A quick guide to Green Economy PDF Print E-mail
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Written by Albert Norström   
Monday, 09 May 2011 09:20

The major event of next year is without a doubt the United Nations Conference on Sustainable Development - Rio+20 - conference. This will take place in Brazil on 4-6 June 2012 to mark the 20th anniversary of the 1992 United Nations Conference on Environment and Development (UNCED), in Rio de Janeiro. It is a conference at the highest possible level, meaning that Heads of State and Government will participate and aim to produce a focused political document. The Conference will focus on two themes: (a) a green economy in the context of sustainable development and poverty eradication; and (b) the institutional framework for sustainable development. We give you a short run-down of what Green Economy is.

What is a Green Economy?

The first theme, green economy, is a term that is increasingly being used in the domain of sustainability science, practice and policy. But what exactly is it? There are many definitions, and for a list of numerous links you can point your browsers to the wikipedia page on green economy. UNEP, for example, has launched a Green Economy Initiative which defines green economy as:

"an economic system that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. In its simplest expression, a green economy can be thought of as one which is low carbon, resource efficient and socially inclusive. Practically speaking, a green economy is one whose growth in income and employment is 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 catalyzed and supported by targeted public expenditure, policy reforms and regulation changes. This development path should maintain, enhance and, where necessary, rebuild natural capital as a critical economic asset and source of public benefits, especially for poor people whose livelihoods and security depend strongly on nature."

The Green Economy Coalition defines green economy as an economic system adhering to the following building blocks:

"1) low-carbon energy, infrastructure and transport; 2) sustainable systems of food production, water and sanitation, and waste; 3) ways of protecting and sustainably using biodiversity; 4) green jobs, decent work, sustainable lifestyles and livelihoods that ensure social justice and equity, and set real measures for progress and wellbeing; 5) investment in green sectors, environmental ‘accounting’ and the introduction of new business models and 7) policy reform."

Solar panels at a Temple in Ladakh, India. Low carbon energy is one of the building blocks of a Green Economy. Photo by Ewa Wisniewska/Azote

Opportunities and pitfalls

In nutshell, then, a “green economy” gives the impression of an economy that is environmentally-friendly, sensitive to the need to conserve natural resources, minimize pollution and emissions that damage the environment in the production process, and produces products and services the existence and consumption of which do not harm the environment. The difficult questions are whether the attainment of such an economy constrains other development aspects including the economic growth of poor countries, social development such as poverty eradication and job creation. Maria Schultz from SwedBio helps us disentangle some of the pros and cons of the current green economy discourse as its being held in the context of the Rio+20 conference.

Positive aspects of the green economy concept that should be examined for the Rio+20 conference include:

Recognizing the economic and social value of the environment (e.g. resources such as clean air, water and forests and their role in helping society meet basic human needs) besides its intrinsic environmental worth. However there should also be recognition of the opportunity cost of not “exploiting” or using up natural resources. The short term usefulness of using natural capital and the short and long term usefulness of conserving nature (or using resources sustainably) should be both recognized and reconciled. International support to developing countries in offsetting the opportunity costs is important.

Allowing market prices to better reflect environmental values and costs. This should not, however, ignore the development dimension, in guaranteeing access of the public (especially the poor) to basic amenities and basic livelihood opportunities. Subsidies that promote environmentally damaging activities or products should in general be minimized but with the condition that access of the poor to amenities is not affected. On the other hand, incentives (subsidies, access to credit, tax breaks, etc) should be given by developing countries to producers and consumers to promote good processes and products (renewable energy, organic food production and consumption, etc).

Develop green economy policies that ensure that resources forming the livelihood base of small-scale producers (e.g. local farmers) and communities are not damaged or depleted. Policies should ensure that these resources (including soil, land, forests, mangroves etc) are rehabilitated and improved. The rights of the communities should be recognized and respected.

At the international level, systems and mechanisms should be established or strengthened for developed countries to support and enable developing countries. These would include the provision of adequate financing, and through appropriate financial mechanisms; and technology transfer, which includes the promotion of endogenous environmentally-sound technology in developing countries.

Reforms and improvements in the global economic frameworks and structures. This has to be made with the goal to enable and support developing countries in the transition to sustainable development models.  Reformation of the international trade rules (multilateral as well as regional and bilateral Free-Trade Agreements) is required. For example, developed countries' agricultural subsidies should be reduced, industrial subsidies to enable developing countries to promote environmentally-sound practices or products such as renewable energy should be developed and appropriate intellectual property rules that enable access to environmental technologies at affordable cost should be established.


Pitfalls that should be avoided with regards to the green economy concept at Rio+20 include:

That the “green economy” is defined in a purely "environmental" manner. Safeguards must be taken so that the green economy concept fully embraces the development and equity dimensions of sustainable development and acknowledges its possible negative effects on developing countries.

A second risk is that a “one size fits all” approach is taken, in treating all countries in the same manner. This would lead to failures either for environment, development or both. The levels and stages of development of countries must be fully considered.

A third risk is that the “green economy” concept is hijacked by countries and used to promote trade protectionist policies. Developed countries may use this as a principle or concept to justify unilateral trade measures against the products of developing countries. One example is the proposed “carbon tariff” or “border adjustment tax” to be imposed to products, on the ground that they generated higher emissions during the production process than the products of the importing countries. This would tend to penalize developing countries that do not have financial resources or technical access to low-emission technologies, and thus violate the principle of common but differentiated responsibilities. Another potential problem could be the adoption of environmental standards for products; developing countries that are unable to meet the standards face the prospect of losing their exports (while these standards, as FLEGT (http://ec.europa.eu/environment/forests/flegt.htm) also are of outmost importance for a green economy). The approach towards developing countries should be to provide resources and technology for upgrading their environmental technology and standards.

A fourth risk is that the “green economy” is used as a new conditionality on developing countries for aid, loans, and debt rescheduling or debt relief. This may pressurize affected developing countries to take on one-dimensional environmental measures rather than sustainable development policies that take economic and social development and equity goals into account.



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