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The Pathway to Sustainable Development

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The Pathway to Sustainable Development Inclusive Green Growth: The Pathway to Sustainable Development As the global population heads toward 9 billion by 2050, decisions made today will lock countries into growth patterns that may or may not be sustainable in the future. Care must be taken to ensure that cities and roads, factories and farms are designed, managed, and regulated as efficiently as possible to wisely use natural resources while supporting the robust growth developing countries still need. Economic development during the next two decades cannot mirror the previous two: poverty reduction remains urgent but growth and equity can be pursued without relying on policies and practices that foul the air, water, and land. Inclusive Green Growth: The Pathway to Sustainable Development makes the case that greening growth is necessary, efficient, and affordable. Yet spurring growth without ensuring equity will thwart efforts to reduce poverty and improve access to health, education, and infrastructure services. Countries must make strategic investments and The Pathway to Sustainable Development farsighted policy changes that acknowledge natural resource constraints and enable the world’s poorest and most vulner- able to benefit from efficient, clean, and resilient growth. Like other forms of capital, natural assets are limited and require accounting, investment, and maintenance in order to be properly harnessed and deployed. By maximizing co-benefits and avoiding lock-in, by promoting smarter decisions in industry and society, and by developing innovative financing tools for green investment, we can afford to do the things we must. ISBN 978-0-8213-9551-6 THE WORLD BANK THE WORLD BANK SKU 19551 GG_i-xiv.indd ii 5/8/12 1:02:10 PM Inclusive Green Growth The Pathway to Sustainable Development GG_i-xiv.indd i 5/8/12 1:02:10 PM GG_i-xiv.indd ii 5/8/12 1:02:10 PM Inclusive Green Growth The Pathway to Sustainable Development GG_i-xiv.indd iii 5/8/12 1:02:10 PM © 2012 International Bank for Reconstruction and Development / International Development Association or The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org 1 2 3 4 15 14 13 12 This volume is a product of the staff of The World Bank with external contributions. The fi ndings, inter- pretations, and conclusions expressed in this volume do not necessarily refl ect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judg- ment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to the work is given. For permission to reproduce any part of this work for commercial purposes, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Offi ce of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: [email protected]. ISBN (paper): 978-0-8213-9551-6 ISBN (electronic): 978-0-8213-9552-3 DOI: 10.1596/978-0-8213-9551-6 Cover design: Richard Fletcher, Fletcher Design. Library of Congress Cataloging-in-Publication Data has been requested. GG_i-xiv.indd iv 5/8/12 1:02:11 PM Contents Foreword . xi Acknowledgments . xiii Abbreviations . xv Overview . 1 Greening growth is necessary, effi cient, and affordable . 4 But obstacles are plentiful, and green growth is no substitute for good inclusive growth policies . 12 The way forward: Good and inclusive growth policies tailored to real-world challenges . 15 Conclusions . 23 Notes . 25 References . 25 1 An Analytical Framework for Inclusive Green Growth . 29 Why not grow now and clean up later? . 30 Delaying action can be costly . 32 Is green growth really possible? The analytical basis . 34 A real-world framework for green growth . .36 What about welfare? . 39 Trade-offs and synergies between green policies and growth . 40 Notes . 41 References . 42 2 Infl uencing Firms, Consumers, and Policy Makers through Market and Nonmarket Mechanisms . 45 Incentivizing: Providing effective market signals to spur green growth . 47 Informing and nudging: Using information and framing to infl uence economic actors . 52 Imposing: Using rules and regulations . 58 Notes . 60 References . 60 v GG_i-xiv.indd v 5/8/12 1:02:11 PM vi CONTENTS 3 Green Innovation and Industrial Policies . 65 Innovation policies: Tailoring mixes of instruments to a country’s innovation potential . 67 Green industrial policies: Ensuring that the standard caveats apply . 80 Notes . 86 References . 86 4 Human Capital: Implications of Green Growth Policies for Labor Markets and Job Creation . 91 Green policies may create jobs, but are no substitute for sound labor markets . 92 But environmental regulation need not kill jobs either . 96 Smoothing the transition to greener growth paths for the labor market . 99 Notes . 102 References . 102 5 Natural Capital: Managing Resources for Sustainable Growth . 105 Extractable renewable resources: Defi ning property rights and moving up the value chain . 107 Cultivated renewable resources: Innovation, sustainable intensifi cation, and integrated landscape approaches . 113 Nonprovisioning services: Creating knowledge and markets for economic valuation . 117 Nonrenewable resources: Promoting rent recovery and reinvestment . 123 Notes . 126 References . 127 6 Physical Capital: The Role of Infrastructure in Green Growth Strategies . 133 Infrastructure as the heart of green growth . .134 Recognizing the need for effi ciency: Meeting large unsatisfi ed infrastructure needs within tight fi scal constraints . .139 Minimizing the potential for regrets and maximizing short-term benefi ts . 149 Notes . 149 References . 150 7 Crafting a Green Growth Strategy. 153 The challenges of developing a green growth strategy . .154 A step-by-step process for crafting a green growth strategy . 158 Uncertainty and the need for robust decision making . 165 Notes . 169 References . 169 Boxes O.1 What is the aggregate economic support to the (over)use of natural capital? $1 trillion to $1.2 trillion annually . 9 O.2 The many ways in which green policies can contribute to growth . 11 O.3 Why “grow dirty and clean up later” is misleading . 16 O.4 Morocco: The importance of political economy . .18 O.5 “Green” cash transfers are helping poor communities in the Brazilian Amazon . ..
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