Issues, and Challenges of Green

Economics

Dr. Naresh Chandra Sahu

School of HSS&M
IIT Bhubaneswar
 Questions???????
What is economic growth?
What is economic development?
Why do we need economic development?
Does economic development lead
sustainable development?
Does economic development helps human
development and ecological sustainability?
What is green economics and growth ?
Growth
 Economic Growth

Shopping Mall in Saudi Arabia Dubai Skyline

Copyright : Christo Pacheco, http://www.sxc.hu Copyright: zchizzerz, http://www.sxc.hu

High economic growth fuelled through capital spending can

hide a number of underlying economic problems how is the
income and wealth distributed? Who is doing the spending and
will it trickle down to the poor?
Development

Iraqis have supposedly

been given their
freedom following the
American led
Operation freedom but
has it improved
welfare?
 Human Development Index

HDI A socio-economic measure Focus on three dimensions of

human welfare:

A long and healthy life (Health)- Longevity Life expectancy

Knowledge Access to education, literacy rates

A Decent Standard of living (Wealth) GDP per capita

Is our economic growth pattern leading
to increased
well-being, human security and
happiness in the long run ?
The day we have consumed resources equivalent to
what the planet could produce in that year is known
as the Earth Overshoot Day of that year.
In 1986, Earth Overshoot Day was at the end of
December.

In 1996, Earth Overshoot Day was in November.

In 2008, Earth Overshoot Day moved forward to 23rd of

September
because we are now demanding resources at a rate of
40 percent faster than the planet can produce them.

Source: http://www.footprintnetwork.org
 What else could be done
to improve the measure of economic
development
which could truly reflect the well-being
of an average citizen in a nation?
To adopt Sustainable Development
and green growth policies and
programmes in the world
 Sustainable Development
(SD)
Sustainable development is development that
meets the needs of the present without
compromising the ability of future generations to
meet their own needs." (Gro Harlem Brundtland,
1987, WCED)
 Sustainable development is often thought
to have three components: environment,
society, and economy. The well-being of
these three areas is intertwined, not
separate.
 In the light of the Fifth Environmental
Action Programme the features of
sustainability are:
to maintain the overall quality of life;
to maintain continuing access to natural resources;
to avoid lasting environmental damage;
to consider as sustainable a development which meets
the needs of the present without compromising the ability
of future generations to meet their own needs.

Source:"Towards Sustainability". The European Community Programme of

policy and action in relation to the environment and sustainable
development (2005). Also known as The Fifth EC Environmental Action
Programme.
 Policy Options to Achieve SD

Green Economy

UNEP has developed a working definition of a green

economy as one that results in improved human well-
being and social equity, while significantly reducing
environmental risks and ecological scarcities.

In its simplest expression, a green economy can be

thought of as one which is low carbon, resource
efficient ,and socially inclusive
Policy Options to Achieve SD

GREEN GDP
The green gross domestic product (green GDP) is an index
of economic growth with the environmental consequences of
that growth factored in.
Green GDP monetizes the loss of biodiversity, and accounts for
costs caused by climate change.
Some environmental experts prefer physical indicators (such as
"waste per capita" or "carbon dioxide emissions per year"),
which may be aggregated to indices such as the "Sustainable
Development Index".
GGDP = NDP Dn
 Greening Growth : Basic Principles

Quality of economic growth

Eco-efficiency of economic growth
Environnemental sustainability
 Eco-efficiency of economic growth
Energy intensity (energy used per unit
GDP)
Water intensity (water used per unit of
GDP)
Sulphur dioxide (SO2) intensity (SO2
emissions per unit of GDP)
Carbon dioxide (CO2) intensity (CO2
emissions per unit of GDP)
 Pillars of Green Growth

Eco-tax Reforms
Sustainable infrastructure
Greening business
Sustainable Consumption
 Eco Tax Reform (ETR)

ETR, also known as green tax and budget reform, is a powerful

policy tool for building more effective, efficient, socially
beneficial and environmentally sustainable fiscal systems and
economies. Its key principles are the internalization of
environmental costs in the market and revenue neutrality, that
is, green taxes should not pose an additional burden

Payment for Environmental Services (PEC)

Traffic Congestion Tax
Excessive Water Consumption tax
 What is Sustainable Infrastructure ?
Sustainable Infrastructure should:

minimize resource use and ecological impacts throughout the life cycle;
preserve ecosystem integrity;
not aggravate adverse global phenomena as climate change and ozone
depletion;
deliver economically viable goods and services;
maximize long-run economic growth for the benefit of all;
be financially viable;
be managed and operated in a sustainable way;
be socially inclusive;
contribute to reducing poverty;
contribute to meeting the MDGs;
be appropriate for the stage of development and context; and
be accepted and supported by the general population
 Sustainable Infrastructure

Green building design can reduce energy and water use by human
settlements by more than 30 per cent over the lifetime of the
structure; this does not take into account the potential savings from
applying eco-efficiency concepts to all types of infrastructure
development. The resulting savings in building operation and
infrastructure development costs can help a nations products and
services become more cost-competitive in the global marketplace
 Sustainable Infrastructure

Green building design can reduce energy and water use by human
settlements by more than 30 per cent over the lifetime of the
structure; this does not take into account the potential savings from
applying eco-efficiency concepts to all types of infrastructure
development. The resulting savings in building operation and
infrastructure development costs can help a nations products and
services become more cost-competitive in the global marketplace
 Greening Business
The first meaning of sustainability is the traditional one: that the
situation can endure over time. It is the desire of every business
owner that the business is healthy, growing and enduring. This
requires sustained competence in business basics: the global
competitiveness of products and services, human productivity,
sufficient capitalization and cash ow management.

Sustainability now also has a second meaning: the alignment of

business operations with the sustainable development principle of
not depriving the next generation by destroying social, human or
natural capital.
Sustainable Business Model
 Sustainable Consumption

we (developing nations) are imitating the world

which created pollution. So our lifestyle is imitating
the lifestyle of the people who have already led the
way. That is the most dangerous part of it So, we
have to find lifestyle which is consistent with our
principle or decision -- we should leave the world
safer than we found it.

Muhammad Yunus, Nobel Peace Prize winner, 2006

 Sustainable Consumption

Developing policy frameworks for regulatory standards; infrastructure

development and demand-side consumption management

Demand-side management using appropriate economic instruments and

pricing systems

Nurturing stakeholder engagement both consumers and businesses

Promoting the sustainable consumption of products and services, via

public procurement processes and infrastructure development

Re-enforcing the linkages between traditional lifestyles, cultural values

and consumption patterns

Supporting energy efficiency progress with policies and standards

 Multiple Crises

Fuel and food crises - 950 million people

worldwide at risk of hunger and malnutrition

Financial crisis - threatening jobs

worldwide & poverty reduction gains

Climate crisis exacerbating the others

200 million jobs lost between 2007 and 2009

Rethinking the Economic Recovery: A global Green New Deal

Revive the world economy, create new and decent

jobs, and protect the vulnerable

Reduce carbon dependency, ecosystem

degradation, and water scarcity

Eliminate persistent poverty by 2015. achieve

the MDGs
 Global Green New Deal Components
International Policy Architecture
International Trade
International Aid
Global Carbon Market
Global Markets for Ecosystems
Services
Fiscal Stimulus
Development and Transfer of
Technology in 2009-2010
GGND International
Coordination Energy Efficient
Buildings
Sustainable
Domestic Policy Initiatives Transport
Perverse Subsidies Sustainable Energy
Incentives & Taxes Agriculture and
Land Use and Urban Policy Freshwater
Integrated Management of
Freshwater
Environmental Legislation
Monitoring and Accountability
 Investing in Green Sectors

Renewable energy
Clean tech : materials & energy
efficiency
Low carbon cities , green buildings
& transport
Waste management & mitigation
Ecological infrastructure
Biodiversity-based businesses
Green Buildings
Energy efficient buildings:
Investments in improved
energy efficient buildings = 2-
3.5m jobs in Europe & USA.
In Australia a proposed US$ 3b
green housing over 4 years is
expected to reduce green
house gas emissions by
3.8mtons/year = 160,000 jobs
In the US it is estimated that
US$ 100b to improve energy
efficiency of building & cities
over 4 years will generate 2m
new jobs.
Sustainable Transport

Shifting 25% of all air travel

in 2050 under 750 km to
high speed rail travel would
result in savings of around .
5 GT of CO2/year (IEA, 08)

Shifting 25% of all road

freight over 500 km to rail, .
4 Gt of CO2/year could be
saved (IEA, 08).
 Renewable Energy

About 2.3 million jobs in

renewable energy sector in
comparison to 2 m employed
in oil & gas refining industry
in 99.

Projected investments of
US$ 630b in renewable
energy sector by 2030 would
translate into at least 20 m
jobs.
Renewable Energy: Case Study
China: RE sector generates output
worth US $ 17 bill & employs 1 mill.
Nigeria: a biofuels industry based on
casava & sugar can provide 200,000
jobs
India: 900,00 jobs could be created
in the biomass gasification by 2025
Bangladesh: At least 20,000 jobs
have been created with the uptake
of 3 renewable energy technologies
(PV solar home systems biogas
facilities, & improved cooking
stoves)
Water
Market for water supply,
sanitation,& water
efficiency estimated at US$
253 bn & is expected to
grow to US$ 658 bn by
2020.

Estimated Investment of
USD 15 bn per annum.

This could generate USD

38 billion (with 15 bn in
sub-Saharan Africa).
 Sustainable Agriculture

Organic agriculture sustains

health of soils, ecosystems &
people
Provides more than 30% more
jobs/ha than non-organic
China has increased its
allocation of land for organic prod
from 300,000 ha in 05 to 3.5 mill
ha in 06
In Ethiopia alone, 6 bn is being
invested in land management
during a period of 15 years.
 Forests
Many communities directly
depend for their livelihoods on
non timber forest products.
Sustainable forest management
can:
create massive employment,
provide for livelihoods,
make a significant contribution
to the fight against climate
change,
combat desertification and
land degradation.
Fostering a Global Consensus on
Green Economy
&
3 R ( Reduce, Reuse & Recycle)
 Thank you!
R. Shanthini 39
19 Sept 2011