The “green economy” debate was at the heart of the discussions at the UN Conference on Sustainable Development (Rio+20), that took place from 20-22 June 2012, Rio de Janeiro, Brazil. This new economic agenda is viewed as a potential new driver for sustainable development and poverty eradication by the UN institutions. The conventional economist and the group of cornucopian that sees economic progress only in numbers, obviously short of arguments against this new concept have deliberately created a lot of confusion around what should be a green economy. To-day the subject has become a debatable issue, despite the fact that there exists a clear definition given by UNEP which states – “An economy that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities.” At the local level the green economy agenda is still at the level of intentions in many spheres. The race for GDP growth which seems to be the overarching policy overshadows the environmental risks and ecological scarcities. On the other hand the reluctance of introducing Strategic Environmental Assessment (SEA) and the weaknesses of our EIA processes will never be helpful to reduce environmental risks. Knowhow is no longer an issue not to enforce SEA. Our system is too loose and developers are taking benefit from it. The precautionary principle remains at the level of intentions.
We are part of a global system that is actually experiencing 5 interrelated challenging trends – the ecosystem decline, energy transition, population growth, economic disparity and climate change. As these challenges are converging in nature the aggregation of their consequences is devastating. With a population of around 6.7 billion people, on average 5000 children die of waterborne diseases everyday (1 every 15 second), 70 species becomes extinct (1 every 20 minutes), 85 million barrels of fossil-fuel are consumed and 23 million metric tons of carbon dioxide are emitted by us humans leading to concurrent crises : climate, biodiversity, energy, food, water, poverty. The result of these crises has led the worst global economic recession since the Great Depression of the 1930s. In 2009, for the first time in decades, the volume of world trade has declined. The number of unemployed globally has risen. The economic model observed in the last decades has failed. The traditional development patterns have prioritized investments in physical capital (e. g. infrastructure) and human capital (e. g. employment) with the aim to increase economic growth (GDP) and this development pattern model is a failure as it has led to multiple crises. There is enough evidence to-day to show that the old economic model is no longer servicing the needs of the growing population. Fundamental changes are needed starting from elaborated parameters for measuring progress not only the GDP. The GDP takes only one measure of progress into account – the economic activity. The GDP as a measure of progress emerged during an era when natural resources seemed or was believed to be unlimited and the quality of life meant high economic standards of living. If prosperity is judged only by economic activities then car accidents on our roads, illnesses such as cancer, depletion of our lagoons, loss of live corals, around 2 % of endemic forests, 45 million pet bottles in the nature and toxic spills in our rivers are all signs of prosperity. Loss of natural resources, reduction in the quality of life and the environment are all being negated by a simplistic economic figure- the GDP – if it is increasing despite the growing poverty and the dilapidation of natural resources, economic life is good – Great ! And the conventionalists find this normal. The welfare of a nation cannot be counted only in terms of GDP per capita, it requires more.
For those who believe that things can be different, there is need to kick start the process to convert the economic system from one of growthism to one of sustainability. The game of environmental roulette and natural resources must stop. The UN Secretary-General Ban Ki-moon has defined the old Economic Growth Model a ‘Global Suicide Pact’ and appeals for « revolutionary action » to achieve sustainable development, warning that the past century’s heedless consumption of resources is « a global suicide pact ». (Source : United Nations).
It is a call to move to the green economy initiatives. Many countries including China have already defined their road map and South Korea has even devoted 2% of its budget to achieve green economic goals. On a business as usual (BAU) scenario Global energy demand will rise by 45 per cent by 2030, and the price of oil is expected to rise to US$180 per barrel. Greenhouse gas (GHG) emissions will increase by 45 per cent by 2030, leading to an increase in the global average temperature up to 6oC. The world economy will sustain losses equivalent to 5-10 per cent of global gross domestic product (GDP) and poor countries suffer costs in excess of 10 per cent of GDP. Ecological degradation and water scarcity will increase. There will be over 1 billion people living on less than US$1 a day and 3 billion living on less than US$2 a day by 2015. This is what the UN secretary general calls the suicide pact.
We are faced to-day with the failure of the economic system and there has been a major problem of capital misallocation and largely unaccounted and unchecked social and environmental externalities driven by existing policies and market incentives. So the need for better public policies, including pricing and regulatory measures, to change the perverse market incentives that drive this capital misallocation and ignore social and environmental externalities is much felt.
The role of appropriate regulations, policies and public investments as enablers for bringing about changes needed. There are a lot of success stories from around the world, especially in developing countries that can demonstrate that there are green economic perspectives.
We need to seize these expanding economic opportunities for a growing global population and address the environmental pressures that could undermine our ability to seize these opportunities. Green growth strategies are needed because the impacts of economic activity on environmental systems are creating imbalances which are putting economic growth and development at risk. No-one can deny that increased efforts to address climate change and biodiversity loss are needed. Natural capital, encompassing natural resource stocks, land and ecosystems, is often undervalued and mismanaged. The absence of coherent strategies to deal with these issues creates uncertainty, inhibits investment and innovation, and can thus slow economic growth and development.
This underscores a need for better ways of measuring economic progress to be used alongside GDP which more fully account for the role of natural capital in economic growth, human health and well-being.
Moreover, the situations within the SIDS will demand different responses, clear and predictable policy signals to investors and consumers. We need to deliver on benefits from greening growth in the form of economic gains, from eliminating inefficiency in the use and management of natural capital, jobs innovation and the emergence of green markets and activities. This is possible !
Faced with the social and economic consequences of a deepening world recession, it may seem a luxury to consider policies that aim to reduce carbon dependency and environmental degradation. Such a conclusion is both false and misleading.