Green growth and sustainable development

Green Growth and Environmental Governance in Eastern Europe, Caucasus, and Central Asia


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This report takes stock of the latest developments in the overall economic and social conditions in Eastern Europe, Caucasus, and Central Asia (EECCA) countries, market signals and environmental governance arrangements that may facilitate the shift towards green growth, and discusses possible barriers and measures to overcome them. At the same time, the report delineates the possible elements of a more coherent and effective reform agenda. In such a way the report aims to serve as background and a starting point for follow up development of green growth policies in EECCA.

This report suggest that, given the economic and social inefficiencies of the current growth models in EECCA, the question is not whether countries need at all to green these models. The question is where to start and how to better organise the country’s green transformation. Each country will have to find its own answer although exchanging ideas, innovative technologies and advanced management approaches internationally will help accelerate progress and will reduce the costs of policy action.

OECD Green Growth Papers, July 2012

Main issues and policy conclusions

Is the green growth issue on the political agenda?

  • At the Rio+20 Summit in June 2012, world leaders discussed how a greener model of development could be promoted globally
  • Several EECCA countries launched the reflection on their green growth strategies
  • In 2009, OECD countries endorsed a Ministerial Declaration on Green Growth and a Green Growth Strategy was endorsed in 2011
  • The Europe 2020 Strategy aims, among others, to establish as resource-efficient Europe
  • Major Asian economies, such as China and South Korea, are among world leaders of green economy promotion

Why policy action is needed in EECCA?

  • The value of natural capital in countries of Eastern Europe, Caucasus and Central Asia (EECCA) continues to erode while the countries’ economic growth relies too heavily on natural assets and ecosystem services. A lack of action is likely to impede growth, sometimes severely
  • Economic competitiveness of EECCA countries is hindered by a low resource productivity
  • The environmental quality of life is degrading as well, with many people being exposed to health risks because of pollution and having poor access to basic services such as water supply and sanitation or waste management

What policy action is needed?

There is some consensus around the following priority policy interventions:

  • Strengthen price and tax incentives;
  • Optimise the management of natural capital;
  • Address regulatory gaps and failures that hinder green economic development;
  • Modernise infrastructure and regional development in line with green growth objectives and opportunities;
  • Stimulate “green” innovation and skills development;
  • Use public finance effectively and efficiently, including to leverage private sector investment;
  • Use better analytical tools to catalyse and measure progress; and
  • Continue the reform of framework policies.

Green growth promotion in EECCA needs a reinforced focus on implementation. Its success will highly depend upon the support and involvement of the non-environmental community, including ministries of economy and finance, line ministries, NGOs and the private sector, and the quality of the overall governance framework, including public administration. Given the context in the region, the role of governments and good governance will remain crucial.

Are there examples of progress?

Examples exist of EECCA countries that already have put in place selected elements of green economy:

  • Alternative energy production is increasing in Georgia, Tajikistan and the Kyrgyz Republic.
  • Organic farming brings an increased proportion of agriculture-related income in Armenia, Moldova and Ukraine.
  • Azerbaijan uses it sovereign wealth fund to finance green projects.
  • The Russian Federation and Kazakhstan have set energy efficiency targets.
  • Energy efficiency has improved in Belarus.
  • Environmental matters are better incorporated in the private sector strategies.

At the same time, these examples are rather scattered and more comprehensive action is needed to promote green growth in EECCA.

Table of contents

Executive Summary
Chapter 1: Introduction to green growth
Chapter 2: The development context for green growth in EECCA
Chapter 3. Economic significance and value of the natural capital
Chapter 4. Environmental and resource productivity
Chapter 5. Environmental quality of life
Chapter 6. Price signals, economic instruments and monetary incentives
Chapter 7: Institutional aspects of green growth – actors, planning frameworks, and capacity development
Chapter 8: Financial aspects of green growth strategies


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