What is green growth and how can it help deliver sustainable development?
Twenty years after the first Rio Summit, the world continues to face a twin challenge: expanding economic opportunities for all in the context of a growing global population; and addressing environmental pressures that, if left unaddressed, could undermine our ability to seize these opportunities. Green growth is where these two challenges meet and it is about exploiting the opportunities to realise the two together.
Green growth means fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies. To do this it must catalyse investment and innovation which will underpin sustained growth and give rise to new economic opportunities.
Green growth is not a replacement for sustainable development. Rather, it provides a practical and flexible approach for achieving concrete, measurable progress across its economic and environmental pillars, while taking full account of the social consequences of greening the growth dynamic of economies. The focus of green growth strategies is ensuring that natural assets can deliver their full economic potential on a sustainable basis. That potential includes the provision of critical life support services – clean air and water, and the resilient biodiversity needed to support food production and human health. Natural assets are not infinitely substitutable and green growth policies take account of that.
In May 2011, the OECD delivered its Green Growth Strategy to Heads of State and Ministers from over forty countries, who welcomed it as a useful tool for expanding economic growth and job creation through more sustainable use of natural resources, efficiencies in the use of energy, and valuation of ecosystem services.
The Strategy responds to a request from Ministers of the 34 countries who signed the Green Growth Declaration in 2009, committing to strengthen their efforts to pursue green growth strategies as part of their response to the economic crisis and beyond. www.oecd.org/greengrowth
What does it aim to achieve?
Green growth policies are an integral part of the structural reforms needed to foster strong, more sustainable and inclusive growth. They can unlock new growth engines by:
Enhancing productivity by creating incentives for greater efficiency in the use of natural resources, reducing waste and energy consumption, unlocking opportunities for innovation and value creation, and allocating resources to the highest value use.
Boosting investor confidence through greater predictability in how governments deal with major environmental issues.
Opening up new markets by stimulating demand for green goods, services and technologies.
Contributing to fiscal consolidation by mobilising revenues through green taxes and through the elimination of environmentally harmful subsidies. These measures can also help to generate or free up resources for anti-poverty programmes in such areas as water supply and sanitation, or other pro-poor investments.
Reducing risks of negative shocks to growth due to resource bottlenecks, as well as damaging and potentially irreversible environmental impacts.
Strategies for greener growth need to be tailored to fit specific country circumstances. They will need to carefully consider how to manage any potential trade-offs and best exploit the synergies between green growth and poverty reduction. The latter include, for example, bringing more efficient infrastructure to people (e.g. in energy, water and transport), tackling poor health associated with environmental degradation and introducing efficient technologies that can reduce costs and increase productivity, while easing environmental pressure. Given the centrality of natural assets in low-income countries, green growth policies can reduce vulnerability to environmental risks and increase the livelihood security of the poor.
Green growth strategies also recognise that focusing on GDP as the main measure of economic progress generally overlooks the contribution of natural assets to wealth, health and well-being. They therefore need to rely on a broader range of measures of progress, encompassing the quality and composition of growth, and how this affects people’s wealth and welfare.
The OECD is working to identify the policy mixes and measurement tools that countries in different situations can adopt to implement green growth in a way that contributes to poverty eradication, employment opportunities, and a strong and sustainable economy.
There is no "one-size-fits-all" approach
The starting point of OECD work is that there is no “one-size-fits-all” prescription for fostering greener growth. Greening the growth path of an economy depends on policy and institutional settings, level of development, social structures, resource endowments and particular environmental pressure points. Advanced, emerging, and developing countries will face different challenges and opportunities. While national plans will differ, in all cases green growth strategies need to go hand-in-hand with the main pillars of action to promote social equity: more intensive human capital investment, inclusive employment promotion, and well-designed tax/transfer redistribution policies.
The OECD report on Green Growth and Developing Countries aims to identify promising areas in which green growth objectives could be achieved and the policies, regulations, technology transfer, financing and new market and innovation opportunities that could help to deliver them. It reviews key barriers and includes options for a policy framework and a set of criteria that developing countries could consider in their efforts towards green growth policy making. Work will also commence on how progress could be assessed.
The report was developed based on a consultative process with developing countries. It aims to provide a platform for developing country partners to indicate their interest in collaborating with the OECD to shape a green growth agenda that is feasible and relevant for them and addresses the aspirations of their citizens. For more information please visit: www.oecd.org/dac/greengrowth
For further information about the OECD's contribution to Rio+20 summit, please visit: www.oecd.org/rio+20