|How Green Should Economic Growth Be? Author : Marcelo Giugale read more >>
Marcelo Giugale, the World Bank’s Director of Economic Policy and Poverty Reduction Programs for Africa, discusses how to make growth greener without slowing it down.
First dilemma. When your country sells its oil, copper, or timber, it is actually swapping one asset for another: out goes a natural resource, in comes cash. Your national wealth has not changed. Now, if the cash is invested wisely, you might be better off -- rather than leaving hydrocarbons, minerals, or trees sitting idle, you would have healthier children, more educated workers, better infrastructure and so on. But does that mean that you should drill, mine or cut-down as much and as soon as possible?
Second dilemma. An investor is about to build a huge clothing factory that will employ thousands of poor people in an otherwise hopeless town where unemployment and decay have been rampant for years. These are well-paying jobs, badly-needed tax revenues and, if things go well, a shot at attracting other investors. There is a catch though: the factory's runoff will slowly but surely pollute the local river. In 30 years, its water will be foul and unusable. But that's 30 years away, and people are suffering now. Would you join a demonstration to stop the construction of the new factory?
Third dilemma. A populous developing country finds a way to quickly grow its economy. Its billion citizens begin to demand condos, cars, refrigerators, and steaks. Producing all this for them will add tons of carbon dioxide to the world's atmosphere, an atmosphere that is already too warm because citizens in rich countries have been buying condos, cars, refrigerators, and steaks for decades. In the end, the warming of the global climate will hurt everyone -- think catastrophic coastal floods, terrible droughts, and devastating storms. Should international organizations somehow try to persuade that developing country to slow down the pace of its economic growth?
Fourth dilemma. A hydropower dam could solve, once and for all, your country's perennial lack of electricity, and unleash its industrial potential. This will surely be good for the environment, because there will be less need to burn coal. Engineers are happy with the project's safety standards and bankers are lined up to finance it. But just when the bulldozers are about to move in, someone finds out that the dam's reservoir will submerge the habitat of a particular type of squirrel that cannot survive anywhere else. That species will be gone forever. What do you do?
Final dilemma. Your economy depends heavily on oil imported from far-away countries whose politics are less than stable. The oil is then used to fuel cars whose emissions ruin the air. A local entrepreneur suddenly invents a new technology to extract gas from underground rocks. The procedure sounds brutal: you drill down deep and then blast the rocks with high-pressure water and chemicals. Out comes a lot of gas that can replace the dirty oil. But you are unsure what the long-term effects of all that subterranean blasting will be. Contaminated ground water? Leaks? Earthquakes? Even the name of the excavation technique -- "fracking" -- sounds a bit scary. Do you shut it down and continue to burn foreign oil, or do you take the risk and try the new technology?
By now, you should be struggling with the economic, social, geopolitical, ecological, and technological content of those dilemmas. If so, welcome to the quest for "green growth", that is, for the right balance between material progress and environmental protection. There is much debate over where and how to strike that balance. The debate boils down to societal preferences and moral choices -- so, of course, there is little agreement. The caricature of the heartless economist and the tree-hugging environmentalist shouting past each other comes to mind. But don't throw in your intellectual towel just yet. Well before one gets to extreme dilemmas, there is a lot that can be done -- based on common sense -- to make growth greener without making it slower. There are win-wins.
To start with, governments could put order in the subsidies they give out. The prices of gasoline, electricity, water, and even food are usually subsidized -- this is true in many countries, developed and developing. Because people don't pay for the true cost of what they consume, they have less incentive to conserve -- why would you unplug your chargers at night if the electricity bill is ridiculously cheap? These price subsidies are not just inefficient but also unfair: Who drives the biggest cars and lives in the biggest houses? Certainly not the poor. Still, by some estimates, the world spends about a trillion dollars a year on this kind of giveaways.
Industries could be much faster in adopting cleaner technologies that already exist. Why aren't they? Because they don't always have to pay for the environmental damage they cause. Sure, when a giant multinational company spills oil in the coastal waters of a rich country, it is held accountable. But, in the day-to-day of business, there is plenty of pollution for which nobody pays. Think of the carbon emissions coming from the hundreds of thousands of airplanes and ships that carry the world's trade. But think also of the millions of subsistence farmers putting down one more round of pesticides, no matter how much they may hurt the environment, just to squeeze a larger crop out of their tiny plot of land.
And consumers -- meaning, us -- could change the way we behave, and what we value. Whether we laundry too much or recycle too little, these individual decisions are the result of the prices we face, the knowledge we have, and the social norms we follow. Who wants to drive a massive SUV if gasoline costs a fortune, you are aware of the car's crass carbon "footprint," and your friends would anyway think it was uncool? The same applies to our appetite for "inter-generational equity"; that is, for saving part of our natural resources for our children and their children. Is this really a priority for you, as a voter, when you have to pick one presidential candidate over another?
So, how does one get governments, industries, and people to do the right thing and go for greener growth? Surprisingly, the technical tools are known: undistorted prices, clear property rights, smart taxes, enforced regulation, markets in emission rights, community engagement, investment in research, finance for innovation, open data, public education campaigns, and so on. But, as with so many things in development, politics -- and the power of those who benefit from the status quo -- gets in the way of action, and reforms either don't happen or take a long time. And don't forget that, to be effective, many of those reforms need countries to act together, something that adds a daunting layer of complexity. That's why, over the coming years, all eyes will be on emerging economies, on whether they will lock themselves in the old ways of doing business or will seek to grow greenly from the beginning.
This post originally appeared on the Huffington Post.
Follow Marcelo Giugale on Twitter: www.twitter.com/Marcelo_WB
On a mission to scale up green growthAuthor : Ari Huhtala read more >>
CDKN’s Ari Huhtala, Director of Policy and Programme, reports on the Global Green Growth Forum’s progress to get green growth concepts into the mainstream.
The Global Green Growth Forum (3GF) was launched to convene governments, businesses, investors and organisations to act together through public-private partnerships (PPPs). There are a good number of best practices and examples of successful private sector involvement in green growth activities, but so far they cannot be considered transformative. The main aim of 3GF is to speed up and bring to scale inclusive green growth initiatives.
The highlight of the 3GF year is the high-level event, held in October, bringing together ministers, CEOs of major companies and heads of multilateral organisations. But that event is the tip of the iceberg and the rest of the year the secretariat is busy developing partnerships and cases for active promotion. As an important part of this process, the Ministry of Foreign Affairs of Denmark organised a pre-event in Copenhagen last week in preparation for 3GF2013.
The overall theme of the meeting was “Improving resource efficiencies in the value chain”, in sync with one of the key themes of the recent Green Growth Knowledge Platform (GGKP) annual conference in Paris. (You can read about this in our story: Measuring green growth comes a step closer.) This year, there was an attempt to dig deeper into sectors such as energy, water and food to develop concrete examples and cases for promotion at the October high-level event.
The cross-cutting thematic day and sectoral PPP workshops provided a lively mix of presentations and discussions on compelling business models under resource constraints and challenges of financing. I was surprised to learn that some developing countries have shown more leadership in promoting green growth in their economies than developed countries. Interestingly, the progress made has not necessarily come about through specialised institutions, but via a process of mainstreaming. Often the tools used have included government budget resources (subsidies and feed-in tariffs, for example) rather than those promoted by financial institutions. 3GF’s partner countries (China, Kenya, Korea, Mexico and Qatar) all had interesting stories to tell.
The private sector is not homogenous; some companies are proactive while others are rather reactive. However, all expect their government’s policy framework to cover the three Ls: Loud (explicit and well-articulated), Long (predictable and stable) and Legal (anchored in clear legislation and regulations). Major momentum can be recorded in driving the green growth PPP agenda through the instrument of public procurement and through sub-national leaders. The work led by mayors through the C40 Cities Climate Leadership Group, a network of megacities committed to addressing climate change, is a case in point.
3GF’s main goal of getting the private sector fully on board must be achieved if a true transformation to inclusive green growth, or mainstreaming climate compatible development, is to materialise. To speed this up, the Forum fosters innovative, imaginative and unconventional PPPs, which include partnerships to agree on standards, new rules of the game and so on. All this is done with a view to going up in scale in the future.
Two years on from the 3GF’s foundation, the high-level meeting in Copenhagen in October can be a turning point in demonstrating that the PPP nexus can kick off transformational change, or it can be yet another event with lofty and eerily familiar declarations but no tangible outcomes. In the words of the Minister of Foreign Affairs of Denmark, Villy Søvndal: “It is time to go beyond talk and start to act”. The 3GF team is putting its best efforts and the goodwill of the Danish government into this process, but the final challenge lies with ministers and company leaders worldwide.
Originally posted on the Climate & Development Knowledge Network (www.cdkn.org).
What can Mozambique show us about making development choices in a changing climate?Author : Sam Bickersteth read more >>
Sam Bickersteth, Chief Executive of CDKN, asks what Mozambique can show us about making development choices in a changing climate.
The planes from Johannesburg to Mozambique’s airports of Maputo, Tete and Pemba are full of business people these days. My neighbours on the flight from South Africa last week were not heading to Mozambique’s beautiful resorts but there to take up the opportunities from the oil, gas and coal revolution that is transforming parts of the country and potentially the entire economy. As well as oil and mineral firms, associated service industries from supermarkets to telecoms are all part of this energy bonanza. In March, the global energy group CWC hosted its first Mozambique Gas Summit. The gathering brought together more than 550 attendees from over 300 companies, and 55 countries in Africa, Europe, Middle East, Asia and the Americas. Mozambique is not alone in its mineral boom; oil and gas has been discovered in recent years in numerous African countries, including Angola, Namibia, Ghana, Kenya and Tanzania.
Mozambique has reason to celebrate its new mineral wealth: it provides an opportunity to transform the economy and livelihoods of ordinary Mozambicans. The country’s brutal civil war ended in the 1990s but despite being a donor aid ‘darling’ it remains ranked as one of the poorest countries in the world (185 out of 187 countries in the UN’s Human Development Index, 2013).
Economic growth would support the much-needed public health, education, roads and other public services that ordinary Mozambicans need. It is also likely to stress the country’s social, economic and political institutions, particularly if the growth is uneven. As one local colleague told me, “we don’t have the capacity to keep up with the change.” Besides issues of governance, use of resources, impacts on equity and the natural environment, there is a question of what the energy bonanza means for Mozambique’s climate policy. The urgent development needs of Mozambique’s poor and the high-carbon profile of the country’s natural resources raise some tough questions about how ‘climate compatible’ Mozambique’s development path could be.
Energy extraction and use cannot be disassociated from climate change, as we were reminded of this week when global atmospheric concentrations of carbon dioxide exceeded 400 parts per million for the first time in 3-5 million years. Mozambique is on the front line of climate change: its 3,000 km coastline and five major river basins expose the country to flooding and weather extremes. In 2000, flooding killed 800 people and displaced half a million, which led the government to start mainstreaming disaster risk management into development planning. Mozambique has prepared a National Climate Change Policy focused around adaptation and disaster management and is now one of Africa’s most advanced countries in this regard.
Even this determined response has not been enough to prepare for every emergency: this February, severe floods in the Limpopo Basin displaced 150,000 people and caused over 100 deaths. The International Panel on Climate Change (IPCC, 2012) has shown that climate change is likely to increase the severity and frequency of extreme weather events as well as sea level rise. Mozambicans are particularly vulnerable to climate shocks because of high poverty: they lack the resilience to bounce back after extreme events. Mozambique’s ongoing work to build its climate resilience is essential. Leaders thus face a question: how can Mozambique steer a course that embraces immediate needs for economic growth and the prospect of real poverty reduction – including energy access for all its citizens – but also contribute to a climate-resilient, low carbon future? There are no easy answers, but there are a few places to start.
At national level, a whole-of-government approach is needed, where energy security, economic development and climate resilience need to be considered in a joined-up way. Mozambique’s climate-energy dilemma also calls for several forms of support from international partners: donors, businesses and others.
First, the international community owes Mozambique – and least developed countries like it – an ambitious, equitable global climate deal in 2015 that recognises its low greenhouse gas emissions and its need to develop and pull its citizens out of poverty. Second, the country’s international partners owe Mozambique the opportunity to leap-frog old, polluting technologies and access the cleanest, greenest industrial technologies available to drive economic growth (for example, developing renewable energy options for Mozambique’s dispersed population). Third, they need to work with Mozambique to tap into international climate finance – beyond traditional aid budgets – to fund climate-resilient and low-emissions trajectories.
Fourth, there is an emerging evidence base on countries’ practical experiences in climate compatible development including those policies, programmes and strategies that deliver low carbon, development benefits without undermining climate resilience and economic growth. Mozambican leaders could do worse than to learn from others’ experience, and foster an open, national debate about the options for a sustainable and equitable development path.
This article first appeared on Alertnet.