towards a green economy

Pavan Sukhdev

Special Adviser and Head – Green Econmy Initiative

United Nations Environment Programme

Lima,

Peru,

24th March, 2011

What is good about the GEI?

3. GEI AnalysisUNEP – GREEN ECONOMY INITIATIVE

Green Economy : Definition

“A Green Economy can be defined as one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities.”

What is good about the GEI?

3. GEI AnalysisUNEP – GREEN ECONOMY INITIATIVE

Green Economy - Definition

“A Green Economy can be defined as one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities.”

Operational level : a Green Economy is one whose growth of income and jobs is driven by investments that reduce carbon emissions & pollution, increase energy & materials efficiency, & enhance natural capital

Growth in per-capita inclusive wealth

Growth in Comprehensive wealth

Arrow, Dasgupta, Maler

Stiglitz - Sen –Fitoussi

“Environmentally friendly GDP Growth” nearest to UNESCAP 2005 & “Green Growth” models

Dasgupta

Stiglitz

Green Economy Initiatives

• Many developing nations are actively promoting transitions to a greeneconomy,

– Barbados National Strategic Plan for 2006-2025

– Brazil (State of Sao Paulo) Green Economy plan

– Cambodia Green Economy Roadmap, 2009

– China is investing US$ 468 bn. to green key sectors in its 12th five-year plan (2011-2015) versus US$ 211 bn over the last five years.

– Indonesia long-term development plan 2005-2025.

– South Africa national Green Economy Plan

• UNEP is supporting initiatives in around 20 countries.

UNEP – GREEN ECONOMY INITIATIVE

FOCUS• Designing and driving

transformation in key sectors critical or highly material for greening the global economy

UNEP’s Green Economy Report


STRATEGY• Establish “Enabling Conditions”

(regulations, subsidies, taxes and related reforms)

• Promote public and private Investment

KEY SECTORS • Agriculture, Freshwater, Forests, Fisheries, Energy, Transportation,

Manufacturing, Waste, Buildings, Cities, Tourism

SCENARIO ANALYSIS • “T-21” model, includes Natural Capital , to forecast outcomes on

Capital stock, GDP growth, Employment


FOCUS • Designing and driving




STRATEGY • Establish “Enabling Conditions”







Scenario

Investing 2% of global GDP into ten key sectors for a transition towardsa low-carbon, resource-efficient economy, as against a further 2%invested in “BAU”,

Key findings

Greening the economy by investing in natural capital, resource andenergy efficiency, & low carbon energy can lead to:

1. Enhanced wealth & natural capital

2. Higher rates of GDP growth over time

3. Decent employment

4. Reduced poverty

Green Economy : Scenario Analysis

Source : T-21 Model, Green Economy Report,

2% of GDP invested in Greening vs 2% more in BAU

Green Economy : reduces

ecological scarcities…



GD

P g

row

th (

%)



Green Economy : over time, achieves

higher rates of GDP growth …

• Agriculture: Over the next decade, global employment in Agriculturecould increase by 4%

• Forests: Forest conservation and reforestation could boost formalemployment in this sector by 20% by 2050.

• Transport: Improved energy efficiency across all transport modescombined with modal shift would increase employment by about 10%above business-as-usual

• Energy: employment that is 20% higher than business as usual by 2050,

while delivering robust economic growth and reduced emissions.

Green Economy : Creates Employment

24.03.2011 11Source: Gundimeda and Sukhdev, D1 TEEB

Indonesia India Brazil

25%

75%

47%89%

99 million 352 million 20 millionEcosystem services

dependency

Ecosystem services

Ecosystem services as a

% of “GDP of the Poor”

Ecosystem services as a

% of classical GDP

21%

79%

16%

84%

10%

90%

Green Economy : Natural Capital

and Poverty Alleviation


FOCUS • Designing and driving




STRATEGY • Establish “Enabling Conditions”







Green Economy : Sectoral Success Stories

• Many developing nations demonstrate successful, scalable, sectoralmodels for transition to a green economy,

– Bangladesh “Grameen Shakti” – rural non-grid electrification usingSolar PV, microfinance, kerosene replacement cost pricing

– Brazil sustainable city : Curitiba - Bus Rapid Transit System, lowcongestion & fuel losses, lower fuel usage, green infrastructure

– China Solar Water Heaters – household cost saving, relief fromRheumatoid Arthritis, employment gains, reduced emissions

– India NREGA 2005, now $ 8 bn in local transfers, employing 30 milion, for water conservation reforestation,

– Kenya feed-in tariffs 2008, initially for wind, biomass & small hydro, now also geothermal & solar

– South Korea Extended Producer Responsibility (EPR) policy onpackaging & products, recycling rate increase, economic benefits

– Uganda Organic Agricultural transformation


• Green farming practices have increased yields, especially on small farms, between 79 % (Pretty et al, 2006) and 180 %.

• 10 percent increase in farm yields -> 7 % reduction in poverty in Africa, more than 5 % in Asia

• Approximately 2.6 billion people rely on agricultural production systems for their livelihood. (FAO, 2009)

• 525 million small farms world wide, 404 million less than two hectares of land (Nagayets, 2005), Small farms cultivate 60 % of arable land (Herren et al. 2010)

An increase in overall GDP coming from agricultural labor productivity is on average 2.5 times more effective in raising the incomes of the poorest quintile in developing countries than an equivalent increase in GDP coming from non-agricultural labor productivity.

Agriculture : Challenges & Opportunities


UNEP – GREEN ECONOMY INITIATIVE UNEP – GREEN ECONOMY INITIATIVE

• Rebuilding depleted stocks• Effective management

Marine fisheries catch

80 mil tons to 113 mil tons/ year

Source: World Energy Outlook 2008

Reductions in energy-related CO2 emissions in the climate-policy scenarios

Energy : Challenges & Opportunities…

• Establish sound regulatory frameworks

• Phase out harmful subsidies in energy, water, fisheries and agriculture

• Prioritize public investment towards greening

• Limit public spending that depletes Natural Capital

• Utilize smart market mechanisms and taxes

• Build capacity through training and technology transfer

• Strengthen international governence

Enabling the Green Economy…

• Modeled investments in the range of $1.3 trillion /year ( less than 1/10 of gross capital formation)

• Investment in green sectors is growing :

– Investments in clean energy of $200 bn + in 2010, up from $162 in 2009 and $173 in 2008.

• Policy & Subsidy Reform, Public investment, & Green Public Procurement can leverage private capital effectively

• Need for innovative financing routes…– Development Financing Institutions – local & global– Seeding with Public Finance – Green Climate Fund– REDD+ and other Payments for Ecosystem Services– Resource Taxation & other Eco-Taxes

Financing the Green Economy…

Thank You !