Developing the Green Economy

The misallocation of capital in the past two decades has contributed to the manifestation of several concurrent crises: climate, biodiversity, energy, food and water, as well as the global financial and economic crisis. In response to these systemic crises, UNEP has stressed the need for a shift to a more sustainable and inclusive economy, reached by effectively incorporating social and environmental policies in development planning. At the visionary level, UNEP (2011) defines the green economy as “an economy that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities”. The report by the United Nations Environment Management Group (EMG) (2011) points out that at the operational level, the green economy is seen as one whose growth in income and employment (highlighting the need for the green economy to be inclusive) is driven by investments that: — Reduce carbon emissions and pollution — Enhance energy and resource efficiency — Prevent the loss of biodiversity and ecosystem services These investments need to be catalysed and supported by targeted public expenditure, policy reforms and regulation changes to create the so-called “enabling conditions” for an inclusive green economy. More specifically, the main policy interventions proposed by UNEP include: — Addressing environmental externalities and existing market failures, by introducing measures to reflect the cost of depletion and degradation of natural capital into market prices. — Limiting government spending in areas that deplete natural capital, by removing harmful subsidies and incentives. Promoting investment and spending in areas that stimulate a green economy, by allocating budget to (a) promote innovation in green technologies and processes; (b) expand infrastructure that support the adoption of green practices; and (c) encourage private sector investments in green infant industries. — Establishing a sound regulatory framework, to accelerate progress towards a green economy and equitably allocate costs and benefits across key economic actors. The main purpose of green economy policies and investments is therefore dual: (1) to create new and sustainable physical capital, human capital and social capital, and (2) to maintain, enhance and rebuild natural capital as a critical economic asset and source of public benefits. Protecting natural resources, from clean freshwater to forests and air, is especially important for poor people who depend on these resources for their livelihoods and are especially vulnerable to environmental contamination and degradation. In this sense, the 2012 United Nations Conference on Sustainable Development, also known as Rio+20, acknowledged the importance of the green economy as a tool for achieving sustainable development. In short, the green economy represents an attempt to guide countries towards the adoption of more action oriented pathways to sustainable development. In this context, given that no single approach exists for sustainable development, policymakers need support through studies and analyses to help them better identify and understand upcoming challenges and opportunities, as well as to design, choose and implement policy interventions.