that deplete and degrade natural capital;

4. designing a country’s regulatory framework of

legislation, institutions and enforcement to channel economic energy into environmentally and socially valuable activity; and

5. the role of international frameworks that regulate economic activity, including the international trading system, in driving a green economy.

The chapter concludes with a discussion of additional supporting measures that may be required, namely, capacity building and investment in training and education. A summary of the enabling conditions identified in the sector chapters of this report is included in Annex 1. Given their importance and complexity, measures related to finance are discussed in a separate chapter.

(MEA), such as the United Nations Framework Convention on Climate Change (UNFCCC), international and national non-governmental organisations (NGOs), unions, and private sector actors from international conglomerations and large firms to small and medium- sized enterprises (SMEs).

This chapter focuses on the changes that could feasibly be introduced in the short to medium term by governments at all levels, from the executive power to particular ministries (such as those responsible for environment, finance and the general economy), and provincial and local authorities. The chapter provides a survey of the main categories of policy tools available to governments to promote a transition to a green economy. It begins with a discussion of five key areas of policy-making that have been highlighted in the previous chapters as creating the enabling conditions that support a green economy transition:

1. using public investment and spending to leverage private investment, including public infrastructure projects, green subsidies and sustainable public procurement;

2. using market-based instruments, such as taxes and tradable permits to level the playing field and provide market incentives in order to promote the greening of key sectors;

552