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Opportunities for Greening the Vanuatu Economy - an Assessment by the Pacific Institute of Public Policy

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Opportunities for Greening the Vanuatu Economy - an Assessment by the Pacific Institute of Public Policy Opportunities for greening the Vanuatu economy - an assessment by the Pacific Institute of Public Policy Foreword The Pacific's leaders and policymakers have come to realise that continued development is premised on addressing convergent economic, environmental and social challenges. The Pacific faces a number of challenges, with energy, food and financial shocks, persistent economic inequities, and climate and environmental issues having dramatic impacts throughout the region. Under business as usual, these challenges will threaten recent progress made in reducing poverty and improving livelihoods. Green growth offers a development model to mitigate these issues while strengthening economic growth and environmental protection. The green growth model is of particular relevance to Vanuatu because of the importance of environmentally vulnerable sectors, such as tourism and agriculture, to economic development. Recalibrating economic growth with sustainable development objectives may help build resilience in these sectors while opening new opportunities in other sectors for improving the livelihoods of people throughout Vanuatu. While many elements of the broader green growth model are relevant for Vanuatu, moving toward a Pacific model of growth is also essential. Small Island Developing States (SIDs) face unique and special challenges: they are environmentally and economically vulnerable, and their geography and lack of resources limit development opportunities. The report will also echo the calls that green growth in the region is also based on marine resources. The idea of a 'green economy in a blue world' was put forward by the Pacific to -- Pacific Institute of Public Policy GREEN GROWTH ASSESSMENT - VANUATU - 1 - emphasise the importance of sustainably utilising the region’s considerable marine resources to achieve strong economic growth and environmental protection. The United Nations tasked the Pacific Institute of Public Policy (PiPP) to produce the report, with the aim of identifying opportunities and constraints to achieving green growth in Vanuatu. This is an important aim, especially because of the strong poverty reduction potential that green growth offers. But most importantly, because green growth offers practical and feasible solutions to a number of the economic, environmental and social challenges faced by Vanuatu, which many prior development models have espoused, but failed to achieve. This report will assist with building the foundations for this transition and provide ideas for how Vanuatu can maximise sustainable development opportunities while overcoming blockages. But most importantly, the report will be useful for the Pacific's preparations for the United Nations Conference on Sustainable Development (Rio+20). The first Earth Summit held in Rio de Janeiro in 1992 gave rise to three key United Nations institutions for the advancement of sustainability: the Convention on Climate Change, the Convention on Biodiversity and subsequently the Convention to Combat Desertification. The world will meet again this year to discuss sustainable development at Rio+20, but with a renewed focus on green growth. The Rio+20 process, and the international community, can assist the Pacific by reaffirming financial assistance for the implementation of green growth and making progress on strengthening international management of the environment, in particular the management of marine and coastal resources. In addition, Vanuatu and other countries of the Pacific can assist the international community in shifting to improved management of marine and coastal resources by sharing accumulated experience of managing the blue economy. How we went about it The report highlights the opportunities for green growth at the national level and within various key sectors to support sustainable development and poverty reduction. Using economic, environmental and social analysis alongside timely and relevant knowledge gained from consultations with key stakeholders, and Pacific Institute for Public Policy expertise on Vanuatu, this report provides a detailed and thorough overview of green growth in the Vanuatu context. The report is organised into five sections: The first section outlines the green growth model and its application to the Pacific, with a particular emphasis on the importance of marine resources as drivers of green growth in SIDs. The second section evaluates the feasibility of using five green growth paths to achieve sustainable development in Vanuatu. Within this framework, the degree of traction and blockages expected under each framework are described. The third section identifies opportunities for green growth at the national level and within the various key sectors to support sustainable development and poverty eradication. The fourth section outlines the local, regional and international mechanisms required to mainstream green growth opportunities into national policy and implementation processes, and comments on the implications of Rio+20 for mainstreaming green growth. The concluding section highlights the important findings of the report and puts forward recommendations on how to best achieve green growth in Vanuatu. -- Pacific Institute of Public Policy GREEN GROWTH ASSESSMENT - VANUATU - 2 - This report does not seek to present every aspect of the green economy assessment in Vanuatu – instead it aims to focus the reader on a succinct analysis of the opportunities and constraints, and provide practical policy recommendations for those involved in the implementation of green growth in Vanuatu. Those who seek a deeper understanding of the green growth model in the Pacific context are encouraged to read the background material referred to throughout the report, and listed in the references and further reading section. Additional material, including a table outlining the opportunities and constraints to achieving green growth, can be found in the appendices. -- Pacific Institute of Public Policy GREEN GROWTH ASSESSMENT - VANUATU - 3 - 1. Introduction What is green growth? Green growth is a model of development that advances environmentally sustainable economic progress to foster socially inclusive development. This is achieved by realigning economic growth aims to achieve concurrent environmental sustainability objectives. Green growth requires a systemic approach which builds synergies between economic growth and environmental sustainability, and mutually reinforces policies to achieve these aims. Most importantly, the green growth model explicitly recognises economic, social and environmental systems as complementary, not conflicting. Therefore green growth strategies can potentially reduce poverty and achieve social progress, while simultaneously increasing the supply of natural assets. Green growth strategies can also provide a more resilient growth model that is more capable of withstanding external shocks, which are becoming increasingly costly and frequent with growing interconnectedness between countries. The triple food, fuel, and financial crisis in 2008 resulted in higher food and fuel prices and a sharp decline in economic growth, all of which threatened poverty reduction efforts in Vanuatu. Implementing green growth can mitigate the impact of global shocks through reducing reliance on fossil fuels, strengthening local food systems, and increasing economic opportunities through focusing on green economic opportunities. The transition to green growth requires a clear vision, measurable targets and monitoring processes. This vision is best articulated in long-term government planning documents, and achieved through the mainstreaming of green growth across government processes. Also necessary are targets and indicators that provide information to monitor the success of green growth policies. Achieving green growth will require a concerted effort, facilitated by the government, and backed by the private sector and civil society. Coordinated action between stakeholders will strengthen environmental and economic governance and increase the likelihood of achieving an equitable, stable and inclusive outcome. In the Pacific context, strengthening regional and international cooperation is also essential, particularly for improving fisheries management and adapting to climate change. Many environmental issues, such as fisheries decline and climate change, are transboundary in nature – and thus cooperation between nations is essential for developing effective and efficient solutions. The market is another key facilitator of the green economy, but appropriate regulation is required for the market to act efficiently and effectively. Investing in natural capital may result in long-term benefits, but may require a significant upfront cost that will need to be provided by the government and other key actors. Moreover, enhancing the level of green investments will also require reducing the price gap between market prices and the economic value of ecosystem goods and services. The current system creates perverse incentives, as decisions are made based on individual short-term benefits and costs rather than long-term social impacts. Such market failures can be corrected by policy changes, including by introducing eco-taxes, which tax destructive activities such as water pollution, and using fiscal transfers to increase the supply of environmental assets, for example through paying an island village to develop a marine protected area. Pacific island countries (PICs) have distinct resource bases and particular environmental
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