ECONOMIC EVIDENCE FOR ACHIEVING INCLUSIVE GREEN ECONOMY

UNDP-UNEP POVERTY & ENVIRONMENT INITIATIVE – AFRICA

PRESENTATIONSESSION 5

POVERTY ERADICATION AND GREEN JOBSAT THE REGIONAL WORKSHOP ON

INCLUSIVE GREEN ECONOMIES FOR POVERTY REDUCTION & SUSTAINABLE DEVELOPMENT IN AFRICA: FROM INSPRIATION TO ACTION

28 Feb-1 March, 2015Cairo, Egypt

UNDP-UNEP POVERTY & ENVIRONMENT INITIATIVE (PEI): WHAT WE DO

The UNDP-UNEP PEI supports governments to:

• Include pro-poor environmentally sustainable natural resource use as a core objective in development planning & implementation

• Build capacity so that decision-makers know :– How pro-poor environmental sustainability contributes to development &– How to include pro-poor environmental sustainability in development

planning & implementation.

• PEI programmes in Mauritania, Mali, Burkina Faso, Kenya, Rwanda, Tanzania, Malawi, Mozambique & Botswana

• Fully joint programme with joint UNDP-UNEP teams at global & regional level working through Government-UNDP Country Office teams at country level with regional PEI team support. Started in 2005.

Assessing & achieving the poverty reduction potential of Green Economy

• Poverty exists when people are deprived of things that contribute to their well-being, as measured by an individual’s possession of income, health, nutrition, education, assets, housing and certain rights in a society such as freedom of speech (World Bank).

• Poverty is multi-dimensional in nature – IE it has more dimensions than cash income. E.g. access to clean water, education, health care, land tenure rights, housing etc.

• It is preferable to measure poverty in a multi-dimensional manner

• Poverty should be measured in a disaggregated manner – e.g. disaggregated by gender.

Assessing & achieving the poverty reduction potential of Green Economy

• Carry out economic analyses to show how environmentally sustainable natural resource use can help achieve economic development including poverty reduction. – Use very specific examples – e.g. Hydro electricity production lost from

unsustainable water use & sedimentation. Agriculture production lost through soil erosion.

– Use non-market values also – take a broad interpretation of economic costs & benefits as conventional economics can miss important ones – e.g. family fishing or fuel wood collection

– Include a specific focus on calculating the poverty impacts

Evidence from Economic Assessments from PEI Africa

•Economic Assessments/Valuations have clearly demonstrated the economic costs of unsustainability at the national level & in some sectors. They are very powerful in convincing Governments sustainabilty should be a higher priority. E.g.

– 5.3% loss of GDP in Malawi due to unsustainable ENR

– 25% decline in agricultural productivity in parts of Rwanda due to soil erosion.– 167% increase in per unit electricity costs due to wetland degradation & soil erosion

reducing hydro-electricity production in Rwanda– Increasing women’s agriculture productivity would result in a 3.8% reduction in

poverty equivalent to 2.9 million people lifted above the poverty line over the next 10 years. (Draft results from one country ).

•Economic benefits of increased investments in sustainable ENR demonstrated– 62% IRR from investing in reforestation in Malawi – including off-site benefits

•Public Environmental Reviews have clearly demonstrated that public expenditure on environment is lower than justified by the economic evidence. E.g.

– In Mozambique damage to GDP is 17% per annum & the cost of fixing environmental problems 9% of GDP yet only 1.4% of GDP is spent on the environment.

Reducing poverty through sustainable ENR: Example from Malawi

• Soil erosion is a major problem reducing agricultural productivity and incomes.

• Economic modelling demonstrated that recovering 6% growth in agricultural yields by reducing soil erosion during 2005-2015, would increase overall GDP growth from 3.2 to 4.8 percent per year leading to the proportion in poverty falling to 34.5 percent by 2015 i.e. an additional 1.88 million people being lifted above the poverty line by 2015.

• If the total lost economic value from unsustainable resource use each year across all NR sectors (5.3% of GDP) is converted into economic growth, the impact on poverty would be much larger

• Over the period 2004 – 2015, the proportion in poverty could be halved from its 1990 level – to 25.2 per cent i.e. that sustainable NR use could have enabled the MDG1 target to be reached

Assessing & achieving the poverty reduction potential of Green Economy

• Review national evidence on poverty & how poverty assessments are carried out.– What are the main characteristics and drivers of poverty?

• E.g. Does unsustainable ENR use contribute significantly to poverty and vulnerability?

– How is poverty measured?• E.g. Is it measured in disaggregated terms? Is poverty assessed in a multi-

dimensional manner?

• Review how poverty reduction is operationally included in government policy & budget formulation, decision-making and implementation.– Poverty reduction is a stated priority by almost all governments in Africa, & how

governments seek to achieve poverty reduction is a key issue.

– Evidence suggests that there is insufficient focus on poverty reduction – e.g. impressive economic growth is not being translated into sufficient poverty reduction.

– How are poverty statistics used in policy, strategy & budget design?

– What tools and approaches do governments use to achieve poverty reduction? E.g. does macro economic modelling include poverty reduction? Do government Cost-Benefit analysis manuals include distributional analysis?

Assessing & achieving the poverty reduction potential of Green Economy

• Focus on integrating ENR sustainability into Planning/Finance led development planning & budgeting process & into key Sector policies & plans because:

– P/F set national development priorities & budgets– P/F have responsibilities for cross-sector links & broader cross-government

co-ordination

– Sectors make the decisions that impact the most on environment– Environment Ministries usually lack capacity & status to mainstreaming ENR

sustainability by themselves.

• Economic evidence approach used can generate increased in budget and donor allocations for GE. E.g.– FONERWA (Environment and Climate Change Fund) Rwanda– Increased budget for environment in other countries

SUMMARY

• SDG implementation including Green Economy requires an integrated economic-environment-social approach

• Economic evidence on the economic and social benefits of Green Economy vital to taking an integrated approach.

• The economic evidence is that investing in a GE can reduce poverty in a cost-effective manner, particularly in countries with ENR based economies

• However, more detailed evidence is needed in many countries on the poverty reduction potential.

• Supporting national counterparts to increase the focus on poverty reduction important.

• Focus on convincing Planning/Finance and key sector ministries that GE can reduce poverty with specific, credible evidence.