Working Towards a Balanced and Inclusive Green Economy

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Printed on recycled paper. Working towards a Balanced and Inclusive Green Economy:

A United Nations System-wide Perspective

Prepared by the Environment Management Group

United Nations Geneva

Table of Contents

Foreword 6 Preface 7 Executive Summary 8 Introduction 25 Part I – Conceptual and institutional framework for action 28 Chapter 1: The green economy as concept 30 Chapter 2: Institutional support from the global to local level 42 Part II – Investment in physical infrastructure and dynamic growth 50 Chapter 3: Green stimulus and beyond 52 Chapter 4: Infrastructure in a green economy 60 Chapter 5: Green and inclusive growth strategies 70 Part III – Investment in human capital and societal infrastructure 82 Chapter 6: Making the green economy work for the poor 84 Chapter 7: Investing in social capital 92 Chapter 8: Investing in human capital 100 Part IV – Enabling policies and measures 110

Chapter 9: Private finance 112 Chapter 10: The role of international financial institutions 120 Chapter 11: Full-cost pricing 130 Chapter 12: Regulatory instruments 136 Chapter 13: Sustainable trade and green markets 146 Chapter 14: Innovation and technology 152 Chapter 15: Indicators of transformation 162 Chapter 16: Conclusions 170 References 177 Annex 1: Agency programmes, initiatives for green innovation and technology 182 Annex 2: United Nations programmes, initiatives on the social dimensions 190 of a green economy Annex 3: United Nations regional programmes, initiatives on the green economy 196 as Rio+20 theme Abbreviations and Acronyms 198 Acknowledgements 200 Foreword by the United Nations Secretary-General

In the past four years, multiple crises – financial, economic, food, energy – have caused governments and other bodies to look more critically at systemic and structural issues related to national and global economies. Responses include a revived debate on the meaning of economic growth and the necessary measures to more effectively and broadly improve the quality of life of citizens. Civil society and the private sector alike are eager to be involved in this debate and in public decision-making.

The agencies, funds and programmes of the United Nations System, including the Bretton Woods Institutions, are ready and qualified to support governments and others in identifying and pursuing long-term answers. Operating from the global to local level, we are well-positioned to facilitate the exchange of knowledge on current trends, the drivers behind them and the innovative solutions that are emerging from different regions.

United Nations entities are keenly aware of the resource challenges that countries face in meeting the needs of a growing and urbanizing world population. The human and economic toll of natural disasters and the volatility of commodity prices reflect worrying trends in global climate change, the growing scarcity of some natural resources and the decline of many ecosystems.

This report highlights how these challenges can and must be addressed as part of integrated development models that focus on poverty and human well-being. Only such an integrated approach will lay lasting foundations for peace and sustainable development. I welcome the contributions from throughout the United Nations System, and the commitment to work with governments and others to improve integrated delivery in support of sustainable development.

The Rio+20 United Nations Conference on Sustainable Development in 2012 is a generational opportunity to act on commitments made two decades ago, while adapting our approach to current realities. I thank all United Nations entities for their contributions to meeting this responsibility, and I invite governments and others to work with us in making Rio+20 a success that will benefit all. Economic recovery has to be based on sound, sustainable foundations. Green growth solutions are illustrative of what such an action-oriented path to sustainable development may look like.

Ban Ki-moon United Nations Secretary-General

6 Preface by the UNEP Executive Director

Developing an inter-agency report on the green economy has challenged members of the United Nations Environment Management Group (EMG) to define their contributions to an approach that is not predicated on just the environmental pillar but all three pillars of sustainable development. It continues to challenge the agencies, funds and programmes of the United Nations System, including the Bretton Woods Institutions (BWIs), to reflect strategically about the way in which their work programmes address basic developmental and resource challenges confronting economies worldwide.

This report builds on the statement of June 2009 by United Nations entities on the “Green Economy: A Transformation to Address Multiple Crises” and provides a common reference for United Nations agencies on the meaning and implications of a green economy approach including the possibilities such an approach brings in terms of improved public-private collaboration.

It highlights key messages from our evolving understanding of what is required to meet current economic and resource challenges. This includes the message that a green economy has to be a people-centered economy. The sustainable use of our natural resource base is inherently about improving the daily lives of billions of people, including those living in poverty, those who are unemployed, the working poor and youth.

Conserving and reinvesting in the world’s ecological infrastructure is not simply a goal in itself. It is about the pragmatic realization that our current models are undermining the very resource base of our societies. There is ample evidence today that business as usual is simply not an option for the decades and generations to come.

The report also highlights the fact that policies and policy mixes need to be reoriented and implemented better. The need for regulatory reform is evident, ensuring that market signals are better aligned with the sustainability imperative.

This report, the work of 40 entities, is a key contribution from the EMG to the preparations for the United Nations Conference on Sustainable Development 2012 or Rio+20. It is above all a practical guide for improving internal coordination, joint planning, financing and integration of work programmes in order to promote a transition to an inclusive Green Economy in respect to sustainable development and poverty eradication.

I encourage readers and decision makers in public and private institutions to make use of its analysis and findings alongside the overview of green economy-related services provided by the United Nations and BWIs.

Achim Steiner United Nations Under-Secretary-General Executive Director of the United Nations Environment Programme Chair of the Environment Management Group 7 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective Executive Summary

Introduction

In September 2009 the United Nations Environment Management Group agreed to establish an Issue Management Group on Green Economy. This group was tasked to prepare a report to assess how the United Nations system could coherently support countries in transitioning to a green economy. The report is expected to facilitate a common understanding of the green economy approach and the measures required for the transition. The report is also envisioned to contribute to the preparatory process for the 2012 United Nations Conference on Sustainable Development (UNCSD or Rio+20) where “the green economy in the context of sustainable development and poverty eradication” is one of the two themes; the other is “the institutional framework for sustainable development”.

A green economy is an approach to achieving sustainable development. It requires breaking away from resource-intensive growth models, a transformation of consumption and production into more sustainable patterns and increased value added created and reinvested in resource-rich supplier communities in the developing world. The context for this approach is the increasing resource intensity of consumption in developed countries even though their production is becoming less resource intensive, which implies the shifting of environmental impact to other countries through international trade. At the same time, the resource intensity of both consumption and production in developing countries may increase in absolute terms in their industrialization process. These trends tend to exacerbate resource constraints and break the planetary boundaries.

A broader context is the projected population growth, which further raises the stakes in poverty reduction efforts. These efforts depend on higher consumption and production. Without appropriate policies in place, population growth will further significantly increase pressures on all natural resources. The likely growth of the world population from 7 billion today to over 9 billion by mid century requires a considerable increase in economic output to ensure food security, reduce poverty, raise living standards and create full, productive and remunerative employment for the populations (UNDESA 2011). Demographic change and urbanization not only heighten the need for a swift transition to a green economy, but also call for policies to address population dynamics within a human-rights-based framework. These policies, most notably, include universal access to reproductive health care and family planning as well as the empowerment of women and appropriate investments in education, especially for girls and women, who are too often left behind.

In these contexts, a green economy requires the inclusion of the marginalized in all development processes. It also requires the reduction of gaps between developing and developed countries and regions in labour productivity and in the capacity to generate and have access to technology and scientific knowledge. It requires bolstering the capacity of developing countries to develop, review, and implement science, technology and innovation policies that are oriented towards green solutions to the climate, food and energy crises. This includes strengthening science education, enhancing research and development capacities, and fostering innovation through South–South Cooperation, North–South

8 A United Nations System-wide Perspective

Cooperation, and public-private partnerships. It is particularly important that commodity- dependent countries have access to new green opportunities to diversify their economies.

Specifically, in a transition to a green economy, public policies will need to be used strategically to reorient consumption, investments and other economic activities – in line with domestic development agendas and contexts – towards:

• Reducing carbon emissions and pollution, enhancing energy and resource efficiency and preventing the loss of biodiversity and ecosystem services, including the development of efficient, clean and low environmental impact technologies, buildings and transport infrastructure; investments in renewable energy; application of the life cycle approach1; promotion of environmental goods and services; sustainable sourcing of materials; and the maintenance and restoration of natural capital consisting of land, soil, forests, freshwater, the oceans, marine resources, wild fauna and flora and other biodiversity components.

• Improving access to energy, food, freshwater, biological resources, sanitation services, public health and health care, new jobs, labour protection, social protection systems, information and communication technologies (ICTs) and training and education including education for sustainable development and the promotion of sustainable consumption.

Priorities should be given to developing public policies that meet social, environmental, and economic objectives, that focus on sustainable livelihood approaches, that increase access to services for the marginalized and that bring about the required structural change associated with a green economy transformation. But a green economy is not a one-size-fits-all path towards sustainable development. From its dynamic policy toolbox, decision makers – local or national – can draw ideas coherent with their specific sustainable development agendas and contexts.

Proper incentives provided through economic instruments, regulations, sound framework conditions for innovation and technology diffusion, distributional policies and voluntary initiatives can help channel investments – public and private – towards targeted sectors and enhance the effectiveness and fairness of such investments. They can also affect incentives and public awareness, and thereby contribute to behavioural changes in production, consumption and lifestyles. The mix of public policies for a green economy will differ across countries based on their specific socio-economic conditions, institutional settings, resource endowments and environmental pressure points (OECD 2011a). All countries, however, stand to gain from pursuing a green economic transformation, achieving direct economic gains through enhanced resource productivity and new sources of growth and jobs from innovation and the emergence of green markets and activities. In certain economies, a major development benefit of moving towards a green economy is manifested in greater human health and well-being as a result of lower pollution.

1 In the context of environmental protection, the life cycle approach means considering and addressing the environmental impacts of a product throughout different stages of its life, from design to disposal.

9 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective Investing in physical infrastructure and target sectors

The call for a green economy comes during a global financial and economic crisis to which many governments have responded with stimulus packages including particular provisions for infrastructure development. As governments seek to scale up the implementation of their provisions, these stimulus packages and their green components are paving the way for longer-term policy reform and infrastructure development. They hold the potential to design new growth paths and to avoid locking capital into inefficient and polluting technologies.

Ongoing systemic problems such as global climate change give the greening of infrastructure additional importance. In developing countries, the need for investments in greening infrastructure could reach US $264-$563 billion by 2030 with an additional US $30-$100 billion for climate adaptation (World Bank 2010a). If these investments are made, it could mean new jobs, new incomes and better health while reducing households’ and countries’ energy bills in the long run, lessening the fiscal burden from unemployment and health payments and providing new business opportunities. The Green Climate Fund agreed in Cancun in December 2010 (with an expected launch in 2013) and the developed country commitment to a goal of jointly mobilizing US $100 billion in public and private funds per year by 2020 as financial support for developing countries can reduce the infrastructure funding gap once operational.

Because of the valuable services they provide, healthy ecosystems – both terrestrial and marine, wild fauna and flora – and the underlying biodiversity play the role of infrastructure as well. Though often unacknowledged, that role is all the more critical in cities and city-regions where the majority of humans live and the fastest economic growth continues to occur. Their maintenance or restoration – including for ecosystem-based climate adaptation and species management – should be considered as a priority for investments.

The greening of infrastructure – including the buildings, energy and transport sectors, which are significant consumers of resources and emitters of greenhouse gases (GHGs) – is urgent as emerging economies and developing countries will build the bulk of their infrastructure in the next few decades. Strategic planning in city-regions is critical for piloting innovations and delivering infrastructural transitions at an increased scale. Given the substantial inertia and “committed emissions” of infrastructure investments, which would lead to the lock-in of unsustainable fossil fuel consumption patterns, delaying action in developing countries by 10 years could result in doubling the amount required to mitigate GHG emissions and make climate adaptation very costly (World Bank 2010a).

Investing in the greening of infrastructure, however, must leverage funding for broader investment needs in developing countries estimated at US $1.0–$1.5 trillion per year, only about half of which has been met.2 In the absence of adequate funding for adequate infrastructure, the deployment and use of individual power generators and

2 This represents 5-8 per cent of developing countries’ Gross Domestic Product today, a rough estimate of what developing countries need to spend annually on infrastructure to move towards universal coverage and to deliver the infrastructure service needed for economic growth. For a full discussion of the difficulties of estimating infrastructure investment needs and the methodologies to do so, see Fay and others (2010).

10 A United Nations System-wide Perspective

batteries, unregulated wells and open drains carries significant social, environmental and economic costs. Tackling these issues requires scaled-up and accelerated international cooperation, innovative technologies, financing mechanisms, integrated city-regional spatial planning and delivery models including decentralized power generation sourced from solar and wind, which could generate multiple benefits at a relatively low cost. By transitioning now, developing countries have the potential to avoid costly retrofits.

Beyond infrastructure, the greening of agriculture, industry (including mining or extrac- tive industries) and services is also crucial for satisfying demands of an urbanizing global population for higher living standards while adjusting to increasing environmental constraints. In the agriculture and food sectors, investments should aim at improving food and nutrition security and livelihoods while reducing emissions and other negative environmental impacts along the entire food chain through:

• Reducing farm-to-table transport distances

• Sound soil and nutrient management, including reduced use of chemical fertilizers and pesticides and promotion of organic agriculture

• Efficient harvesting and water use

• Reducing the environmental impacts of animal husbandry

• Enhancing production system resilience and associated biodiversity functions such as pollinators and natural pest predators

• Enhancing vulnerable community resilience through livelihood protection, development and productive safety nets interventions

• Strengthening market and risk management opportunities for the most vulnerable

• Intensifying transformational landscape interventions including through climate-smart agriculture approaches

• Conserving genetic resources

• Reducing post-harvest losses

• Improving processing

• Sustainable diets

• Reducing food waste at final sale and consumer levels.

11 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

Making these investments employment-intensive will benefit workers, communities and local enterprises. Some of the priority areas requiring policy attention include: increasing productivity in a sustainable manner, in particular by according a higher priority to research and development, innovation, education, extension services and information; ensuring that well-functioning markets provide the right signals and, in particular, that prices reflect the scarcity value of natural resources as well as the positive and negative impacts of their use; establishing and enforcing well-defined property rights so as to ensure sustainable use (OECD 2011b); and enhancing access by the poorest to agricultural inputs, including credit and insurance, as well as to food and nutritional security at an affordable price.

In the industry sector, investments in renewable energy technologies and more resource- and energy-efficient production processes could generate multiple benefits, but distributional effects need to be taken into account with an emphasis on improving access to cleaner technology and employment opportunities. Apart from renewable energy, investments in the broad category of environmental goods and services sector ranging from clean production processes, low impact logistics and material-saving packaging to natural products and services from ecosystems including the often neglected oceans also have a potential for generating multiple benefits.

The global environmental markets were projected to reach US $688 billion in 2010 and just under US $800 billion by 2015 (DEFRA 2006). As demand for environmental services, equipment and technologies has been increasing, mainly pushed by regulatory demands in developed countries, the environmental industry has become a dynamic growth pole in OECD countries. This market provides important opportunities for small and medium-sized enterprises (SMEs).3 The greening of industry holds the potential for opening up vast new markets such as services in the prevention and management of waste and markets created through the application of life cycle approaches.

In the service sector, ICTs as applied, for example, to intelligent transport networks and smart grids can become enablers of resource efficient development. While intelligent use of ICTs can help industries and consumers to do more with less, the sound management of electronic waste poses new risks and opportunities. A growing number of transport sectors are also scaling up their responses to climate and related risks and opportunities. In the aviation sector, substantial investments are needed to scale up the production of fuels from sustainable biomass or renewable oils to commercially viable levels for meaningful uptake by the sector while reducing the emissions of GHGs, par- ticulate matter and fuel sulphur content.

Payments for ecosystem services (PES) is a tool used by many sectors, notably agriculture and forestry, to promote the management of land resources and provide the necessary incentives for restoring rural livelihoods and for rehabilitating damaged ecosystems. It aims at adapting to and mitigating against climate change and at preserving biodiversity or reducing its loss. It is also increasingly used for income generation in rural areas and, thus, can support the transition to a green economy. Standards can be voluntary through, for example, environmental labels that are in demand by environmentally aware consumers willing to pay price premiums for quality and environmental friendly products.

3 See for example UN-ESCWA (2011).

12 A United Nations System-wide Perspective Investing in human capital and societal infrastructure

At the heart of the green economy approach is the desire to improve human well-being and social equity, which implies targeted investments in human and social capital on top of investments in natural capital and green physical capital (e.g., clean technologies). A green economy must contribute to the United Nations Millennium Development Goals (MDGs), which are likely to be pursued beyond their 2015 target year with a continued focus on enhancing the access of the poor, women and other vulnerable and marginalized segments of society to services, resources and opportunities, as well as supporting necessary social transformations. The United Nations Millennium Project projected the cost of meeting the MDGs in all countries to amount to US $121 billion in 2006 and US $189 billion in 2015 (in 2003 US dollars).4 In the global transition towards a green economy, these financing gaps must be addressed in synergy with the investments needed for the greening of infrastructure and other economic sectors. Poverty reduction policies should be formulated with a view to encouraging sustainable consumption and production patterns and establishing a green path for future development.

Transitioning to a green economy requires a fundamental shift in the way we think and act. For this to happen, investments in people’s capacities and the fulfilment of their entitlements are needed. With greater education, training, information, awareness, understanding and participation in decision-making processes comes greater ownership and responsibility to take action at a grass roots level and change individual and collective behaviour and production/consumption patterns. Investments and technological progress are important in moving towards a green economy, but equally important are awareness, motivation and empowerment of individuals and communities.

To break the cycle of poverty and over-exploitation of resources, a firm commitment is needed to make long-term investments in quality education and training. Education for Sustainable Development (ESD), including climate change education, is a particularly important part of quality education. It provides people at all levels of education, in particular youth, with the skills, competencies and knowledge needed to prepare for green jobs and to change unsustainable consumption and production patterns. It must, therefore, be integrated into educational curricula at all levels and in all educational settings. Communication and media, including the generation of information on sustainable use of resources for poverty reduction and access to such information is also important. Exclusion and inequalities linked to wealth, gender, ethnicity, language, location and disability are holding back progress in providing people with basic education. Girls are disproportionately affected.

In addition, culture must be an integrated part of a green economy transition. Sustainable tourism, cultural as well as creative industries and heritage-based urban revitalization are powerful economic sectors that generate green employment, stimulate local development and foster creativity. Local and indigenous knowledge systems and environmental practices must also be taken into account as they provide valuable insight and tools for tackling ecological challenges, preventing biodiversity loss, reducing land degradation and mitigating the effects of climate change.

4 See UN Millennium Project, Investing in Development, Chapter 17, United Nations (2005). The investments considered in the MDG needs assessments are hunger, education, gender equality, health, water supply and sanitation, improving the lives of slum dwellers, energy and roads.

13 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

A green economy and green jobs present a significant opportunity to overcome poverty and inequality by creating more and better jobs. This can be a major contribution to inclusive growth. A transition to a green economy can lead to net gains in employment, not only in green jobs but across the economy compared to the unsustainable conventional growth path (UNEP 2011). It is thus not necessary to chose between the environment on the one hand and employment and economic growth on the other. In order to address the root causes of poverty and inequity, however, any green economy initiatives should include supporting social policies and measures, in particular for the provision of access to better quality social protection. Coherence between social, environmental and economic policies is needed to maximize opportunities and buffer the social cost of the transition. A transition to a green economy needs to project a vision of a greener as well as a fairer economy and society.

Addressing the unemployment challenge through a green economy approach requires increased investments in sectors with high potential for the creation of productive employment opportunities. It also requires exploiting the potential synergies between different policy objectives. Labour market policies could support targeted investments by focusing on improving the skills of the most vulnerable – women, youth, informal workers, small farmers and the unemployed – with particular attention to imparting skills of value in a green economy.

Measures to support the most vulnerable groups such as access to a social protection floor and social safety nets are essential to achieve social inclusion, to deal with the restructuring towards a greener economy and to adapt to climate change as well as to lift marginalized people out of the poverty trap and include them in a green development path. They are also needed to protect groups that might be negatively affected by a transition towards a green economy as may be in the case of workers in the fossil fuel sectors. Such investments include access to nutritious food, health services, education, training and retraining and unemployment benefits. It requires an improved and sound social and physical infrastructure as well. A just transition also requires social dialogue and civic participation in identifying the employment impacts of green economy policies and to charter the way to economic diversification that generates green jobs.

14 A United Nations System-wide Perspective Enabling the transition towards a green economy

Mainstreaming: Environmental and social integration

A fundamental challenge the green economy poses to all public institutions is to converge, align and integrate work across the social, environmental and economic dimensions of sustainable development. This is in part a failure of institutional collaboration and coherence of policy approaches between different United Nations entities at the international and national levels. The green economy approach requires a new level of mainstreaming that goes beyond business as usual. The linkage of “green” and “economy” with human well-being and social equity as core goals requires renewed commitment to measure and value human and natural assets more appropriately, and to put them at the centre of economic development. It also requires more inclusive and pro- poor growth.

Investments in efficient transport systems, housing, energy efficiency improvements, sustainable sourcing of biological resources and environmentally sustainable agricultural practices, among other priorities, have the potential to generate significant social benefits. For example, household energy investments to replace inefficient biomass/ coal stoves with improved stoves and cleaner fuels as well as household waste-for- biogas production could improve the sanitation and health of 3 billion people and the well-being of women in particular (WHO 2010). These linkages point to the need for an integrated approach, which should provide a basis for prioritizing investments in a green economy. Those investments that generate both environmental and social benefits should be the priorities.

Public and private financing

A global transformation towards a green economy will require substantial financial resources and coherent criteria for their use. Subsidy reforms and ecological taxes can unlock a substantial amount of funds to support a balanced and inclusive green economy transition. If, for example, industrialized countries were to use carbon taxes or auctioned emissions permits to reach the GHG emission targets they pledged in the Cancun Agreements, they could raise as much as 0.6 per cent of their GDP or about US $250 billion in revenues per year by 2020 (OECD 2012). In addition, other forms of carbon finance, PES, green stimulus funds, micro-finance, social responsibility investment funds, green bonds and other local financial innovations have emerged in recent years and can open up the space for large-scale green financing. To further scale up the financing for a green economy, public-private innovative financing mechanisms are needed to tap institutional investors’ capital.

The private sector is a major driving force in many national and local economies alongside farmers, foresters and fisher folks. With its capacity to invest and innovate, the private sector is uniquely positioned to create solutions that can reduce emissions and resource use while generating growth and employment opportunities including for the poor. The bulk of green investments will come from the private sector.

The role of the public sector, however, is indispensable for influencing the flow of private financing and for triggering a green economy transition. Public spending is important for setting the appropriate investment context, institutionalizing more sustainable

15 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective consumption and production patterns, and building the necessary capacity for the transition. Governments, including at the local level, could develop PES schemes, focus on greener public infrastructure and access to food, water, sanitation and energy services as well as on poverty eradication, gender equality and biodiversity and ecosystem conservation and sustainable use. Governments should also use their resources, including through public procurement, to leverage financial flows from the private sector towards green and socially beneficial economic opportunities including at the local level.

Effective green investments and innovation and the adoption and dissemination of green methods of production require good governance. Corruption is a key bottleneck for investments as are the absence of the rule of law, clear regulations, transparency and predictability. A level and transparent playing field will be necessary for a green economy to deliver as required. Governments should involve the private sector in jointly identifying impediments to a green economy and establishing clear, stable and coherent policy and regulatory frameworks to facilitate the integration of social, environmental and governance issues into investment decision-making. At the same time, given the importance of international investment as a vital source of finance and a powerful vector of innovation and technology transfer, governments are encouraged to continue monitoring their investment treaty practices with regard to green economy objectives to ensure that they encourage green investments without leading to green protectionism (OECD 2011c).

The United Nations system and the multilateral development banks have an important role to play in supporting investments in resource efficient development and advancement of sustainable consumption and production. They can provide technical advice and capacity support to governments in the following areas:

• Policy and project design and implementation

• Carbon market development

• The greening of strategic value chains

• Helping countries catalyse investments in energy efficient and climate change mitigation and adaptation by the private sector

• Using a range of instruments to support and fund development of climate-smart agriculture and greener and more resilient infrastructure.

To support the kind of governmental decision-making that will underpin a balanced, inclusive and green transition, however, entities of United Nations system and international financial institutions will need to work together more coherently based on their respective mandates and comparative advantages. To truly contribute to a green economy transition, investments and interventions need to be environmentally sound and socially inclusive to ensure that they are neither harmful to the environment nor disad- vantageous or harmful to the poor and that the continued flow of funding towards education, health and social protection activities is guaranteed.

16 A United Nations System-wide Perspective

Full-cost pricing

Full-cost pricing, which includes full social and environmental costs, is an essential tool for changing investments as well as consumption and production patterns and for motivating innovations. Apart from reflecting social and environmental costs in prices through taxes, full-cost pricing also implies the phasing out of harmful subsidies, such as those on fossil fuels, fisheries, forestry, water use, land use and agriculture. These subsidies not only encourage carbon emissions, resource depletion and environmental degradation, but can also cause trade distortions and strain public finance. Developing and emerging economies are currently providing subsidies to fossil fuel consumption in an estimated amount of US $409 billion per year while OECD countries provide US $45-$75 billion in support to fossil fuel production and use (OECD 2011d). In comparison, government support to electricity from renewable and biofuels globally was estimated to amount to US $57 billion in 2009 (IEA 2011).

Full-cost pricing contributes to a more level playing field between established, “brown” technologies and newer, greener ones. Distributional consequences, especially the impacts on the poor and marginalized should be duly considered when designing and implementing subsidy reforms. United Nations entities can help governments and others to find the most appropriate ways of phasing out harmful subsidies while combining that with the introduction of new incentive schemes to encourage positive steps forward.

Governments need to stimulate inter-ministerial collaboration to communicate the societal implications of under-pricing to all concerned and collectively design fiscal and tax policies as well as policies on how to use the newly generated revenue. Consultations with major groups including trade unions, employers’ organizations and women’s associations on the various policy options for implementing full-cost pricing need to take place in order to decide on options that enjoy the broadest societal support. Such consultations will also help strengthen these groups and facilitate participatory policy dialogues especially where social organizations are weak. Any adverse effects of changes in prices of goods and services vital to the welfare of vulnerable groups must be com- pensated for and new livelihood opportunities provided.

At the international, subregional and regional levels, there is a need for policy coherence and financial and technological cooperation, as countries may not be willing to adopt full-cost pricing unilaterally or in isolation for fear of losing international competitiveness. In spite of this potential collective action problem, which should be addressed at global and regional levels, it is still beneficial for countries to take full-cost pricing measures independently as in the case of the European carbon emission trading system. As commodity prices including fossil fuel prices are generally expected to continue to rise, countries can benefit from the development of resource-efficient technologies and renewable energies even if others continue with business as usual.

Regulatory approaches

To support the transition to a green economy, governments can employ mandatory technical regulations, voluntary standards and information-based instruments. Often, regulatory frameworks are required to support the greening of sectors that rely on natural resources. At the international level, global conventions including, but are not con- fined to, Multilateral Environment Agreements (MEAs), can foster global commitments and promote coordinated activities on key aspects of the green economy agenda. 17 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

In some cases, legislators may choose to adopt domestic regulatory frameworks to further these global objectives. The role of international non-environmental agreements such as on labour standards and human rights in a green economy, however, requires further research.

Regulatory approaches are often taken to support price-based measures or when a ban or binding limitation is deemed necessary to stop certain damaging activities or to bring about behavioural changes. Regulations can also provide enabling conditions and incentives, establish the needed market signals and certainty for businesses to make investment decisions, deploy green technologies, accelerate green innovation and foster clean technology development and diffusion. Information-based instruments, such as labelling schemes and voluntary reporting, which show the environmental and social implications of goods and services coupled with appropriate pricing, can alter consumption habits and promote demand for green and socially responsible goods and services while stimulating suppliers to design and produce such products and services and improve their environmental and social performance.

The success of regulatory approaches hinges on the certainty of policies as well as the quality and credibility of regulatory institutions and their compliance mechanisms, including justice systems. Regulatory institutions need to be transparent, accountable, efficient and designed with a view to minimizing additional costs for business and consumers. Effective compliance mechanisms should be put in place in order to achieve the desired outcomes. Fostering regulatory approaches to support a green economy requires strengthened integrated institutional frameworks and governance. To avoid the proliferation of national regulations and standards, the use of relevant international standards is essential.

In this regard, a number of United Nations entities have been involved in developing international regulations, standards or guidelines to be used as a basis for national regulations or standards to support green economy objectives. Examples are the mandatory emission targets under the Kyoto Protocol, the mandatory measures introduced to reduce GHG emissions from international shipping – the first global mandatory GHG reduction regime for an international industry sector – and the framework developed to reduce GHG emissions from international aviation – the first sector with a shared global commitment to increasing fuel efficiency and stabilizing its GHG emissions in the medium term. It is important that regulations and standards to promote the green economy do not become a source of green protectionism, in line with Principle 12 of the Rio Declaration on Environment and Development. In this respect, the World Trade Organization (WTO) Agreement on Technical Barriers to Trade, while recognizing the important role of standards and regulations for the achievement of legitimate policy objectives, seeks to ensure that they are not discriminatory and do not create unnecessary barriers to trade.

The United Nations system and the Bretton Woods Institutions (BWIs) have an important role to play in supporting the transition to a green economy in the area of regulatory approaches. They can encourage the ratification of relevant international agreements, assist the Parties to implement and comply with related obligations, develop relevant international standards and guidelines, promote good regulatory practice and build capacity, including that of legislators at national and subnational levels to prepare and ensure compliance with regulations and standards in supporting the transition to a green economy. 18 A United Nations System-wide Perspective

Sustainable trade

Trade can expand the markets for green goods and services and diffuse clean and resource-efficient technologies and production methods. It can also transmit the growing environmental and social preferences of firms and consumers. An open, rules-based and non-discriminatory multilateral trading system that provides predictability, security and stability is essential for enabling green investments, innovation and technological change, and for preventing trade protectionism disguised as green economy measures.

Positive steps are needed to take the Doha Round negotiations forward, which could contribute to a transition towards a green economy. These include negotiations on the removal of trade distortions, in particular of harmful subsidies including in fisheries and agriculture, and the elimination or reduction of tariff and non-tariff barriers to environmental goods and services. Support is needed to assist developing countries, especially their low-income producers and SMEs, to identify green export opportunities, develop capacity in the production and export of related goods and services, facilitate access to information, training and education, finance, technologies, and markets and increase their competitiveness. International and regional organization have an essential role to play in this regard.

Freer trade should be tied to important human values, welfare goals and inclusive growth, assisting those developing countries that are marginalized in the global trading system. Trade policy also needs to be accompanied by policies in both the social and environmental spheres.

Innovation and technology transfer

Technological innovation in product design, production processes, service systems and organizational management is essential for reducing negative environmental and social impacts and improving resource efficiency. It is also essential for the development of new products, services and technologies that promote decent work, benefit society and support economic diversification and productivity-enhancing structural change.

Changing user behaviours in resource demanding sectors such as food, housing and mobility, however, requires innovation not only in hard technologies but also in knowledge, management systems and incentive mechanisms, all of which are important attributes of social innovation. The use of ICTs can help generalize access to relevant information in decision-making, anticipate and manage potential risks from new technologies and optimize sustainability and cost-efficiency in all economic sectors, including in workplaces through workers–management collaboration and dialogue. United Nations entities need to scale up support for education and training, small business development, continual improvement in resource efficiency and access to innovative financing. In addition, they should provide practical tools that support intellectual property rights and the critical complementary know-how to enable the transfer, adaptation and widespread use and dissemination of green technologies. It is critical that local actors have ownership of the innovative process and new technologies and that local and indigenous knowledge is part of the change.

19 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

The United Nations system and the BWIs have indeed actively supported technological and social innovations in developing countries. Their activities range from policy advice and policymaking tools to technical and managerial engagement with industries on resource efficiency and cleaner production, financing and marketing support, skill and capacity development and facilitating the development of knowledge networks and platforms. There is, however, a need for improving the delivery of joint, interagency initiatives as well as mainstreaming programmes on the introduction and effective implementation of new technologies and standards including North–South and South– South technological transfer and cooperation that a green economic transition requires. International policy coordination, e.g., through adherence to MEAs and technical and scientific capacity-building in the receiving country are also key for inducing technology transfer and ensuring that markets for innovations are not fragmented across different countries (OECD 2011e).

Assessment and indicators

An integrated policy assessment framework including improved accounting systems and indicators to capture relevant information and measure/monitor progress is an essential part of making the green economic transition towards sustainable development. The policy framework – based on a wide range of assessment approaches and tools – should include the participation of all relevant stakeholders.

On accounting systems and indicators, an important starting point is the United Nations System of Environmental-Economic Accounting (SEEA), which will become an internationally agreed statistical framework in 2012. It is important that policy makers begin to use this system systematically, taking into account the effects of economic activities on all forms of capital when making policy decisions. It should be noted, however, that the SEEA is not designed to fully capture the social implications of economic activities. Dedicated efforts are needed to standardize and publicize social indicators and use them in public policies in conjunction with other indicators.

Building on the SEEA and other relevant initiatives such as the work on resource indicators by the International Resource Panel, the Wealth Accounting and Valuation of Ecosystems, the Economics of Ecosystems and Biodiversity and the work on monitoring progress towards green growth, three interrelated groups of indicators may be considered:

• Indicators that measure the green transformation of key sectors including environmental investments, environmental goods and services and green jobs

• Measures of decoupling economic productivity and human well-being from resource and emission intensity, including eco-efficiency, re-use and recycling, doing more with less, substitution and material flow indicators

• Overall measures of well-being with a particular focus on natural capital, poverty, social equity and social inclusiveness – indicators of how well a green economy has delivered on human-centered development.

20 A United Nations System-wide Perspective

United Nations entities need to improve their ability to contribute to the further development of the SEEA, including programmatic support to institutions in developing economies to improve their capacity to collect, organize, interpret and communicate the relevant data. Public institutions can also learn from experience gained by responsible businesses in defining and applying “core and additional” indicators in their reporting systems and how non-financial information is increasingly linked with financial information in emerging models of integrated reporting. Efforts should also be made to build any new indicator on the basis of existing macro-level indicator sets such as the Human Development Index and indicators for sustainable development. In addition, and importantly, the system of green economy indicators should allow flexibility for countries to develop their own set of indicators that reflect their particular national and industrial circumstances.

The way forward for the United Nations system

Mobilizing expertise

It is important to organize the expertise of the United Nations system including BWIs in a targeted and integrated manner when providing green economy related services to countries. It is also important to ensure that this expertise is delivered in a coherent manner and in accordance with nationally and locally identified challenges and priorities. To accomplish these tasks, it is necessary to sensitize policy and research staff as well as operational staff, at United Nations entities’ headquarters and in their regional and country offices, to the green economy approach, and to develop their capacity to align this approach to countries’ policy frameworks and priorities. In some cases this may require the creation of special units within United Nations entities with expertise in economic analysis to support other experts in defining the economic case and supporting the mainstreaming of environmental and social goals in economic policy programmes.

At the global inter-agency level this expertise is being mobilized through inter-agency mechanisms such as the High-Level Committee on Programming, the Environment Management Group and in a synthesized way directly targeting the work of United Nations Country Teams (UNCTs) and the United Nations Development Group (UNDG). At the regional level the UNDG Regional Directors Team pool resources needed to support UNCTs in their regions.

Regional and subregional cooperation should be enhanced further to support replicat- ing, up-scaling and advancing green economy initiatives, which have been successfully applied in various countries. In this regard, the United Nations Secretariat through the Regional Commissions provides a unique platform for regional dialogues and consensus building. In addition, the Regional Commissions, as the Chairs of the United Nations Regional Coordination Mechanisms, also have the opportunity to mobilize the expertise of the entire United Nations system as well as regional and international institutions and research community outside of the United Nations system.

21 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

Consolidating country assistance frameworks and strategies

Given the intersectoral and inter-agency nature of the green economy transition, it is important that any green economy policy development and programme support by a United Nations entity is demand-driven and coordinated with the work of other agencies through the UNCTs and the cycle of the United Nations Development Assistance Framework. The “Delivering as One” approach being piloted in eight countries and applied in another 24 countries offers opportunities that are particularly noteworthy for the transition to a green economy by ensuring that support to countries in the transition to a green economy is delivered in an integrated manner and through a dialogue with all relevant parts of the host government. The ongoing challenge of improving integration across the three pillars of sustainable development is also one of improved inter- agency collaboration across the global, regional and national levels.

Generating green, efficient and effective financial support at scale

Public resources are getting increasingly scarce, calling for a greater focus of public funds to catalyse larger scale private investments in supporting a transition to a green economy. In many cases private sector investment flows await regulatory reform and the introduction of new measures that facilitate the opening up of new markets in environmental goods and services and the in mitigation of risks. Private sector financial flows seek adequate financial instruments – that incorporate an acceptable risk/return proposition – for investing in the green economy. Promoting country ownership and the alignment of the United Nations system’s programmes and projects with national priorities will be critical. Countries also need support in developing capacities to attract and drive green investments. In addition, there is a need to identify and develop at scale new sources of international funds that support the global transition towards a green economy. Efforts need to be made to explore the potential for an innovative use of Special Drawing Rights,5 other international reserve assets and pools of concentrated assets to serve the aim of financing green economy investments with attractive social as well as private returns and increasing the provision of global public goods.

Nurturing green innovation and mobilizing green technologies

Technology has historically provided the means by which humanity has addressed social and environmental challenges. Policymaking needs to strike a balance between incentivizing investments in new technologies and giving access to the social and environmental benefit of new technologies. Such incentives help mitigate the risks associated with private sector investments in developing new technologies to enable a shift towards a green economy. But these incentives must also be cognizant of the need to maximize the benefit of these new technologies to society as a whole.

5 “The Special Drawing Right (SDR) is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies.” See: http://www.imf.org/external/np/exr/facts/sdr.htm

22 A United Nations System-wide Perspective

The United Nations system must continue to support Member States in their efforts to achieve this balance. It must also continue to provide assistance in the building of innovation infrastructure in developing countries as well as partnerships and capacity to transfer, adapt and disseminate green technologies. Support for efforts to facilitate the use of the global technology database provided by the patent system through the disclosure of technologies in patent applications and tailored search tools such as “IPC Green” can provide an inventory of green technologies that helps both innovation and technology transfer.6 Support should also be provided for initiatives that create an efficient marketplace and platform for the sustainable transfer of green technologies, making available both intellectual property rights and associated know-how needed to implement a technology.

Contributing to the global economic recovery and the success of Rio+20

The world has not recovered from the financial and economic crisis that broke out in 2008–2009. Recent developments indicate a renewed setback in the recovery driven by the unsustainable debt levels of many industrial economies. The lingering crisis is causing damage to the world economy at large with serious implications for poverty, social equity and social stability as well as commitments to environmental sustainability in all countries. Investments in renewable energy and energy efficiency, sustainable transport, sustainable agriculture and other areas, however, hold a great potential to contribute to global economic recovery. By fundamentally restructuring public spending and leveraging private investments towards environmental and social investments, indebted industrial countries can expect to find new growth paths that support fiscal consolidation while contributing to a green economy.

At a global level, Rio+20 provides an important policy opportunity in the near term for the United Nations system to make commitments to support countries, including Least Developed Countries, in their efforts to move towards a balanced and inclusive green economy. Agreement among United Nations entities on core elements of strategy, policy and programmatic services in support of governments’ green economy initiatives will send a powerful signal to governments, businesses and civil society of the determina- tion of the United Nations system to “Deliver as One” on a green economy transformation for sustainable development and poverty eradication.

6 The International Patent Classification (IPC) facilitates searches for patent information. The IPC Green Inventory was developed by the IPC Committee of Experts in order to facilitate searches for patent information relating to environmentally sound technologies.

23 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © Shutterstock / Pedro Salaverría View of a beech forest in the natural park of Moncayo, Spain.

24 A United Nations System-wide Perspective

Introduction

In September 2009, the Senior Officials of the United Nations Environment Management Group (EMG) 7 agreed to carry out an inter-agency assessment report on how the United Nations system and Bretton Woods institutions could more coherently support and assist countries in transitioning to a green economy model. They also expected this assessment report to capture a common understanding of the green economy and to frame a coherent approach to appropriate measures needed to support green economic transitions at the international and country levels. The EMG also created an Issue Management Group on the green economy, which was tasked to oversee the production of an inter-agency report on the green economy.

The decision by the Senior Officials was made in the context of an evolving global financial and economic crisis, accompanied by ongoing challenges related to food, energy, climate, health and natural resource scarcity, among others. It was also based on an earlier inter-agency initiative on the green economy as part of the Joint Crisis Initiatives launched by the United Nations Chief Executives Board. In June 2009, 22 agencies signed a joint statement on the green economy, outlining common positions on the investments and policies needed for countries to respond to multiple crises. Entitled “Green Economy: A Transformation to Address Multiple Crises”, the statement spoke of a “new economic foundation” with new growth poles.

In addition to the above, the prospect of an international conference in follow-up to the Rio 1992 United Nations Conference on Environment and Development as well as the 2002 World Summit on Sustainable Development gave the preparation of this inter-agency report special importance. In December 2009, the United Nations General Assembly adopted Resolution A/RES/64/236, deciding to return to Rio de Janeiro, Brazil, in 2012 and hold the United Nations Conference on Sustainable Development (UNCSD), also known as “Rio+20”. One of the two overall themes for UNCSD is “Green Economy in the Context of Sustainable Development and Poverty Eradication”. At a time of financial and economic crisis, this signaled special interest in the green economy approach as a pathway towards sustainable development and poverty eradication.

This assessment report therefore also aims to contribute to Rio+20, providing an overview of relevant activities by EMG members and a framework for common understanding and mutual support in their work programmes. In parallel to ongoing deliberations among governments and other stakeholders, and in support of the Rio preparatory process, the agencies, funds and programmes of the United Nations system, including the BWIs, have endeavoured to make a joint contribution on how to make the transition to a green economy as one of several inter-agency contributions to the UNCSD. This report captures the various perspectives of the United Nations system and associated institutions involved, helping to define a shared understanding, coherence in approach as well as potential areas for improved coordination and inter-agency collaboration.

7 The EMG is a United Nations System-wide coordination body on environmental issues, established in 2001 pursuant to General Assembly resolution 53/242 in July 1999. Its membership includes the specialized agencies, programmes and organs of the United Nations System, including the secretariats of multilateral environmental agreements, as well as the Bretton Woods institutions and the World Trade Organization.

25 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

The report is organized into four main Parts, covering (i) concepts and institutions; (ii) investing in physical infrastructure and target sectors; (iii) investing in people and human capital and the societal infrastructure; and (iv) enabling policies and measures for the transition.

Part I addresses the framework for action to illustrate the current conceptual and institutional landscape. Chapter 1 covers conceptual issues related to a green economy. It includes an overview of concepts such as green growth, green industry, green jobs and sustainable consumption and production. It also shows the linkage with related concepts associated with core agency mandates, concepts such as human development, health, education and a rights-based approach. Chapter 2 introduces different levels of intervention by United Nations entities, BWIs and regional development banks in pursuing the relevant concepts and goals involved, including ways of improving inter-agency collaboration and integration across economic, social and environmental dimensions.

Part II covers investment in physical infrastructure and target sectors for dynamic growth. Chapter 3 focuses on the green stimulus packages that have been introduced by many governments in response to the financial crisis, in particular their components earmarked for green investment programmes such as the development of appropriate infrastructure. Chapter 4 provides an update on infrastructure needs in developing countries and the urgent need for longer-term investment to deal effectively with services such as the supply of cleaner energy and water. Chapter 5 considers inclusive growth strategies that governments can introduce in order to place their economies on greener and more sustainable growth paths.

Part III focuses on the importance of investing in people and human capital and the societal infrastructure of communities. Chapter 6 explores a new multidimensional approach to poverty and ways of enabling inclusive and pro-poor growth. This includes recognition of the role that the Millennium Development Goals have played in shifting the focus of development to investments in social sector outcomes, while considering shortcomings in the prevalent economic development model. Chapter 7 addresses social capital, including various aspects of health and other socio-economic benefits that follow from investment in cleaner technologies and systems to avoid and reduce pollutants. It also covers the role of culture and the media, including lifestyles and socio- economic benefits from tourism and related activities to protect world heritage sites. Chapter 8 on human capital goes from the societal to the level of individual citizens, addressing their education and ability to participate productively in the economy. This includes the quality of working conditions, social dialogue, social protection and training in making a just transition towards greener industries and green jobs.

Part IV reflects an emerging understanding of policies and measures that are essential for enabling a transition in national economies. Chapter 9 addresses expectations for private finance, including the role of the investment, banking and insurance community. It considers the scale of financing estimated to address challenges such as climate mitigation as well as the catalytic role that public finance can play in higher risk and public interest areas. Chapter 10 highlights activities of the BWIs and regional multilateral financial institutions in facilitating public financing in new thematic areas.

26 A United Nations System-wide Perspective

It signals efforts by global and regional finance institutions to apply new criteria in their investment and lending decision-making. Chapter 11 introduces the role of economic and fiscal instruments, with special focus on full-cost pricing. This includes consideration of how the removal of harmful, trade-distorting subsidies can constitute a triple win for trade, the environment and development. Chapter 12 addresses the use of regulatory approaches, including voluntary standards and information-based instruments. Relevant international standards and multilateral agreements that provide a basic reference for the development of national regulations and standards are also featured.

Chapter 13 examines the role of trade in opening new markets for green goods and services as well as for the development and diffusion of green technologies. It highlights the importance of an open, rules-based and non-discriminatory multilateral trading system, together with good governance and policy coherence. The development and diffusion of cleaner technologies is the subject of Chapter 14, along with an exploration of different modes of innovation. Whatever mandatory or voluntary programmes governments pursue, a green economy transition requires integrated accounting and reporting at the national, economic sector and organizational levels. Chapter 15 focuses on indicators for the measurement and communication of progress, including improved methods for measuring the condition of national economies and tracking progress in human well-being and equity. It covers new systems for analysing and communicating relevant information, and emerging standards set by frameworks such as the United Nations System of Environmental-Economic Accounting.

Chapter 16 provides conclusions, and highlights possible areas for improvement by agencies. Detailed descriptions of relevant activities by United Nations agencies, funds, programmes and Regional Economic Commissions as well as BWIs are provided in the Annexes. These descriptions includes highlights from some of the 40 institutions that contributed to the preparation of this report. The EMG has provided a platform for bringing together these institutions with diverse mandates and focuses to present a broad picture, taking into account multiple dimensions and different sectoral perspectives.

Readers should note that the content of the report does not represent a consensus position, and should not be attributed to the governing bodies of any institution. The report aims to garner the collective expertise and experience across the United Nations System, providing a framework to share relevant information and analysis, promoting common understanding and synergy in approach, as well as new partnerships in exploring the green economy as a pathway to sustainable development. The compilation of the report with full support of Senior Officials from EMG members is testimony to the readiness of the United Nations family to make a coherent response to the challenges that will be addressed at the UNCSD in June 2012 and beyond.

27 INSTITIONAL

ACTION

INNOVATION ACTION

LOCAL GLOBAL INSTITUTIONAL LOCAL LEVEL ACTION FRAMEWORK

INSTITUTIONAL CONCEPTUAL

ACTION

GLOBAL INSTITIONAL

ACTION

INNOVATION ACTION

LOCAL GLOBAL INSTITUTIONAL LOCAL LEVEL ACTION FRAMEWORK

INSTITUTIONAL Part I ConceptualCONCEPTUAL and Institutional Framework for Action

ACTION

GLOBAL Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © FAO / Giuseppe Bizzarri © FAO Urban and peri-urban agriculture to improve nutrition and livelihoods of poor families, Venezuela.

30 Part I – Conceptual and Institutional Framework for Action A United Nations System-wide Perspective Chapter 1: The green economy as concept

1.1 Green economy: Origins and definition

In the 20 years since the term “green At the visionary level, UNEP (2011) economy” was first coined, interest in considers the green economy as: “An green economic principles and actions economy that results in improved human has evolved and intensified. As of 2008 well-being and social equity, while signifi- the global market and financial crisis trig- cantly reducing environmental risks and gered calls in the global policy arena for a ecological scarcities.” Global Green New Deal (GGND). This was the focus of a report commissioned by the At the operational level, the green United Nations Environment Programme economy is seen as one whose growth (UNEP) in 2009.8 Implementation of green in income and employment is driven by economic principles was described as investments that: a long-term strategy for moving national economies out of crisis. The GGND set • Reduce carbon emissions and out three concrete objectives: (i) eco- pollution nomic recovery; (ii) poverty reduction; and (iii) reduced carbon emissions and • Enhance energy and resource ecosystem degradation. The document efficiency proposed a framework for green stimulus programmes as well as supportive domes- • Prevent the loss of biodiversity and tic and international policies, including ecosystem services. support to least developed countries. These include investments in human and Despite continuing concern over global social capital, and recognize the central posi- economic and environmental develop- tion of human well-being and social equity ments in many countries, the pace of the as core goals promoted by growth in income implementation of green stimulus pack- and employment. By definition, green eco- ages and green investments in critical nomic objectives need to be aligned with sectors, such as public transport, remains the sustainable development agenda, high- painstakingly slow. United Nations entities lighting a concern with the balance of risks are thus called upon to identify concrete and scarcities faced by peoples across the opportunities for green economic devel- globe. Affirming sustainable development opment, as well as the positive and as overall or end goal, the green economy proactive role that the United Nations can also represents an attempt to mobilize more play in facilitating such development. action-oriented, mainstream and bottom-up pathways to sustainable development. The approach is based on sound economic analysis of current trends, risks and opportunities as well as on taking stock of national experiences in applying more integrated policy tools effectively.

8 The report was authored by Professor Edward B. Barbier, who in the 1980s co-authored along with David Pearce and Anil Markandya the ground-breaking report “Blueprint for a Green Economy” (Earthscan 1989) for the United Kingdom of Great Britain and Northern Ireland Government. See Barbier (2009) and UNEP (2009). Part I – Conceptual and Institutional Framework for Action 31 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

1.2 Sustainable development organization, which in turn impact on and its objectives the ability of our biosphere to absorb the effects of human activities. In addition, “Human beings are at the centre of con- environmental impact is determined by cerns for sustainable development. They the sheer size of populations as well as by are entitled to a healthy and productive their geographic distribution, living stand- life in harmony with nature.” - Principle ards and consumption patterns. Projected 1 of the Rio Declaration on Environment population growth will raise the stakes in and Development, at the United Nations poverty reduction efforts, pushing higher Conference on Environment and consumption and production levels, and Development (UNCED 1992). absent appropriate policies will further increase pressure on resources. The concept of sustainable development was thrust onto the global stage by the The likely growth of the world population Brundtland Commission in Our Common from 7 billion today to over 9 billion by mid- Future - Report of the World Commission century requires a considerable increase on Environment and Development (1987) in economic output to ensure food security, and defined as “development that meets reduce poverty, raise living standards and the needs of the present without compro- create full, productive and remunerative mising the ability of future generations to employment for all. Demographic change meet their own needs.” not only heightens the need for an alternative economic paradigm, but also calls for The report’s framing of the concept of policies to address population dynamics sustainable development twinned environ- within a human rights-based framework mental action with poverty reduction, and that serves to empower, among others, helped set the stage for the 1992 Earth women and girls. 9 Summit and Rio Declaration. The concept recognized the value of the environment, As governments today seek ways to lead extended the time horizon and empha- their national economies out of financial sized the role of equity. The Commission and economic crisis, the revival of (1987: 43) noted that sustainable develop- growth, and the optimal nature or quality ment embodies two key themes: of such growth, remain topics of intense debate. This is reflected in the findings • The idea of needs, in particular, the of the Commission on the Measurement essential needs of the world’s poor, to of Economic Performance and Social which overriding priority should Progress, chaired by Joseph Stiglitz be given (2009), which examined the need to move beyond the common yardstick of Gross • The idea of limitations imposed by the Domestic Product (GDP). state of technology and social organization on the environment’s ability to Meeting essential needs remains critical, meet present and future needs. as measured by progress in achieving the MDGs. At the same time, persistent gaps Mindful of the message from the Limits to in the health and growth of developing Growth (1972) report by the Club of Rome regions remain. These raise perturbing in the 1970s, the Commission recognized questions in terms of how the world can that limits are not always absolute but best address resource scarcity, includ- also reflect states of technology and ing through more equitable and efficient

9 Cf. historical messages in this respect from the International Conference on Population and Development (ICPD) of 1994 (www.un.org/ecosocdev/geninfo/populatin/icpd.htm) and the World Summit for Social Development (WSSD) of 1995 (http://social.un.org/index/Home/WSSD1995.aspx). 32 Part I – Conceptual and Institutional Framework for Action A United Nations System-wide Perspective

exploitation and sharing of resources. The Showing means of addressing these, concept of the green economy addresses reference has been made to economic this challenge with a substantively new development (growth, jobs), resources and different approach. It aims to deepen (food, energy, water), human develop- our understanding of, and support for, ment (health, education), infrastructure, risk-assessment and decision-making technology and behavioural patterns that more effectively merge environment (both in consumption and production). and economics. Consideration of human well-being and poverty, human needs and equity raises Against this historical context, and with the the goals of human development, health above more action-oriented components and education. in mind, the green economy describes an action-oriented pathway taken by any 1.3.1 Human development, health and country, region or the global community education to implement sustainable development policies – whose ultimate aim is human In the twentieth anniversary edition of its health, well-being and productivity, in the Human Development Report series, the spirit of Principle 1 of the Rio Declaration. United Nations Development Programme (UNDP) affirmed its definition of “human 1.3 Mandates and goals in development” as follows: the context of the green • Human development is the expansion of economy people’s freedoms to live long, healthy and creative lives; to advance other goals The United Nations System includes more they have reason to value; and to engage than 30 agencies, programmes, regional actively in shaping development equita- commissions and funds covering differ- bly and sustainably on a shared planet ent aspects of sustainable development (UNDP 2010a). – from humanitarian-, to business- and trade-related. Most of these activities The United Nations Development interface, often on a day-to-day basis, Programme has added that people are both with the national economic realities, priori- the beneficiaries and the drivers of human ties and decisions of its member states. development, as individuals and groups. The report sees as critical to advancing Considering the ways the United Nations and sustaining progress in human develop- work can support the greening of national ment the identification of principles for how economies in concrete and practical terms governments can promote sustainability, is a natural outgrowth, then, of all of the equity and empowerments that are mutu- other aforementioned United Nations res- ally reinforcing. The report also identifies olutions and initiatives, not to mention the the critical role investment in health and specific goals and objectives embraced education – promoting gender equity – and by individual member institutions. Some of development cooperation in these areas these key linkages (between institutional have played over the past four decades in mission and green economic principles or advancing human development even where objectives) are outlined thematically in the growth has faltered. sections below. The advancement of health is integral to The discussion above noted the concepts human development. As stated by the World of human well-being, needs, social equity, Health Organization (WHO) charter, “health future generations, risks and scarcities. is a state of complete physical, mental

Part I – Conceptual and Institutional Framework for Action 33 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective and social well-being, and not merely the access to “Education For All”. Exclusion absence of disease.” Not only is health and inequalities linked to wealth, gender, improved with advances in human develop- ethnicity, language, location and dis- ment, but improved health promotes human ability are holding back progress to development insofar as a healthy population human development, particularly in least is more productive overall. developed countries. Incentives are also needed to get more girls into school and Environmental degradation and ecosystem to retain them in school, particularly in disruption also takes a human health toll by developing countries where gender parity contributing to the emergence of new dis- has still not been achieved at all levels of eases and resurgence of known contagious education.12 diseases.10 There is thus mounting evidence that green economic activity can have many 1.3.2 Decent work and green jobs clear and quantifiable global health benefits – reducing the burden of disease overall and Initiatives to address employment and the particularly among the poorest and the most quality of working conditions highlight the vulnerable. goal of decent work as promoted by the International Labour Organization (ILO). Equity is an essential building block to a The ILO Director General’s Report to the more holistic concept of health – one which International Labour Conference in 1999 addresses the root environmental causes provided an early definition of what is of disease with preventive actions that meant by the concept of “decent work”: also support sustainable development. The World Health Organization states that • Productive work under conditions of “health development” is directed by the freedom, equity, security and dignity, ethical principle of equity: Access to life- in which rights are protected and saving or health-promoting interventions adequate remuneration and social should not be denied for unfair reasons, coverage are provided (ILO 1999). including those with economic or social roots.11 This reflects the rights-based Since then, the ILO has attributed the fol- approach promoted by the United Nations lowing characteristics to decent work: High Commissioner for Human Rights. Commitment to the principle of equity • It is productive and secure work; ensures that WHO activities aimed at ensures respect of labour rights; health development give priority to health provides an adequate income; offers outcomes in poor, disadvantaged or vul- social protection; and includes social nerable groups. dialogue, union freedom, collective bargaining and participation. For the United Nations Educational, Scientific and Cultural Organization (UNESCO), the equity principle drives the organization’s work to provide equal

10 Currently, WHO (2009) estimates that approximately 25 per cent of all deaths and disease globally are due to environmental pollution, including urban outdoor pollution; indoor smoke from the burning of solid fuels and biomass in poor countries; unsafe water, sanitation and hygiene; chemical exposure; and climate change itself. Most of this burden of disease is borne by poor countries (cf Pruss-Ustun 2005).

11 See http://www.who.int/about/agenda/en/index.html

12 Encouraging young people, particularly young women, to become scientists and engineers is critical in the green economic transition. For example, an estimated 2.5 million new engineers and technicians will be needed in sub-Saharan Africa alone to achieve improved access to clean water and sanitation (see UNESCO, 2010).

34 Part I – Conceptual and Institutional Framework for Action A United Nations System-wide Perspective

Collaboration between UNEP and ILO ways in which employment is likely to be in follow-up to the World Summit on affected as economies become green Sustainable Development (WSSD) has and oriented toward greater sustainability. led to a work stream focused on green This reflected the facts that new jobs jobs. The Labour and Environment will be created, some substituted, some Assembly (WILL 2006), hosted by UNEP eliminated and some transformed. Faced and ILO with the International Trade with this scenario, calls have emerged Union Confederation and International for a fair and just transition in which Employers Organization paved the way those harmed by change are adequately for new research that resulted in publica- assisted and newly created opportunities tion of the Green Jobs Report in 2008. are shared by specific groups of workers, The report defined “green jobs” as: social constituencies and communities. Social dialogue is a critical component • work in agricultural, manufacturing, of the just transition, especially in the research and development, admin- workplace. This entails an important role istrative, and service activities that for joint labour–management committees contribute substantially to preserving and similar bodies. or restoring environmental quality. A key message from the 2008 report was In a more recent analysis, the ILO Institute that green jobs need to reflect decent for Labour Studies has produced a refined work – productive jobs under conditions definition: of freedom, equity, security and dignity in which rights are protected and adequate • Green jobs are those jobs maintained remuneration and social coverage are or created in the transition process provided. Evidence shows, however, that towards a green economy that are green jobs do not automatically constitute either provided by low-carbon intensive decent work, depending on how “green” is industries (enterprises) or by industries defined. Some of these jobs may be dirty, (enterprises) whose primary output func- dangerous and difficult and do not qualify tion is to green the economy (IILS 2011). as green if the concept also embodies labour standards. The dismantling and The Green Jobs report of 2008 recog- recycling of electronic parts by workers nized that there are “shades of green”, under conditions that do not meet rec- considering, for example, ripple effects ognized occupational health and safety that impact the provision of support standards, for example, would not qualify services and that create jobs that are indi- as green. rectly green. Greening holds the prospect of, among others, improving the health Developing the workforce for transformed of the workforce and creating jobs in the or new green jobs requires a new set environmental and pollution abatement of skills and knowledge different from sectors. Greener economic development those promoted in the past. This requires can also help reduce and avoid occupa- reorienting current formal and non-formal tional and environmental diseases and education at all levels to mainstream injuries that seriously hinder workforce sustainable development issues, as pro- productivity both in industrialized and moted by UNESCO as the lead agency for agricultural economies. Acknowledging the Decade on Education for Sustainable the fact that different industries, old and Development. It also requires technical new, are likely to go through their unique and vocational education and training to transitions, the report identified different train and retrain the existing workforce.

Part I – Conceptual and Institutional Framework for Action 35 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

1.3.3 Green industry, goods, services be, nor need be, any policy contradiction and their sustainable trade between upholding and safeguarding an open, non-discriminatory and equitable The United Nations Industrial Develo multilateral trading system on the one pment Organization (UNIDO) has for hand, and acting for the protection of the years sought to promote sustainable environment and the promotion of sustain- industrial development and the goal of able development on the other. producing more with less as captured by the Brundtland Commission in its analysis In recent years, Asian interest in the con- of industry in the 1980s. In its mission cept of green growth has led UNIDO to statement, UNIDO states that it aspires sharpen its focus on green industry, and to to reduce poverty through sustainable describe green industry as having a two- industrial development, adding, “We want pronged agenda: every country to have the opportunity to grow a flourishing productive sector, to • To assist existing and emerging indus- increase their participation in international tries to reduce their energy, water and trade and to safeguard their environment.” materials consumption and to reduce their emissions to water, air and land in The UNIDO statement highlights the an agenda for the greening of industries concepts of growth, productivity, trade lib- meant to ensure that all industries pro- eralization and environmental care. This duce more while using fewer resources includes trade as a facilitator for greening and generating fewer emissions, year markets across the world. The preamble after year, as a continuous improve- to the 1994 Marrakech Agreement that ment process over time established the World Trade Organization recognizes sustainable development as • To establish a vibrant and innovative well as the protection and preservation environmental goods and services of the environment as fundamental goals sector that includes providers of waste of the organization. The WTO provides a management and recycling techniques framework of disciplines to facilitate global and services, producers of environmen- trade and serves as a forum to negotiate tal technologies, providers of energy further trade openness. Freer trade is efficiency and renewable energy tech- not an end in itself. It is tied to crucially niques and suppliers of environmental important human values and welfare monitoring services (Yumkella 2010). goals captured in the WTO founding charter. Among these goals are raising living The UNIDO agenda raises the distinc- standards, ensuring full employment, tion between brown and green sectors, using the world’s resources sustainably between the greening of existing goods and protecting the environment. and services and the development of new markets in goods and services that The WTO members thus established a are explicitly green and labelling as such. clear and explicit link between sustain- The earlier work by UNEP and ILO on able development and disciplined trade green jobs and more recent work on green liberalization in order to ensure that the economy recognizes the reality of green- opening of markets goes hand-in-hand ing as a process. It includes practices and with environmental and social objectives. goods that are not green by definition, but Ministers also addressed this topic in the part of greening as an ongoing process 1994 Decision on Trade and Environment. of progressively making improvements They acknowledged the Rio legacy and in reducing pollution and in using natural expressed the view that there should not resources more efficiently.

36 Part I – Conceptual and Institutional Framework for Action A United Nations System-wide Perspective

This approach is complemented by 2010), “green growth” refers to, “economic the work of United Nations agencies progress that fosters environmentally sus- such as the International Civil Aviation tainable, low-carbon and socially inclusive Organization, the International Maritime development.”15 Organization or the International Tele communication Union (ITU), which are There are three things to note here. First, engaging specific sectors and industries “growth” as used in this concept is not to promote innovation, improve their the same as output growth, which is the environmental footprint and help the standard meaning of growth in economics. greening of other sectors. For instance, Rather, it is elevated to cover economic the development of new green technology progress. Second, “green” appears to standards in the areas of information and be equal to environmentally sustainable, communication technologies, smart grids which refers to using natural resources or intelligent transport systems is laying efficiently and respecting the carrying foundations for a low carbon future. capacity of ecological systems. Third, low-carbon and social inclusion are the The green economy suggests an econo objectives of green growth. mic system that is dominated by investing in, producing, trading, distributing and According to the Organisation for Economic consuming not only environmentally Co-operation and Development (OECD friendly but also environmentally enhanc- 2011a), “green growth means fostering ing goods and services.13 In this sense, economic growth and development, while green conditions should no longer be seen ensuring that natural assets continue to as constraints on an economy but rather provide the resources and environmental as forces that generate new economic services on which our well-being relies.”16 opportunities. This is about expanding and reshaping, not reducing, the scope for eco- Applying holistic and life cycle principles nomic development and poverty reduction. at the national level, the concept of the circular economy, written into legislation in 1.3.4 Green growth14 China, refers to an economy that reduces the consumption of resources and the gen- Concepts similar to green economy that eration of wastes, and reuses and recycles have been promoted in recent years, wastes throughout the production, distri- particularly in Asia, include that of green bution and consumption processes. This growth and the circular economy. The use resonates with the 3R concept as promoted of the word “growth” suggests the particular for instance in Japan, signaling a waste importance many countries attach to the mitigation hierarchy of reduce, re-use and quantitative expansion of their economies re-cycle. Investment in resource-efficient to accommodate the growing population and technologies and preventative waste rising development aspirations. According management are expected to generate to the United Nations Economic Commission new sources of income and jobs, building for Asia and Pacific (UN-ESCAP and others a resource-efficient society.

13 The term “environmentally friendly” refers to causing no harm to the environment, such as low-impact logging. The term “environmentally enhancing” refers to strengthening ecosystem functions such as the restoration of degraded land.

14 Partly drawn from Sheng (2009).

15 See also UNESCAP Environment and Development Division, Green Growth website http://www.greengrowth.org/

16 The OECD has argued that green growth means improving health prospects for populations and strengthening energy security through less dependence on imported fossil fuels, adding that investment in the environment becomes a driver for economic growth. See www.oecd.org/document/41/0,3746,en_2649_34893_43783465_1_1_1_1,00.html

Part I – Conceptual and Institutional Framework for Action 37 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

The relationship between human 1.3.5 Sustainable consumption and well-being and the amount and type production of available goods and services for consumption is left for individuals, At the 2002 WSSD summit hosted in households and other economic agents to Africa, countries agreed that, “Poverty determine. Traditional economic models eradication, changing unsustainable of the relationship assume that more is patterns of production and consumption better. Today, this assumption is ques- and protecting and managing the natural tioned by the drive for resource efficiency, resource base of economic and social sustainable lifestyles and the call for more development are overarching objectives with less. The concept of the sufficiency of, and essential requirements for, sus- economy promoted in Thailand builds tainable development.”17 on similar principles taken from Buddhist teachings. The Johannesburg Plan of Implementation (JPOI) dedicated full chapters to the References to movement from the waste themes of poverty, health, the natural or throw-away society to the resource- resource base (cf. ecosystem services efficient society raise the question of as defined by the Millennium Ecosystem sustainable consumption and sustainable Assessment18) and unsustainable pat- lifestyles. This poses again the ideas of terns of consumption and production. needs and limitations as highlighted by Recognizing that consumption patterns the Brundtland Commission in defining often undermine progress made in improv- sustainable development. Sustainable ing resource efficiency in production, the consumption and a healthy, green life- text put the term “consumption” ahead of style have different meanings in different the term “production” and used the concept communities, rich and poor, and different sustainable consumption and production national conditions within which United (SCP). This also sought to recognize the Nations agencies operate worldwide. This interrelation between production and con- has been reflected in Roundtables on sumption, between supply and demand Sustainable Consumption and Production and the need to move from a tendency to convened in follow up to WSSD as part of treat these aspects in isolation from each the Marrakech Process overseen by the other. The JPOI described SCP as a shift: United Nations Department of Economic and Social Affairs and UNEP. To promote social and economic development within the carrying capacity of ecosystems by addressing and, where appropriate, delinking economic growth and environmental degradation through improving efficiency and sustainability in the use of resources and production processes and reducing resource degradation, pollution and waste.19

17 Johannesburg Plan of Implementation (2002), paragraph 2, available at: www.un.org/esa/sustdev/documents/WSSD_ POI_PD/English/POIToc.htm

18 The UN Convention on Biological Diversity determines ecosystems as a component of biological diversity. Accordingly, the Millennium Ecosystem Assessment (MA 2005) identified an ecosystem as “a dynamic complex of plant, animal, and microorganism communities and the non-living environment interacting as a functional unit.” The main contribution of the MA was the elaboration of the concept of “ecosystem services”, which it defined simply as “the benefits people receive from ecosystems.”

19 Johannesburg Plan of Implementation (2002), paragraph 15.

38 Part I – Conceptual and Institutional Framework for Action A United Nations System-wide Perspective

Importantly, the above raises the idea up progress towards sustainable develop- of decoupling of economic growth from ment. The green economy and SCP can resource use and environmental degrada- therefore best be described as two sides tion. It highlights key elements of SCP, of the same coin, covering macro and namely: micro interventions that require changes in policy and regulatory instruments, • The promotion of social development investment and business operations, as and economic development and growth, well as behavioural change in society. but growth that is within the carrying capacity of ecosystems and decoupled 1.4 The five capitalsas enablers from environmental degradation The United Nations Environment • Increased resource efficiency and Programme (UNEP 2011) has highlighted cleaner technologies, reducing mate- that a green economy is expected to rial use and eliminating waste and deliver three types of outcomes. They pollution. are (i) new sources of income and jobs; (ii) low carbon emissions, reduced use Sustainable lifestyles and consump- of resources and reduced generation of tion patterns are key agenda items waste and pollution; and (iii) contributions addressed by United Nations agencies to broader societal goals of sustainable such as WHO, UNEP, UNDP, the World development, social equity and poverty Food Programme, ITU and UN-HABITAT reduction. The optimal contribution of a insofar as they are closely related both green economy to social goals is, how- to trends in health and quality of life ever, not automatic. Specific policies and as well as to human and sustainable institutions must be attached to green development overall. Integral to cleaner economy activities. These include effec- production are economic concepts such tive education and training programmes, as eco-efficiency; using less material; instruments that send appropriate price costing for environmental externalities signals and incentives, as well as sup- (the polluter pays); and payments for portive trade and investment agreements. ecosystem services, as well as the principle of precaution. These principles have This tie-in of goals and impacts in the eco- been promoted in work with industry by nomic, social and environmental domains UNEP, UNIDO, the International Finance raises the role of catalysts and incentives Corporation and others since the 1980s. to improve integration across the three pillars of sustainable development. It is a The words “production” and “consump- challenge that affects all agencies in the tion” point to activities at the level of delivery of their mandates. This chapter organization, company, household and has given an overview of how agencies individual consumer. These microeco- define the green economy and related nomic dimensions have been addressed concepts such as human development, by a range of environmental policies health and education, SCP, green jobs, implemented by governments. The green industry and green growth. It has green economy as work area focuses on highlighted how different agency man- macroeconomic analysis of the trends dates lead to differences in approach that result from these activities, and how ranging from humanitarian concerns to a economic and other policies pursued by focus on the economic case. governments can influence these to scale

Part I – Conceptual and Institutional Framework for Action 39 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

Comparing the core concepts and goals Nor does it seek to substitute the three of what sustainable development sets out pillars. Rather, it requires attention to the as a vision, the question follows: What is way in which the relationship among the really different in approach when activities three pillars is conceptualized and how as are initiated under the heading of green a result resources or capital are allocated economy? One shortcoming of the way in decision-making with an integrated in which sustainable development has perspective that cuts across the three been operationalized over the last two principle domains. decades has been the tendency to operate activities under the so-called three This approach has special interest in using pillars in isolation from each other. The indicators that integrate environmental, world’s approach to dealing with the three economic and social dimensions. It focuses pillars of sustainable development has on environment as a driver for economic led many to juxtapose these rather than growth, and ecosystem services that can to integrate them. New thinking related to be valued in economic terms. Using the the green economy seeks to address this, idea of five capitals as enablers that cut highlighting that what really matters is across the three pillars of sustainable not the arithmetic among the three pillars development, the approach can be pre- (added or subtracted as convenient) but sented schematically as shown in Figure 1. rather the algebra among them (how the variables relate and affect one another in Figure 1 signals core work areas for many context, how they combine towards the United Nations agencies, programmes equation of sustainable development). and regional commissions, including mandates related to environment, labour, Seeking to improve the effectiveness education, health, industrial development and scale up the impact of activities for and investment. The positioning of five sustainable development, approaches capitals that enable results in the domains such as that of the green economy focus of environmental, economic and social on enablers that cut across the three pil- development signals an action-oriented lars of environment, economic and social approach. It reflects a new approach in development. These enablers refer to which the green economy is about main- resources or different types of capital that streaming across the three pillars and are employed to advance implementation an action-oriented pathway for achieving of sustainable development and deliver sustainable development. It requires new results in its three principle domains. forms of integrative collaboration and This more integrated approach does not joint management among different United require any change to the established Nations agencies as well as among differ- definition of sustainable development. ent ministries within governments.

40 Part I – Conceptual and Institutional Framework for Action A United Nations System-wide Perspective

Figure 1. Drivers for green growth

Environment Economic Social Pillar: Pillar: Pillar:

Natural resource base, Natural Capital ecosystem services, etc.

Labour, education, health, Human Capital etc.

Societal infrastructure, Social Capital culture, basic services, etc.

Physical infrastructure, Manufactured Capital industries, etc.

Financial institutions, Financial Capital investment, etc.

Note: Five “enablers” that cut across the three pillars of sustainable development to deliver “results” in each of the environmental, economic and social domains.

In a green economy, natural capital – The green economy model seeks a more comprising the biosphere as a whole, balanced portfolio of investment of social, including biodiversity and ecosystems – is human, natural, financial and physical an enabler of economic growth and human capital. It recognizes the value of markets, well-being. Rather than being seen as a but is not tied to markets as the sole or passive receptor of wastes and pollution best solution to all problems. It better generated by economic activity or as one includes and uses the productive power of many substitutable factors of production, of natural capital, especially in devising the environment in a green economy is livelihood solutions for those living in pov- seen as a determining factor of economic erty and who depend on nature for a large production, innovation, value creation, part of their livelihood. Since the poor are stability and long-term prosperity. 20 most dependent on the natural resource base for their livelihoods and least able to shield themselves from a degraded environment, movement towards a green economy is seen as a means of promoting equitable and inclusive growth.

20 The Millennium Ecosystem Assessment (MA) shows how ecosystems and their services contribute to human well-being. For the full MA series of reports published under United Nations auspices from 2001 onwards, visit: www.maweb.org/en/Reports.aspx#

Part I – Conceptual and Institutional Framework for Action 41 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © UNEP © UNEP Dr. Babu Gopinatahn clearing a spot for tree planting at a school in Ogoniland, Nigeria.

42 Part I – Conceptual and Institutional Framework for Action A United Nations System-wide Perspective Chapter 2: Institutional support from the global to local level

2.1 Introduction 2.2 Supportive action by the United Nations system The United Nations system, as the most globally inclusive multilateral framework for policy and action, has an essential role to play The United Nations collectively raises in supporting efforts to pursue sustain- awareness on key issues at the global able development, including efforts level through international summits and through the avenue of a green economy. conferences such as the legacy of key Relevant experience and a range of events on sustainable development, programmes are in place that can be fur- notably the United Nations Conference ther developed and tailored to the green on Environment and Development economy approach with local needs and (UNCED 1992), the World Summit on relevant context in mind. Being vertically Sustainable Development (WSSD 2002) integrated, the United Nations is present and the United Nations Conference on at global, regional, national and in some Sustainable Development (Rio+20 2012). cases also at local levels. The United Noteworthy because of their focus on sus- Nations can play a role in generating a tainable development are the three Rio shared analytical methodology and frame- Conventions agreed in 1992, namely the work to assess investment, policies and Convention on Biological Diversity (CBD), measures in support of a green economy the United Nations Framework Convention transformation and improved pathways to on Climate Change (UNFCCC), and the sustainable development. United Nations Convention to Combat Desertification (UNCCD). The same applies to the Bretton Woods family of institutions and multilateral The United Nations provides the platform development banks at the regional level. for agreeing on principles, norms and United Nations agencies, multilateral standards in treaties relating to, among finance institutions and other international others, human rights, labour, environ- agencies are all challenged to find the ment, climate change and anti-corruption. appropriate combination of top-down United Nations agencies, programmes, and bottom-up initiatives. Programmatic funds and regional commissions collabo- action at country and regional levels can rate also with non-governmental actors in for example be used to provide tailored these areas, including the private sector and coherent responses through a locally as is done through initiatives such as the driven, bottom-up approach and possible United Nations Global Compact of the tools defined by national and local stake- United Nations Secretary-General. The holders. This chapter provides a brief normative function at the global level will overview of the relevant presence of the be key to ensuring that a green economy United Nations and multilateral finance is framed in the context of sustainable institutions at different levels of action, development and poverty eradication, ready to support national green economy employing relevant norms and standards transitions in different parts of the world. that truly serve to make sustainable development a reality in markets and societies worldwide. In this regard,

Part I – Conceptual and Institutional Framework for Action 43 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective expertise is being mobilized through noted by the United Nations Secretary- such inter-agency mechanisms as the General (2010) in his report to the first High-Level Committee on Programming, PrepCom held for the UNCSD (Rio+20). the Environment Management Group, 23 The opportunity offered by Rio+20, with UN-Energy, UN-Water and UN-Oceans green economy in the context of sustain- and the United Nations Development able development and poverty reduction Group (UNDG), which also pools together as a core theme, is the chance to advance resources needed to support the United the application of a range of economic Nations Country Teams (UNCTs) in their instruments to impact investment choices respective regions. These mechanisms and consumer behaviour to ensure such aim at enhancing system-wide coher- integration and transformation of national ence of agendas and issues in various development takes place. contexts ranging from the MDG Summit to Conferences of the Parties. This sense of opportunity is reflected in the joint statement “Green Economy: In line with conference outcomes and A Transformation to Address Multiple international agreements, the United Crises” that 22 heads of agencies from Nations System provides support to the United Nations, the World Bank and Member States in meeting their sustain- WTO issued in June 2009.24 It offers a able development goals. Coming together common perspective from multilateral around the MDGs, the United Nations institutions on how, inter alia, actions such System has contributed substantively as green investment, financial support, to the strengthening of particularly the fiscal reform, phasing out perverse subsi- social pillar. The comprehensive plan of dies, trade liberalization, education, green action called “Agenda 21”, adopted at the jobs, capacity development and integrated UNCED 1992 and reinforced at the WSSD environmental-economic accounting can 2002, is being implemented globally, help countries onto a greener and more nationally and locally by various organi- inclusive development path. zations of the United Nations System, governments, and Major Groups.21 This Today, agencies need to explore new is reflected in the agenda of almost all ways of pursuing these actions through United Nations entities as documented in initiatives such as the Green Economy the “Note on Environment in the United Initiative and related programmes of inter- Nations system”22 prepared by EMG national agencies from the global to local members in 2011. level. These can complement initiatives by different Major Groups from the non- What has yet to happen on a greater scale is governmental world, including the Green stronger focus on socio-economic aspects Economy Coalition and the Vision 2050 and the integration or convergence among initiative of the World Business Council for the pillars of sustainable development as Sustainable Development.

21 For the full text of Agenda 21 online, visit www.un.org/esa/dsd/agenda21/.

22 The text is available as Information Document UNEP/GC.26/INF/23 prepared for the 26th Session of the UNEP Govern- ing Council http://www.unep.org/gc/gc26/information-docs.asp, February 2011. The note was developed with input from all EMG members.

23 The report warns that “the overall picture is one of divergence” and adds that “progress to date is also threatened by the series of crises that affected the global economy starting in 2008” (UNSG 2010). The full text of the report and other SG reports for the Rio+20 PrepComs are available at: www.uncsd2012.org/rio20/index.php?menu=44

24 The statement was issued at the United Nations General Assembly Conference on the World Financial and Economic Crisis and it Impact on Development, held in New York from 24-26 June. It is available from http://www.unep.org/pdf/press- releases/Green_Economy_Joint_Statement.pdf

44 Part I – Conceptual and Institutional Framework for Action A United Nations System-wide Perspective 2.3 Supportive action at the Relevant instruments have been devel- regional level oped in other regions as well. The United Nations Economic Commission for The United Nations Secretariat, through Europe (UNECE) Protocol on Strategic the Regional Commissions, provides a Environmental Assessment (2003) unique platform for regional dialogues and the Aarhus Convention on Access and consensus building, which often to Information, Public Participation in leads to the coordination of regional and Decision-making and Access to Justice subregional activities. In addition, the in Environmental Matters (1998) precede Regional Commissions as the Chairs of recent green economy initiatives but the United Nations Regional Coordination remain particularly relevant. The Aarhus Mechanisms have the opportunity to Convention links environmental rights and mobilize the expertise of the entire United human rights, government accountability Nations System as well regional and and environmental protection. Importantly, international institutions and research it underlines that sustainable development community outside of the United Nations can be achieved only through the involve- System. Approaches to green economy ment of all stakeholders. This also applies policies and actions have already been to the participation by European countries addressed at this level, most comprehen- in the further development by the OECD of sively in the Asia and Pacific Region. its Green Growth Strategy.

In 2005, the Fifth Ministerial Conference In Latin America and the Caribbean, the on Environment and Development in United Nations Economic Commission Asia and the Pacific adopted the green for Latin America and the Caribbean growth approach as a key strategy to (UN-ECLAC) is studying the creation of achieving sustainable development in an institutional mechanism such as a sub- the region. The United Nations Economic sidiary body of the Commission that would and Social Commission for Asia and the periodically convene ministries of industry, Pacific (ESCAP) has since conducted development, finance, environment and a range of activities to promote green social affairs in order to promote the inte- growth. Notable progress made includes gration of sustainable development into a partnership with the Global Green government strategies. This would become Growth Institute in the Republic of Korea, an important mechanism in advancing a along with the development of a “Low holistic approach and in improving align- Carbon Green Growth Roadmap for East ment in planning between ministries such as Asia”. The 2010 UN-ESCAP Ministerial those of the Environment and Finance. Conference adopted the Astana Green Bridge Initiative, which will promote an This was the spirit of a Ministerial Statement innovative partnership between Europe by African Ministers at an Annual Meeting of and Asia and the Pacific for the imple- the African Union Conference of Ministers mentation of the green growth approach. of Economy and Finance and the United Its Regional Implementation Plan and Nations Economic Commission for Africa Ministerial Declaration set a framework Conference of Ministers of Finance, Planning for Member States of Asia and the Pacific and Economic Development in March to achieve sustainable development, 2011 when they stated: “We will play our including the MDGs and poverty eradica- part to spearhead the transition to a green tion through green growth. economy in Africa, inter alia, by supporting the necessary systemic and institutional transformations to ensure that green economies contribute to sustainable development

Part I – Conceptual and Institutional Framework for Action 45 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective and poverty reduction objectives… We call change.25 While these efforts can clearly be on all development partners to accom- seen as an integral part of United Nations pany Africa in this journey.” When African support for transition to green economy, Ministers of the Environment issued the there is at present no consolidated over- Bamako Declaration on Environment view of the extent to which green economy for Sustainable Development in June is being specifically targeted through joint 2010, they urged the African Ministerial efforts by UNCTs and through actions in Conference on the Environment member parallel to joint UNCT efforts. states to fully explore opportunities for building green economies, among others The expertise in support of the UNCTs is through the development of cleaner being mobilized, at a global inter-agency technologies, renewable energies, water level, through inter-agency mechanisms services, green transportation, waste such as the High-Level Committee management, green buildings and sus- on Programming, the Environment tainable agriculture. Management Group and in a synthesized way directly targeting the work of UNCTs, 2.4 Delivering as a team at the United Nations Development Group. the national level At the regional level the UNDG Regional Directors Team pool resources needed to support UNCTs in their regions. Providing sound advice and support to governments for their development Subject to country demand, the Delivering policies, strategies and actions will be as One approach could help such efforts. essential to achieving a national transi- The approach is being piloted in eight tion to a green economy. Responding to countries and in 24 so-called self-starters. country demand, United Nations agencies The overall objective of the approach is as service providers and implementing to maximize existing synergies, eliminate agents can assist in advancing national duplication and overlap and optimize green economy initiatives through the the impact of the collective effort of the United Nations Resident Coordinator United Nations system. While the overall System and the United Nations experience of Delivering as One countries Development Assistance Framework. has been diverse, the lessons emerging This country-specific planning framework suggest that UNCTs in those countries for the development operations of the are engaged in more coherent planning, United Nations System lays the founda- prioritization and programming. The tion for cooperation with governments and approach has supported greater national other development partners. ownership and leadership of the development agenda, and participant countries United Nations Country Teams (UNCT) have improved access to the full range have in recent years scaled up their of the mandates and expertise of United assistance to governments to support low- Nations agencies. carbon and climate-resilient development. In 2009, 65 UNCTs reported capacity- The Delivering as One experience holds building efforts on climate change, linked important lessons for future country-level especially to policy development and collaboration among United Nations implementation, to support obligations agencies as they participate in national under existing legal frameworks, including green economy advisory services as 17 joint programmes targeting climate provided by, for example, UNEP. Advisory

25 Reported through the Resident Coordinator Annual Reports (RCAR) available on the UNDG website (www.undg.org) including through the synthesis of the RCARs.

46 Part I – Conceptual and Institutional Framework for Action A United Nations System-wide Perspective

services include the provision of platforms under the UNDP-Global Environment for national dialogue and consultation; Facility Small Grants Programme a number analytical and research support through of green economy approaches have macroeconomic and sectoral assess- proven successful at the community level, ments of green economy opportunities and sustainable livelihoods have been and options; capacity enhancing activities; an entry point to engage communities in and sharing of international experiences green economy development processes and best practices. Since 2010, the UNEP in areas such as certification and revenue Green Economy Initiative has been pro- generation based on local produce. The viding advisory services to more than 20 Seed Initiative of UNDP, UNEP and the governments around the world, with an International Union for Conservation of active engagement in 15 countries. Nature (IUCN) has a growing database of local level, multi-stakeholder partnerships 2.5 Engaging at the local level through which local entrepreneurs are with cities, rural advancing MDGs on the basis of green business development. communities and others In its work with cities, UN-HABITAT is Green economy approaches can also taking action in two key areas, namely be applied at the subnational level, for (i) assisting national and local govern- example, at the level of cities and rural ments in reviewing and updating building communities. Rapidly urbanizing com- laws and regulations; and (ii) revitalizing munities in industrializing countries have urban planning. The first of these aims to pressing problems related to their daily promote the use of climate-friendly build- quality of life and environment, their ing materials, renewable energy sources, health and their employment. On the other as well as energy efficient design criteria hand, rural communities in poor countries and standards. Through appropriate have their own set of unique but relevant urban planning, a powerful tool to curtail economic problems associated with, for urban sprawl, the intention is to promote example, their access to education and sustainable public transport systems direct dependence on natural resources. and influence the management of future energy supply and demand. The potential contribution to sustainable development at this level requires capac- 2.6 Facilitating the provision ity development and supporting tools of public-private in areas such as sustainable land use, building standards, green cities, public financing at all levels transportation, infrastructure and energy efficiency, sustainable agriculture and Programmatic action in support of green rural livelihoods. Local authorities can be economy goals at all levels requires private a substantive contributor to the achieve- capital and targeted public finance to cata- ment of green economy objectives. The lyse new ways of managing economies, local level offers ample opportunities for businesses, projects and technologies. The collaboration and consultation with civil World Bank and International Monetary Fund society, research centres, think tanks, (IMF) as well as the Regional Development community-based groups and grassroots Banks have all made sustainable develop- organizations. ment a core component of their policy and operational practices, and are exploring Various parts of the United Nations already ways in which these can be aligned with support efforts at this level. For example, new green economy approaches.

Part I – Conceptual and Institutional Framework for Action 47 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

The role of the multilateral development expertise and resources to help develop- banks (MDBs) in fostering a transition ing countries and their public and private towards a green economy needs to sectors respond to the challenge of cli- consider carefully their distinctive capaci- mate change while achieving the MDGs. ties in both public and private lending. The Climate Investment Funds are a joint The MDBs play different roles in this instrument for five MDBs (including their respect. Yet overall resource efficient and private sector arms) to assist developing low-carbon development has become countries in scaling up financing that is a priority in all MDBs. It is increasingly needed for the transition to a green econ- integrated and mainstreamed in their omy. Contributions of US $6.5 billion have development and operational strategies, been pledged by 13 countries. The Clean as has the development of various prac- Technology fund has endorsed 14 invest- tices to mainstream resource efficiency ment plans for a total of US $4.5 billion and climate change considerations in all leveraging US $37 billion in co-financing. their financing activities. A range of sectors benefit from the above, Like United Nations agencies, the MDBs with notable results in renewable energy can support borrower countries in a and energy efficiency. The initiative number of ways to address the challenges includes projects with investments in the of the green economy. With respect to natural resource sector, both national and climate change in particular, they can do multi-country regional activities. Since the this through: MDBs operate on a country demand basis, their portfolios reflect increasing demand • The use of a broad range of from different stakeholders in developing instruments to fund climate change countries for developing sustainable poli- interventions cies and practices. Hence the emphasis on green growth and green economy is • Catalysing energy efficient and timely and relevant. climate change investments by the private sector While transitions to a green economy are increasingly the driving force in all the • Providing technical advice and capac- Bretton Woods Institutions and Regional ity support to borrower governments Development Banks, their collective response to date has focused particu- • Support for project implementation larly on climate change. Initial emphasis and sustainability on action to reduce GHG emissions is increasingly accompanied by action to • Support for carbon market improve climate resilience in countries. development. The MDBs are also collaborating with United Nations agencies in initiatives Concerted action related to climate such as the Climate Finance Options change is illustrative. In their Joint knowledge platform, which is managed Statement of December 2009 at the jointly by UNDP and the World Bank. The Copenhagen Climate Conference, the platform addresses information needs on Heads of the MDBs and IMF pledged the multitude of funds available for climate to build upon their respective mandates, action in developing countries.26

26 Based on the UNFCCC framework, the platform is composed of two complementary domains created to help catalyse financial and investment flows to more effective and efficient climate measures (mitigation and adaptation). See www.cli- matefinanceoptions.org.

48 Part I – Conceptual and Institutional Framework for Action A United Nations System-wide Perspective

2.7 Improved collaboration cooperation and demand-driven partner- between UN system ships at the national level. It requires partners and others the network and expertise of the United Nations and multilateral finance partners, Work delivered at the global and regional including stronger collaborative mecha- levels is mainly in support of the work nisms that help to integrate and mobilize delivered at the national and local levels. the enabling capitals across the three pil- The United Nations and multilateral fund lars of sustainable development. Likewise, offices at the national level are the front- international agencies are well advised to line with the governments, who are the work not only in an inter-agency context, drivers of development. but also in close collaboration with civil society, research centres, business, labour, With its main focus on the national economy, consumer groups and community-based the green economy is an issue that lends and grassroots organizations, particularly itself very well to stronger inter-agency for transformative action at the local level.

Part I – Conceptual and Institutional Framework for Action 49 GREEN STIMULUS

ACTION

INSVESTMENT STIMULUS

LOCAL GLOBAL PHYSICAL PROGRESS GROWTH INFRASTRUCTURE

INSTITUTIONAL CONCEPTUAL

ACTION

PROGRESS GREEN STIMULUS

ACTION

INSVESTMENT STIMULUS

LOCAL GLOBAL PHYSICAL PROGRESS GROWTH INFRASTRUCTURE

INSTITUTIONAL CONCEPTUAL Part II Investing in Physical Infrastructure

ACTION and Dynamic Growth

PROGRESS Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © Shutterstock / Oleksiy Mark High-speed train with motion.

52 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective Chapter 3: Green stimulus and beyond

3.1 Introduction

In response to the financial and eco- Government stimulus packages inclu nomic crisis of the last four years a ded not only committed government number of countries, both industrialized spending, but also tax relief and tax and developing ones, launched fiscal incentives for the private sector. An stimulus packages. Altogether these overview of specifically committed were estimated to amount to US $3.1 government spending in eight coun- trillion of committed spending in 2009 tries from different regions is provided (UNEP 2009a). At least 15 per cent of in Table 1. this spending – over US $445 billion – was allocated to sectors and activities such as infrastructure, in particular, railways, electric grids, high-speed broadband networks, water and waste, energy efficiency, renewable energies and low-carbon vehicles that build on and enhance the Earth’s natural capital or reduce ecological scarcities and environmental risks (Robins 2009). These sectors, in addition to other innovative and energy-efficient goods and services, can therefore broadly be considered green.

Part Il – Investing in Physical Infrastructure and Dynamic Growth 53 A United Nations System-wide Perspective Water/ Waste 23.38 - 13.89 0.1 - - 0.19 - 0.52 15.58 Grid 70 - - - 4.85 - 4.13 - 0.92 11 Rail 98.65 0.03 7.01 0.61 - 2.75 0.39 - 0.33 9.59 Lo C* Vech+ 1.5 - 1.8 - 3.88 0.69 - - 0.76 4

Building EE* 7.31 - 6.41 0.1 2.85 10.39 0.57 0.75 3.34 27.4 CCS* / Other - - 29.05 - 12.49 - - - 2.6 3.95 Renewable - 0.07 1.8 - 0.65 - 0.87 - 10.25 22.53 Green Fund (US$ billion) 200.8 0.1 59.9 0.8 24.7 13.8 6.1 0.8 18.7 94.1 Total Fund Total (US$ billion) 586.1 5.9 76.1 7.5 38.8 104.8 33.7 7.7 185 787 Period (year) 2009-2010 2009 2009-2012 2009-2011 2009-2010 2009-2010 2009-2010 2009 10 Years 10 Years NDRC* Stimulus Package Stimulus Plan Green New Deal Budget 2009-2010 Economic Recovery Plan-Only EU Stimulus Plan Revival Plan Aggr for Home Economics & Emp Act Emergency Economic Stabilization American Recov and Reinvestmt Plan Package Country Asia Pacific China Indonesia South Korea Africa South Africa Europe European Union Germany France Americas Mexico United States

Table 1- Sizing Green Stimulus Packages Table Part Il – Investing in Physical Infrastructure and Dynamic Growth Adapted from HSBC, 9 March, Delivering the Green Stimulus. Source: * NDRC = National Development and Reform Commission CCS = carbon capture and storage EE= energy efficiency LoC = low carbon * NDRC = National Development and Reform Commission CCS carbon capture storage EE= energy efficiency A United Nations System-wide Perspective

3.2 Assessing impact to date Infrastructure, in particular, rail infrastructure, has received the biggest boost from There is indication that green stimulus green stimulus packages. Investment in spending triggered a significant expan- rail and water infrastructure, grid expansion of economic activity in targeted sion and improved building efficiency green sectors. The Chinese State Grid has been particularly high, totalling Corporation has announced that 2009 85 per cent of the allocation of green was its highest-ever investment in grid stimulus packages or US $379 billion. For development, in part due to an increase in example, almost half of China’s US $218 railway infrastructure (Robins 2010). billion green stimulus package has been allocated to railway infrastructure. About In the United Sates a record high of 9.9 US $23 billion (15 per cent of the total) GW of wind installations was added in has been channeled to the construction 2009. The US Department of Energy of water infrastructure that benefited 14.6 indicates that the stimulus in the renew- million people. (Robins 2009, 2010) able sector will leverage US $43 billion of private capital in 2012. Spending by In 2009 South Africa activated plans for the US Department of Energy has been the government and its utilities to spend matched by an estimated US $27 billion US $96.7 (787 billion rand) over the next of private capital, totalling approximately three years on building and upgrading US $65 billion in projects (approximately infrastructure for power supplies (UNEP equivalent to 0.5 per cent of total GDP). 2009b). Other investments promoted by Public-private partnerships were made governments include investment in infor- possible through government grants, as mational technology infrastructure. In the well as soft and facilitated loans. As a US this has taken the form of a plan for direct result of the American Recovery improving access to high-speed broad- and Reinvestment Plan, the State of band networks to more than 100 million Massachusetts in 2009 awarded funding households, aiming to advance national solely for projects that move towards the goals for education and health care (US development of zero net energy buildings Government 2010). (MNN 2009).

Part Il – Investing in Physical Infrastructure and Dynamic Growth 55 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

Overall, green stimulus appears to have the highest increases in unemployment secured green jobs at risk and created among young adults after the global new ones around the world. In a number financial crisis. Despite efforts to revive of countries, a large portion of the fiscal the economy, unemployment rates have stimulus has been geared towards stagnated. As a result, Spain’s informal securing jobs and providing social safety economy has grown, lowering wages nets, with varying degrees of success. At and government revenue (European the same time, the injection of massive Employment Observatory 2010). spending in specific sectors resulted in a rapid transition in labour markets within The effort to advance decent work and and among countries, requiring policy pro-poor sustainable development as a intervention to manage such a transition in single and integrated strategy is critical to a fair manner (ILO 2010a). Infrastructure building green jobs across the developing investment is one of the main means of world. One way to reduce the risks associ- restarting growth and creating jobs, the ated with green jobs would be to increase reason why a significant part of fiscal social safety nets in various countries. spending went to construction, transpor- The Green Jobs Initiative of the ILO and tation and energy-related infrastructure. its partners seek to mobilize governments, Part of this includes green infrastructure employers and workers to engage in dia- such as works for flood control, irrigation logue on coherent policies and effective schemes, insulation of buildings and programmes leading to a green economy changing transport from road to rail. with green jobs and decent work for all.

The American Recovery and Reinvestment 3.3 From stimulus to long- Act has saved or created some 52,000 term policy reforms clean-energy jobs and supported another 11,000 jobs (Robins 2010). The Republic towards a green economy of Korea’s Green Growth Strategy is expected to create 1.47–1.18 million jobs There is empirical evidence today that in green industries (Korea 2010). The bulk targeted government spending can start a of Indonesia`s US $5.9 billion fiscal stimu- transition to a low-carbon economy. The lus launched in February 2009 was spent Green Economy Report (UNEP 2011) to prevent worker layoffs and improve found that investing 2 per cent of global Indonesian business competitiveness. GDP per year in ten economic sectors between 2010 and 2050 can kick-start a Nonetheless, there have been concerns transition towards a low-carbon, resource- about the sustainability of jobs created efficient economy. Currently, 2 per cent of through stimulus packages. According to global GDP amounts to approximately US certain studies, just one in ten of the newly $1.3 trillion. In comparison, all of the green created green jobs became a permanent stimulus packages only amount to US $521 job (Álvarez and others 2009). It must billion (Robins 2010). be noted that very little analytical work has been devoted to this issue in the lit- Several countries have expanded invest- erature. Therefore, the results emanating ment in specific sectors beyond the green from the few studies available should be stimulus packages. For example, Germany interpreted with caution. More generally, announced a number of plans that can the rising level of informality in the global be seen as shifting the economy towards economy constitutes a major challenge to a green path, building on some of the all job growth, including green job growth. initiatives under the stimulus package. Spain, for example, experienced one of One component is the Renewable Energy

56 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective

Sources Act, which entered into force in a low-carbon, green growth vision. Under 2009. Germany’s goal is to increase the the plan, US $83.6 billion, representing 2 share of renewable energy in total electric- per cent of GDP, will be spent in the area ity consumption to at least 30 per cent by of climate change and energy, sustain- 2020, a doubling of the current share of able transportation and the development almost 15 per cent (Germany 2010). of green technologies. For example, around US $1.8 billion was allocated to Mexico is one of the first developing the promotion of low-carbon vehicles in the countries to commit to a voluntary carbon Korean stimulus plan. This five-year plan reduction target by pledging to halve GHG is expected to stimulate production in the emissions by 2050 (WRI 2009). Mexico amount of US $141–160 billion. (Robins also plans to put in place a domestic 2010, UNEP 2009b) cap-and-trade system by 2012 (Burtraw and others 2010). Among other significant During the twelfth five-year plan period measures, the government enacted the starting 2011, China is expected to invest Special Program for Climate Change 2009- US $468 billion in greening the economy 2012 (PECC). This programme lays out with a focus on three sectors: waste recy- a long-term vision for combating climate cling and reutilization; clean technologies; change while establishing the sectoral level and renewable energy. China’s environ- interventions that will result in emission mental protection industry is expected to reductions. It also creates a framework continue growing at an average of 15–20 for monitoring improvements and estab- per cent per year and its industrial output lishes a blueprint for emission reduction is expected to reach US $743 billion during initiatives. Through the PECC, Mexico is the new five-year period, up from US $166 evaluating the vulnerability of the country billion in 2010. The multiplier effect of this to climate change and conducting an eco- emerging sector is estimated to be 8–10 nomic valuation of the priority measures for times larger than other industrial sectors intervention (WB 2009a). (China Development Bank Corporation 2010). Moreover, governments have moved into macroeconomic policy reform, specifi- The 2010 budget of the US Government cally using fiscal policy to mitigate climate outlines several green priorities under a change. The South African government is programme for creating jobs and investing in considering the introduction of a long-term, long-term economic growth. This includes a escalating carbon tax to help curb GHG proposal to create a Clean Energy Economy emissions, particularly from coal-fired – a comprehensive energy and climate power plants (UNEP 2009b). change plan to invest in clean energy, decrease dependence on oil, address the Green investments are also being integrated global climate crisis and create new jobs. into medium- to long-term development plans in certain countries. This expansion Recent studies on the prospects of green of short-term countercyclical measures into investments in the long run point to a spending as part of the regular budgeting possibly tripling of the market to US $2.2 process for 2010 characterized some coun- trillion per annum by 2020, with an annual tries. Others even developed full-fledged growth rate of 11 percent (Robins 2010). medium-term development plans with a The encapsulation of short-term stimulus significant component on themes related to packages into long-term policy frameworks, promoting a green economy. The Republic targets for investment, and green economy of Korea adopted in July 2009 a Five-Year strategies, as discussed above, appear Green Growth Plan (2009/2013) to serve to give reason for a significant growth of as a medium-term plan for implementing green investment in the next decade.

Part Il – Investing in Physical Infrastructure and Dynamic Growth 57 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

Some important changes could take place, global financial crisis, many people have both in sectors offering brighter prospects been left struggling to find stable employ- for investments and in the dynamics of ment, adding pressure on governments to markets. For example, energy efficiency address social demands related to unem- in the car industry with the uptake of low- ployment benefits, especially in developed carbon vehicles such as plug-in hybrid countries. In most OECD countries, the and full electric vehicles is expected youth-unemployment rate increased by 4.9 to surpass efficiency improvements in per cent between 2007 and 2009, to 18.4 the power sector as a major investment per cent. By the second quarter of 2010 opportunity. Similarly, the uptake of smart it had risen to 19.6 per cent (Economist grids will deeply transform the relation- 2010). This coupled with budgetary con- ship between energy supply and demand, straints seem to have led to austerity even especially at the household level, intro- in developed countries during 2010. ducing significant reductions in GHG emissions and promoting the creation of Nonetheless, environmental spending green jobs. In general, smart grids may appeared to be resilient in the wake of introduce savings of 10 to 25 per cent in budget cuts. While governments cut electricity demand (ITU and others 2011). spending, particularly in Europe, it is worth The low-carbon market in China would mentioning that green spending received overtake the US, but not Europe. relatively limited cuts despite budgetary constraints in most countries. For exam- There is, however, concern about the ple, in the UK, environment spending was timing of governments’ plans and targets cut 5–8 per cent compared to an average for green investment. Despite positive of 20 per cent in all sectors (Robins 2010). economic growth, the labour market This confirms a growing understanding has yet to recover with unemployment that greening investments become a core figures particularly high for young adults part of the national strategy for longer- in developed countries. As a result of the term economic recovery.

58 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective

Part Il – Investing in Physical Infrastructure and Dynamic Growth 59 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © UNDP / Eskender Debebe © UNDP A family using solar energy in generating power in Tarialan soum, Uvs Aimag, Mongolia.

60 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective Chapter 4: Infrastructure in a green economy

4.1 Introduction energy sector, however, trade-offs between economic and environmental goals (local or Despite some progress in the last decade, global) can appear significant. The higher especially in the telecommunications sector, costs of cleaner technology imply a trade-off infrastructure needs remain enormous in with expansion of service. In addition, many developing countries. This applies to both developing countries face severe financing the goal of meeting universal access needs constraints that appear to require a choice and the goal of supporting rapid growth and between "building right" (which may make job creation. Understanding the urgency of both economic and environmental sense) these needs as well as the budget constraints and "building more" (which may be what is faced by developing countries in addressing required socially). This is a particularly vexing them is essential when thinking about how problem in the case of renewable technolo- to address the challenge of a transition to gies, which are characterized by substantially a green economy. Addressing them also higher capital costs upfront and lower recur- requires being mindful of how human-made ring costs.27 infrastructure ultimately relies on the supplies of a healthy ecological infrastructure, both As such, investments in the transition to a providing public goods and services. green economy must be evaluated with due consideration to this developmental dilemma The case of climate change action is illustra- of apparent trade-offs between goals and tive of the difficulty of mobilizing national time frames. This is particularly important for economies in response to a global public investment needs related to climate change good problem. The climate challenge raises adaptation and mitigation, as they are the ones fundamental issues related to energy infra- most often discussed in abstraction without structure and efficient use of existing and regard to the relevant domestic context. To cleaner sources of energy in infrastructure: date there has been remarkably little interaction the use of energy and fossil fuels in particular between the traditional infrastructure finance has ripple effects throughout the economy. community and climate finance specialists.

For infrastructure investments to contribute to The two sets of debate on how to finance the green growth with appropriate social develop- enormous infrastructure investment needs ment impact requires careful management of developing countries and how to address of possible tradeoffs that may arise between the (much smaller yet substantial) additional environmental, economic and social goals, financing needs associated with climate between shorter- and longer-term returns, change continue to occur in parallel. There is a and finding optimal win-win solutions. The real urgency in dealing with this issue. As devel- latter exist in, for example, the case of water oping and emerging economies build their and sanitation, where environmental, social infrastructure and cities, they may create a path and economic goals all broadly point towards dependency into a low-efficiency economy that similar investment choices. A win-win dynamic will prevent major energy savings for decades. also characterizes urban public transport inter- While the additional cost of "building right" is ventions that improve local air quality, reduce limited today, the cost of retrofitting this new emissions and make cities less congested, infrastructure for environmental reasons in a hence more efficient and competitive. In the few decades would be enormous.

27 It may also be the case for a number of adaptation interventions that will pay off in the future but may impose immediate additional costs.

Part Il – Investing in Physical Infrastructure and Dynamic Growth 61 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

4.2 The existing infrastructure improved water. Yet 884 million people are funding gap still without access to an improved water source. The sanitation situation is much More than a quarter of developing-country worse, with 2.6 billion people lacking households have no access to electricity access to improved sanitation, making the (see Table 2). The situation is particularly achievement of the MDG sanitation goal dire in Africa, where nearly 70 per cent of very unlikely.28 Connectivity also remains the population is unconnected. Access low, particularly in the rural population, to water has increased and the world is where only 70 per cent have access to an on track to meet the MDG of halving the all-weather road (33 per cent in Africa). proportion of people without access to

Table 2 - Household access to infrastructure in developing countries

All developing Africa Non-Africa countries low-income countries Percent of households with 63 29 56 access to electricity

Improved water source 84 60 79 Improved sanitation facilities 52 31 48

Percent of rural population with 70 33 49 access to an all-weather road

Telecom: mobile and fixed lines 64 36 42 per 100 inhabitants

Source: Reproduced from Fay and others (2010).

Note: Electricity and road access figures are for 2006 or the latest year available up to that date; telecoms, water, and sanitation data are for 2008. Figures are weighted by country population. The road access indicator measures the share of rural population that lives within two kilometers of an all-season road. The only significant infrastructure success and can therefore be fully financed by the of the last two decades has occurred in private sector. Information and communi- telecommunications, where 73 per cent of cations technologies (ICTs) are critical to the population has access to a telephone green growth, as they are key to improved today. This is a massive increase since the management of resources through, for early 1990s when it hovered around 3 per example, smart grids, smart transport cent. Two reasons explains this: (i) a new systems, improved water resource man- technology (cellular telephony), which has agement and early warning systems for enabled massive leapfrogging and allows natural disasters.29 The relevant public for low-cost provision even in remote, low- intervention needs are critical but limited – density areas; and (ii) the acceptability of provide a good regulatory and competition full-cost pricing, which means it can be fully framework, and help structure minimal funded by users (rather than taxpayers) core network investments.

28 WHO-UNICEF (2010) projects that by 2015 the share of people without improved water will have fallen to 9 per cent on current trends, exceeding the target of 12 per cent. In contrast, the share of individuals without access to improved sanitation is expected to be around 36 percent, much higher than the 23 per cent target.

62 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective

Very rough estimates suggest that capital In this context of insufficient funding, many investments in the order of US $1.0–$1.5 countries select least-cost technology trillion are needed annually for developing for their infrastructure investments even countries to close the development gap when environmental impacts (from climate and support rapid growth (Fay and others change to local pollution) are significant. 2010). These needs represent some 6–9 Moreover, in the absence of adequate infra- per cent of developing country GDP and are structure, people rely on alternative service not inclusive of operation and maintenance provision arrangements such as individual costs. Rough estimates place annual power generators and batteries for electric- infrastructure investments in developing ity, unregulated wells for irrigation water or countries at about US $600 billion – or open drains for sanitation and drainage. roughly half of what is needed. The environmental consequences of these alternative approaches are often worse In Africa, where estimates were carefully than infrastructure-based provision, with constructed country-by-country and sector- higher GHG emissions and significant by-sector, infrastructure spending needs local air, water and soil pollution. These amount to some 15 per cent of the region’s approaches also have important negative GDP. Only about one third of this is currently public health consequences, and their financed. (To place this in perspective, the costs can be substantially higher (diesel national budget amounts to 10–20 per cent generations, purchase of potable water).30 of GDP in a typical low-income country.) Efficiency gains could cover another third, The economic cost of alternative service but new and additional funding of some US technologies is typically much higher than $30 billion annually would still be needed that of adequate infrastructure. Electricity (Foster and Briceno-Garmendia 2010). from power generators and water from remote wells is more expensive than These estimates do not include the many network-provided electricity and water. missing critical protective investments. Without flood risk reduction infrastructure, Many coastal cities do not have the coastal the human and economic cost of disas- protections that would be needed to cope ters increases. The lack of infrastructure with even relatively frequent storm surges funding has thus both an environmental (Nicholls and others 2007) or the irrigation and socio-economic cost. and water storage facilities that will be needed with increasingly unpredictable precipitation patterns. These estimates are also exclusive of urban public transport systems and other large urban public works that are impossible to estimate at an aggregate level, but are obviously critical for sustainable development.

29 ICTs are absolutely critical for green growth as they enable green management of many infrastructure services (smart grids in electricity, smart transport and congestion management) and generally permit much more efficient management of resources (e.g., water use).

30 The implication is not, of course, that only grid provision is appropriate, but it tends to be substantially more efficient (economically and environmentally) except for isolated, low density communities or for specific uses (e.g., solar water heaters). Renewables are often the most desirable source of energy for remote communities, but they tend to require government support (financial and logistical).

Part Il – Investing in Physical Infrastructure and Dynamic Growth 63 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

4.3 Meeting the needs for infrastructures are even implemented local and global with the main objective of improving local public goods public goods. Drainage and sanitation infrastructure aims at limiting the amount Aligning economic and social needs with of wastewater emitted into the natural environmental concerns is easier when environment. The welfare and economic dealing with the local environment, with gains are immediate and visible in terms short-term and visible impacts on welfare of water treatment costs, health costs and and economic activity. For instance, there labour productivity. In such a case, objec- are clear incentives to favour solutions tives associated with the three pillars of with lower negative consequences on air sustainable development are consistent and water quality and on health. Some and synergies can be exploited.

Box 1. Ecological infrastructure: Benefits and investment needs of protected areas (PAs)

Natural capital is the ecological infrastructure that provides the many goods and services that sustain all life. It is estimated that ecosystems deliver essential services worth between US $21–$72 trillion per year as compared to the 2008 World Gross National Income of US $58 trillion (Nellemann 2010). Ecosystems within protected areas provide a multitude of global benefits. Nearly 1.1 billion people worldwide depend directly on protected areas for a significant percentage of their livelihoods (UN Millennium Project 2005). Yet benefits from protection are often broadly disbursed, long-term and non-market, while the costs of protection and the earning potential from non-protection choices are often short-term and locally concentrated. Policy actions are therefore needed to address the distribution of benefits and costs and to leverage the investments needed to establish comprehensive, representative and effectively managed systems of national and regional protected areas.

The establishment of marine protected areas is a matter of particular urgency as these can play an important role in supporting the maintenance and recovery of fish stocks, as well as a wide range of other services. Financing needs and gaps for protected areas are listed below. The ecological infrastructure is also critical in cities and city-regions where the majority of humans live and the fastest growth continues to occur. The maintenance or restoration of the ecological infrastructure – including ecosystem-based adaptation and species management – should be considered an investment priority. While it is typically cheaper to maintain, conserve and sustainably use ecosystems than to restore them, it is increasingly recognized that the restoration of degraded ecosystems in urban areas or elsewhere can also bring high rates of return across a range of biomes. This is particularly the case when the value of nature’s goods and services are properly accounted for.

Baseline for PA investments Financing gap Source US $6.5 billion/yr US $45 billion/yr x 30 yrs Balmford et al. 2002 US $7 billion/yr US $23 billion/yr x 10 yrs Bruner et al. 2004 US $402 million/yr (Lat Am & Caribb) US $314–700 million/yr Bovarnick et al. 2010 US $36–38 billion/yr US $24–135 billion/yr Parker & Cranford 2010

64 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective

Problems are more complicated when could yield up to 25 GtCO2e of reduced global public goods are concerned, when emissions annually. environmental impacts occur over the long term only, and when investment In the case of climate change, trade-offs decision-making implies a trade-off between immediate economic gains between short-term costs and long-term and long-term objectives are obvious benefits. Additional water withdrawal when infrastructure decisions need to be creates immediate economic gains for made. Building dense cities that consume irrigation, industry or domestic use, while less energy and can more easily rely the negative impact on ground water on public transportation requires imple- availability and quality and on many eco- menting land-use regulations that are systems lays far in the future. In this case costly to enforce (both economically and alternative solutions are more expensive politically). New land use regulations can and can only be justified using a long-term accelerate the growth of housing costs, perspective, an approach difficult to apply which are already a concern in many with highly constrained resources in the developing-country cities. Also, providing immediate term. This has to be weighed electricity for all is already a challenge in against the higher longer-term costs that many countries. An increase in investment will follow from an eventual restoration of expenditure to reduce carbon emissions ecosystems (see Box 1). would translate into reduced access to energy, and potentially reduced economic This dilemma of shorter- versus longer- growth and poverty alleviation. term returns is evident in the case of climate change mitigation. The objective Transforming the global economy will of maintaining climate change below 2°C require action locally (e.g., through land was recognized by the Major Economies use planning), at the national level (e.g., Forum on Energy and Climate in L’Aquila through energy-use regulations) and in July 2009 (MEF 2009), was explicitly at the international level (e.g., through included in the Copenhagen Accord and is technology diffusion). Actions will have present in the final text adopted in Cancun to be taken by households and individu- in December 2010. Reaching such a als (e.g., investing in home insulation), goal requires global GHG emissions to businesses (e.g., change in production decrease at least by 50 per cent below process), and public institutions (e.g., 2000 levels by 2050. By 2030, this could standards and regulation). Some of these represent absolute emission reductions of actions will get implemented naturally, as about 30 Giga-tons carbon dioxide equiva- income increases in developing countries. lent per year (IEA 2009). Other actions, however, involve difficult trade-offs, making them impossible to Even if Annex I countries were to eliminate implement in the current situation. or offset their emissions by 2030, the global mitigation challenge of 30 GtCO e per year Only the implementation of a set of Source 2 by 2030 could not be reached. Emission diverse instruments – including pricing Balmford et al. 2002 reductions in developing countries are and taxation, regulation, research and Bruner et al. 2004 therefore essential. Studies about the still development programmes and public and Bovarnick et al. 2010 mostly under-tapped mitigation capacity in private investment – can make such a Parker & Cranford 2010 developing countries conclude that 50–70 transition possible. In the short to medium per cent of the global mitigation potential term, developing countries are unlikely to could be located in non-Annex I countries implement economy-wide climate policy. (UNFCCC 2007). Adding the emission Much can be gained, however, from early reduction effort of developing countries actions on investment patterns.

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4.4 Climate investment needs of US $264–563 billion (table 3). The difference between net costs and total Reducing GHG emissions will require financing needs is due to the fact that large investments in energy, building, many efforts concern energy efficiency transport and end-use equipment. or renewable energy projects with higher Mitigation costs in developing countries upfront costs but lower operational costs could reach US $139–175 billion per year that can offset at least part of the higher by 2030 with associated financing needs initial investment.

Table 3. Annual net cost and financing needs to limit warming to 2°C in 2030 Net cost Financing need Total Infrastructure $ billion $ billion $ billion % IEA - 565 324 57.3 IIASA - 264 - - MiniCam 139 - - - McKinsey & Co. 175 563 - - PNNL - 384 - -

Source: World Bank (2009b).

Table 4. Average annual incremental adaptation cost by 2050 Total Infrastructure $ billion $ billion % UNFCCC (2007) 28-67 2-41 - Parry et al. (2009) * - 15.9-63.2 - World Bank (2010b) **

NCAR scenario 90 30 33 CSIRO scenario 78 14 17

* Including housing and infrastructure. ** Delta-p only. Source: World Bank (2010b).

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An additional US $30–100 billion will be and developing countries will build the bulk needed for adaptation (table 4). Adaptation of their infrastructure in the two next dec- costs are estimated as the incremental ades, and infrastructure is characterized costs brought by changed climatic condi- by substantial inertia. Most infrastructure tions, that is, the additional cost of bringing assets have a lifetime of more than 30 new investments to the new standards years (table 5). For transport and energy required by the changing climate as well infrastructure and urbanization patterns to as the increased maintenance and opera- contribute to reduced climate vulnerability, tion costs on existing assets. a lower environmental footprint, as well as lower energy consumption and GHG Environmentally driven action on infra- emissions by 2050, changes in investment structure is particularly urgent as emerging choices are required with no delay.

Table 5. Priority sectors, considering timescale and environmental impacts

Sector Time scale Sensitivity Water infrastructure (e.g., dams, reservoirs) 30–200 yr + + + Land-use planning (e.g., in flood plain or coastal areas) >100 yr + + + Coastline and flood defenses (e.g., dikes, sea walls) >50 yr + + + Building and housing (e.g., insulation, windows) 30–150 yr + + Transportation infrastructure (e.g., ports, bridges) 30–200 yr + Urbanism (e.g., urban density, parks) >100yr + Energy production (e.g., nuclear plants) 20–70 yr +

Source: Hallegatte (2009).

China offers a striking quantitative illustra- A failure to start acting now may result in tion of the magnitude of the inertia issue for environmentally damaging development mitigation. Although its emissions are cur- patterns – energy and water consuming rently on par with those of the US, China’s technologies, low-density cities poorly committed emissions (computed on the suited to mass-transit, fossil-fuel electric- basis of its existing installed infrastructure ity production and water-hungry ways of and world infrastructure lifetime average) life – that would be difficult and costly to already account for 37 per cent of global reverse. The stakes are high, since infra- emissions commitments (Davis and others structure directly contributes 41 per cent 2010). This is due to the massive and very of GHG emissions, mostly from transport recent expansion in its infrastructure – the and power, without accounting for their mean age of power plants in China today indirect contribution. Further, delay in is 12 years as opposed to 32 for the US action will be costly: by one estimate and 27 for the European Union – and delaying developing countries’ measures the fact that coal accounts for most of its to adopt green infrastructure by 10 years power generation capacity. If one takes would result in a doubling of the estimated into account the inertia in assets location costs of mitigation reported in table 3 and energy-services demand drivers, (Edmonds and others 2008).31 this only increases the amount of committed emissions in emerging countries (Guivarch and Hallegatte 2011).

31 Modellers optimize, assuming that mitigation actions take place whenever and wherever they are cheapest. Part Il – Investing in Physical Infrastructure and Dynamic Growth 67 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

Further, current patterns of infrastructure Tackling environmental issues requires development increase vulnerability to profound and immediate transforma- natural hazards. Most economic impacts tions in how infrastructure is planned, of natural disasters arise from losses designed, managed and maintained. The of infrastructure-related services such choices made now in what is built, where as water and energy provision, and and how, determine future options and transportation capacity (Tierney 1997). vulnerabilities. There is thus a narrow Vulnerability to heat waves depends window of opportunity to shift develop- largely on building characteristics and ment strategies to more sustainable paths urbanization patterns and pre-existing air (Shalizi and Lecocq 2009) by mobilizing quality issues. Droughts and reduction upfront investments in energy, building, in water availability can be exacerbated transport and end-use equipment. This if water infrastructure (water reservoirs, shift, however, must recognize that the treatment plants) becomes inadequate. funding required for infrastructure due to environmental concerns is additional to the pre-existing funding gap. Efficient climate action cannot be implemented without tackling the infrastructure challenge. © Shutterstock / Tracing Tea Tea © Shutterstock / Tracing Man draws water from a pump above a mountain stream in Warduj, Afghanistan.

68 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective

4.5 More effective matching Current flows of mitigation and adapta- of core and additional tion finance pale in comparison to the funding objectives needs (World Bank 2009). Even though the resources flowing through the Clean Development Mechanism (CDM) have Climate-oriented financial support cor- steadily increased since 2005, they only responding to the additional cost of amounted to about US $23 billion over developing infrastructure with reduced 2002–2008 (UNEP 2010a). With each GHG emissions and increased climate dollar of carbon revenue leveraging on resilience would not be sufficient to allow average US $4.60 in investment and pos- basic infrastructure to be built, unless it sibly up to US $9.00 for some renewable has a strong leverage effect. In a country energy projects, some US $95 billion in where most of the population is not con- clean energy investment benefited from nected to an electricity grid and thus relies the CDM over 2002–2008 (World Bank on power generators, funding only the 2009). additional cost of producing low-carbon electricity would not permit the develop- Additional funding has been made avail- ment of the needed grid and a reduction able through organizations such as the in power-generation emissions. A poor Global Environment Facility (GEF), which country that cannot finance any dike commits about US $250 million per year system to protect its coastlines would in grants for climate investments. Other have little use for a funding source that donors have created climate funds that would pay for upgrading costs, unless participate in the funding of infrastructure. this additional funding is paired with other But those fragmented initiatives are still resources. far from closing the financing gap adding up to some US $8 billion a year, far less An efficient funding scheme for mitigation than what is needed. Moreover, this and adaptation in developing countries fragmentation is a source of inefficiency cannot focus solely on additional cost, and violates the principles of the Paris but must aim to leverage other sources Declaration on Aid Effectiveness. of funding – including domestic sources, private capital and official development The creation of a Green Fund was agreed assistance – and thus close the financing upon in Cancun in December 2010, with gap for broader infrastructure needs. This the objective of mobilizing US $100 billion calls for a rethinking of climate funding per year from 2020. The implementation in developing countries, considering of this fund could help close the infrastruc- infrastructure objectives for growth and ture funding gap provided that eligibility poverty alleviation. These would need and funding rules are designed to do so. to be integrated, along with a rethinking A move away from the “additionality” cri- of infrastructure finance in which climate teria adopted for the CDM to a financial objectives are mainstreamed. gap approach would also help provide developing countries with the resources needed to close their infrastructure gap, and to do it in a climate-smart way.

Part Il – Investing in Physical Infrastructure and Dynamic Growth 69 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © FAO / Giulio Napolitano © FAO Rickshaws in the Old Town section of Dhaka, Bangladesh.

70 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective Chapter 5: Green and inclusive growth strategies

5.1 Introduction: World economic growth outpaced growth Structural factors in in commodity consumption for most present growth dynamics commodities since 1975, but after 1992 the trend reversed in the case of metals, Continuing on the path of the current largely due to a steep rise in investment in energy- and material-intensive growth industry and infrastructure in China.32 model which defines our global economy is no longer possible, since it is strongly There has been relative decoupling of

correlated with increasing CO2 emissions, resource consumption from GDP growth overexploitation of natural resources and since 1980 as material productivity has damage to the Earth’s ecosystems, threat- risen, but the strong economic growth has ening the prospect of sustained economic overwhelmed these improvements so that growth at the global scale. Progress in absolute amounts of materials and fossil poverty eradication has been very uneven energy consumption have continued to rise and wealth inequalities have been widen- (cf. International Resource Panel 2010). ing across the globe. A new approach will have to be devised for ensuring that eco- Since the early 1990s, the long-term trend nomic progress goes hand in hand with of declining raw materials prices has human development and environmental been reversed, with steep rises in certain protection. Moving the global economy commodity prices in recent years. This away from a growth path based on fossil reflects growing scarcities as evidenced, fuels and materials consumption will for example, by declining ore grades in necessarily involve profound changes in the case of metals. economic systems, in resource efficiency, in the composition of global demand, in In developed countries a key feature of production and consumption patterns economic growth has been a continuous and a major transformation in public decline in the share of primary commodi- policymaking. ties and manufacturing in GDP and the rise in the share of services and human Structural factors underlying the present capital and technology-intensive activi- global growth picture have translated into a ties. This has occurred especially over persistence of large social, technological, the past three decades and has meant a economic and environmental asymmetries persistent decline in the use of material within countries and between developed inputs in production. and developing countries. Among the underlying structural determinants of In contrast to production, developed present growth patterns that need to be countries have not significantly reduced taken into account by countries embrac- material consumption. This group of coun ing a green and inclusive economy are tries accounts for a very large share of the following (cf. López 2009). global consumption, with the United States alone being responsible for 40 per cent and the OECD for 78 per cent of world consumption in 2009 (World Bank 2010c).

32 This has been mainly due to rapid increase in commodity-intensive manufacturing since 1993 in China. After declining for years, the commodity intensity began to rise gradually toward the beginning of the 1990s and then sharply accelerated around 1998. See World Bank (2009c).

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The combination of reducing material dynamics of world population (growing in production and little change in mate- from 7 billion to over 9 billion by 2050) are rial content of consumption implies that expected to change, particularly in South developed countries have been shifting Asia and sub-Saharan Africa. In fact, the environmental impact associated with projections based on world population producing the goods they consume to growth and food consumption patterns other countries through international trade indicate that agricultural production will (Ghertner and others 2007). need to increase by at least 70 percent to meet demands by 2050 (FAO 2010). A number of labour-abundant developing Population dynamics are therefore a key countries have benefited from the growing variable, particularly if we expect every- markets and increased trade in industrial one to enjoy a healthy and productive life goods arising from the reduction of material free of poverty in the coming decades. in production in the developed countries. In this context, the labour-rich develop- Furthermore, the elasticity of certain emis- ing countries were in a better position to sions, notably GHGs, in growth of these gain directly from this demand than the emerging industrial economies is high, resource-rich developing countries. The which means that their continued rapid latter have supplied raw materials, until economic growth will imply increases in recently at low cost. In these resource-rich their emissions. More importantly, this countries, the enclave-based expan- means that world economic growth is sion of commodity extraction, with weak now even more closely linked to carbon backward and forward linkages to the rest emissions than during the late twentieth of the economy, has in most cases been century (López 2009). insufficient to promote economic growth based on principles of sustainable devel- Resource-rich exporting countries have opment and equity (Barbier 2005). benefited from rising commodity prices, but this has also increased the risk of The incorporation of highly populated “Dutch disease”34 and the risk of being developing countries such as China and out-competed by the emerging industrial India into the global growth process is a exporters, complicating the prospects positive phenomenon but also a challenge of a transition to a green and inclusive for a transition to a green economy. Being economy for a number of the commodity at an early stage of development, their exporters. consumption and production processes are still very material-intensive.33 Economic growth has been fueled by, among other factors, the availability Demand in emerging economies for of relatively inexpensive energy. The industrial goods, notably consumer dura depletion of fossil fuel resources and bles and agricultural products with high a soaring energy demand represent environmental impact, such as meat, new constraints. These, combined with has increased at a pace that has often environmental concerns, notably related exceeded growth of per capita GDP. In to climate change, are expected to steer addition, consumption patterns linked energy systems towards a transition to not only to GDP growth but also to the alternative energy resources.

33 For example, from 2000 to 2007, Chinese demand accounted for 20 per cent of world export growth in metals, 11 per cent for copper, 55 per cent for iron and 58 per cent for soy. Since the crisis, while global demand for these same commodities decreased, Chinese demand for them doubled (Gallagher 2010).

34 The “Dutch disease” makes manufactured goods as well as services less competitive by raising the value of the currency.

72 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective

The above underlying structural factors globalization will extend those lifestyles are at the core of the present global growth and consumption patterns to developing problem, and should be dealt with when countries. It will require technological identifying what kinds of dynamic growth progress that boosts not only material strategies are needed for making the and energy efficiency but also labour transition to a greener and more inclusive productivity. global economic system. Overall, there are two pressing issues that emerge from The transition to a green economy will the structural factors mentioned above: also have to consider the need to narrow (i) the need to change resource-intensive two main gaps between developing and consumption patterns in developed coun- developed countries – the technological tries; and (ii) a need to promote efficient gap and the productivity gap. The technol- resource-saving technological and struc- ogy choice of economic agents is crucial tural changes in production systems in for achieving low material and low carbon developing countries, so that global growth intensity in the productive structures, is “decoupled” from environmental impact and will have to go hand in hand with and becomes less commodity-intensive increasing labour productivity.36 Labour and environmentally damaging.35 productivity is key for an inclusive green transition because it reflects not only effi- 5.2 New engines of productive ciency in production, but also the potential and efficient growth of the labour force to obtain better wages and reach higher living standards. Raising labour productivity is therefore recognized As mentioned earlier, the nature of eco- as a critical factor for increasing economic nomic growth in the coming decades will growth and reducing poverty levels, and have to be fundamentally different from low levels of education are among the the resource- intensive growth of the past main obstacles for reaching higher pro- and it will need to be assessed against the ductivity in many developing countries. criterion of whether it satisfies demands for higher living standards for a larger The evolution of labour productivity in dif- global population, while adjusting to tight- ferent groups of developing countries has ening environmental and natural resource varied. In Latin America, GDP per worker constraints. This will mean much greater increased up until 1978 and has declined efficiency in resource use, stronger ever since.37 East Asian economies have environmental protection and a shift in been steadily improving their labour pro- the composition of consumption away ductivity relative to the US. Strong growth from resource-intensive goods towards in labour productivity explains in part why less resource-intensive goods and into a number of highly populated and histori- services. In effect, it will require a seri- cally poor countries have been successful ous rethinking of lifestyles in developed in their growth process and in narrowing countries and of the expectation that the income gap with developed countries.

35 The nature of consumption is also important in developing countries, and continued structural change and technological progress is relevant in developed countries as well. It is important to make the distinction between relative and an absolute decoupling. Relative decoupling refers to a situation where resource impacts decline relative to GDP but nevertheless continue to rise. The situation in which resource impacts decline in absolute terms is called absolute decoupling. If the green economy is to tackle environmental scarcities, then absolute decoupling is needed.

36 Labour productivity is defined as GDP per hour worked.

37 If the sectors in which productivity rises account for a small proportion of total employment, then only a few workers with more advanced skills will benefit from higher wages, while the rest will continue to be employed in sectors where wages and productivity are lower. In Latin America and the Caribbean, high-productivity sectors account for a rather small portion of all employment (8.1 per cent in 2008). See the assessment by UN-ECLAC (2010).

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This can be explained in part by the transfer (see figure 2). The green quadrant – low of large of numbers of people in Asia from material and energy intensity and high low productivity rural employment to jobs in labour productivity – corresponds to the factories, a process that will eventually runs twin criteria of green and inclusive. A high its course as it did some time ago in Latin material and energy intense growth model America. Then, sustaining labour productiv- characterized by low labour productivity ity growth becomes more challenging. (lower left quadrant) is not desirable from either an environmental or a social per- The argument for closing both the tech- spective and reflects the situation of many nology and labour productivity gaps with developing countries. But there are also developed countries as basis for a green cases of countries characterized by high and inclusive economy is summarized in labour productivity, where the economy is very broad terms in the following matrix not sustainable (lower right quadrant).

Figure 2. Green economy matrix

Low material Low material and energy and energy intensity intensity Low labour High labour productivity productivity

High material High material and energy and energy intensity intensity Low labour High labour

Greening of the economy productivity productivity

Increase in labour productivity

Public policies will need to be used externalities and getting prices right, or strategically to orient the process of eco- targeting the greening of certain sectors, nomic growth towards such a sustainable but it also requires major changes in pathway, and issues of fairness in income economic policymaking. In fact, scaling distribution and social investment as up successful examples of best practices well as planning for long-run energy and on greening the economy is important but resource efficiency need to be included insufficient for addressing the scale of in the redefined set of economic policy environmental and equity problems that goals. the world is facing today. The approach should therefore not be restricted to This approach requires a systemic shift sector-level analysis, because green rather than incremental improvements buildings, more efficient transportation or alone. It involves not only steering the moving into more sustainable agricultural market through the use of sound micro- production systems will not, in themselves, economic policies, such as internalizing lead us to sustainable development.

74 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective

The fundamental redirection required for expand over time because they do not gen- a green and inclusive economy cannot erate significant negative environmental be achieved without a decisive reorienta- impact. Indeed, energy-saving and natural tion of macroeconomic policy to advance capital investments, as well as human the required major changes in present capital investments, are urgent from the economic growth models and the drastic points of view of both social well-being and adjustments in consumption and produc- environmental sustainability. The latter tion patterns. To encourage sustainable would include investments health care, consumption and production requires the food and nutrition security and education, internalization of negative externalities as well as cultural activity and information through a range of instruments such as services.40 Investments in transforming fiscal incentives and disincentives, carbon agricultural production systems are also trading schemes, rules and regulations desirable to ensure higher productivity and and product standards. These policies will food security, not only because of growing influence consumption, investment and population but also because agriculture other relevant economic aggregates. represents the biggest employer globally and the major income source especially Redesigning macroeconomic policies is for the poor. Growth in agriculture is often key when focusing on a new approach to more effective than growth in industrial economic growth. In fact, macroeconomic sectors at reducing poverty for the poorest policies not only affect the dynamics of people in society. economic activity, income distribution, investment and employment, but they can Naturally, however, in evaluating the also bring about the required structural environmental and resource impacts in economy-wide changes associated with a different sectors, indirect effects through green economy transformation. input-output linkages and the entire life cycle of the goods and services produced A breakdown of the major sectors of should be considered. For example, aggregate demand38 is useful in thinking as food systems are becoming more about a new economic growth path for globalized and complex, greening in the individual countries and regions. The idea agriculture sector has to be achieved is that we should distinguish between through the whole food chain. Excessive those macroeconomic aggregates that agrochemical production and use, water should be strictly limited, such as resource use, processing, packaging, transport, intensive consumption, investment in retail and waste are all major factors that energy-intensive infrastructure and tran make agriculture and food production one sport and government spending on fossil of the sectors with a significant impact on fuel subsidies,39 and those that could the environment and natural resources.

38 This can be expressed by balancing the well known aggregate demand equation of Y=C+I+G+X-M. For further details see Harris (2008).

39 According to the joint report prepared by OECD, IEA, World Bank and OPEC (2010) for the G20 Summit of June 2010, fossil fuel subsidies exceeded US $650 billion in 2008, in addition to the US $400 billion subsidies on agriculture in OECD countries.

40 It is of course true that the world economy as a whole cannot specialize in services and that services cannot replace essential agricultural and industrial products, but we can still imagine a transition to more service-intensive and less material- intensive consumption and production patterns.

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5.3 Opportunities in agricul- through social safety nets and other social ture, manufacturing protection services that enable them to and services make investments in the sustainable management of natural resources. Agriculture accounts for about 14 per cent of GHG emissions (about 33 per Bioenergy potentially offers developing cent when including the forestry sector), countries many advantages: (i) it offers and is one of the major causes of land opportunities for enhanced energy access cover/use change, including deforesta- and increased energy security by reducing tion. Sustainably managed agriculture, the dependence on fossil fuel imports; however, can also become a key sector in (ii) it potentially creates a new market for the development of a green economy, as producers; (iii) it can create significant it is able to achieve multiple benefits with new employment; and (iv) it potentially relatively low capital investments, including contributes to the reduction of GHGs. food security, environmental sustainability, Depending on the underlying feedstock, carbon sequestration and opportunities for biofuel production and use can generate green jobs and livelihoods. very different GHGs gas savings. While ethanol from sugarcane is estimated to Sustainable agriculture has the potential reduce GHG emissions by 80 per cent to enhance ecosystem services through over the production and use lifecycle, other actions such as restoring water catchment feedstock such as sugar beets, wheat and areas, reforestation and forest restoration, vegetable oils offer substantially lower sav- improving soil quality, sustainable man- ings in emissions. Corn, a key feedstock agement of animal husbandry, biodiversity for ethanol in the United States, has the conservation and creating habitats for lowest (<30 per cent) estimated savings pollinators and natural pest predators. (OECD 2008). Well-functioning ecosystem services will make production systems more resilient in Some important concerns have been the face of disruptive events, and will bring raised in relation to negative impacts of positive impacts on food security. biofuels on world food security, rural development and the environment.41 At a global Investment is required in transforming or national level, the diversion of food to both commercial and subsistence agri- new markets, such as biofuels, can have cultural systems. In commercial systems, ripple effects throughout food markets. investments should be aimed at sustaining The International Food Policy Research efficiency while reducing emissions and Institute and the World Bank simulations other negative environmental impacts. In show a potential significant impact on food subsistence agricultural systems, invest- prices through competition for land and ments should be aimed at transforming inputs, especially for ethanol. The rapidly smallholder agricultural systems through increasing demand for biofuels is largely sound soil and nutrient management, determined by the subsidies and mandates water harvesting and efficiency in use, provided in many developed countries. The increasing production system resilience, possible impacts of biofuels on land use, conserving genetic resources, reducing deforestation, water resources and food post harvest losses, improving processing prices will vary with feedstock, the method and reducing time to market. This in turn and location of production and the manage- requires significant investments in small ment of the sector. Sound bioenergy policy farmers’ human capital, including invest- development that reduces the competition ments in their food and nutrition security between energy and food needs must be

41 The development of second-generation biofuels (produced from cellulosic feedstock) and third-generation biofuels (produced from algae) offer the prospect of fewer negative food and environmental impacts. 76 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective

the outcome of a context-specific analysis. and Thailand (WTO and others 2009). In the manufacturing industries, there are An adequate transfer of technologies and significant opportunities for growth and a focus of policies on education, technical employment in renewable energy and training, investment and enhancement resource-efficient technologies. A larger of local skills would allow developing contribution of so-called green industry to countries to create endogenous capacity GDP not only has positive economic and and develop a competitive new economic social effects, but it can also be highly ben- sector. This goes hand in hand with envi- eficial for the environment in the long term ronmental protection, economic growth and provide locally critical improvements and employment creation, while reducing in livelihood conditions and employment knowledge and technology gaps.42 opportunities. In the services sectors, the globaliza- The development of China’s solar photovol- tion of services with low environmental taic industry since 2002 is a case in point. impacts provides alternative opportunities China has become one of the top global for developing countries to find markets solar cell manufacturers and more than 95 beyond manufacturing and commodi- per cent of domestic cell and panel produc- ties where they can specialize, scale tion has been exported. Demand for solar up and achieve high economic growth. cells has been driven to a great extent by Diversification into services can be com- the renewable energy policies of Europe, plementary to efficiency improvements in including renewable energy mandates and manufacturing, displaying how intelligent feed-in tariffs. Manufacturing of wind tur- use of services in both manufacturing and bines is also growing rapidly, and domestic commodity production can result in more demand for wind power is growing rapidly effective resource planning and use. in China. China’s wind market was virtually nonexistent 20 years ago and has grown Services in information and communica- to be the fourth-largest market in the world, tion technology are having a significant behind the United States, Germany and and continually evolving impact on eco- Spain. nomic growth. They allow for new ways of organizing production, consumption and Another case in point is the environmental markets, giving rise to important produc- goods and services (EGSs) industry. As tivity gains across sectors. Information demand for environmental services, equip- and communication technologies also ment and technologies has been increasing, hold high potential in the development of mainly pushed by regulatory demands in intelligent transport networks and smart developed countries, the environmental grids, two new applications enabled by industry has become a very dynamic high-speed broadband networks that are growth pole in OECD countries. The EGSs expected to be future enablers of low- market has been projected to reach US carbon development (GeSI 2010). $688 billion by 2010. Developed country producers are the major participants in this global market. A number of developing countries have a significant export interest in certain environmental goods. For example, five developing economies are among the top ten exporters of the entire renewable energy category of goods: China; Hong Kong, China; Mexico; Singapore;

42 This was revealed by the results of assessments on market potential for environmental goods and services done by ECLAC and GTZ for Argentina, Mexico, Chile and Colombia. For more information see: www.eclac.cl/dmaah/proyectos/pymes/index.htm# Part Il – Investing in Physical Infrastructure and Dynamic Growth 77 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

A number of modern services have technologies in developing countries will become transportable, tradable and be critical for green growth. Transfer of scalable and can be transacted across such technology depends on the recipient borders over the Internet. India is a countries’ absorptive capacity, which is good example, displaying rapid growth related to infrastructure, adequate levels of in exportable services with low environ- human and physical capital, investment in mental impact over the past two decades research and development and institutional while generating income and facilitating quality. All of these are important ingredi- growth. India is revealing strength in ents of growth. Thus, growth and greening skill-intensive services, including software go hand in hand (cf. OECD 2010). development, ICT-enabled services, product/project engineering and design, 5.4 Public policy and media, entertainment and healthcare strategic positioning (Altenburg and others 2008).

In the area of tourism, enormous growth Government policy plays a crucial role in in numbers of middle-income consum- determining which growth path will be fol- ers in emerging market economies is lowed. The transition to a green economy adding significantly to the size of a global in the context of sustainable development tourism business traditionally catering will not come about without active govern- mostly to OECD-country consumers. This ment intervention. As mentioned before, augments an already big challenge of given the scale of environmental problems managing tourism activities sustainably. that the planet is facing, public policies will Ecotourism innovations and the promotion need to be used strategically to orient the of responsible business through tourism process of economic growth towards a trade are as yet only a partial response to sustainable pathway and to focus on the the challenge. specific goals of employment and equity.

Pursuing all the sector-specific opportuni- Although environmental sustainability can ties highlighted above will require new partly be accomplished through incen- workforce and managerial skills that in tives – taxes and subsidies – aimed at turn require substantial investment in edu- internalizing environmental costs and cation and training. The important role of promoting environmentally beneficial sec- education as a means of increasing work- tors, there is also a need for investment force skills and generating knowledge for in societal and low-carbon infrastructure innovation suggests that it should have as well as long-term development strate- a permanent place on growth agendas. gies. Governments have a critical role Government policies that provide the in providing social protection as part of right incentives for investing in green the investment in human capital. Fiscal sectors and technologies should generate policy also plays a key role, as it can shift demands for the kinds of skills needed to incentives towards less environmentally build, manage and operate green econo- damaging activities and target interven- mies and attain green growth. tions towards particular socially and environmentally beneficial investments. Investments in human capital and more Shifting the burden of taxation from eco- particularly in developing the skills nomic “goods” such as income and jobs demanded of a green economy can be to ecological “bads” such as pollution and seen as part of a set of mutually reinforc- resource depletion should be central in ing investments. Deployment of new the transition.

78 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective

China provides a good example of 5.5 Private sector innovation combining investments and public policy incentives to encourage major advances The transition to the green economy, like in the development of cleaner tech- any process of structural change, is made nologies. Chinese support for domestic difficult by the fact that some of the estab- industry has always considered markets lished companies, which may be among outside of China. The country has strate- the losers, have considerable policy gically integrated itself into world markets leverage. Yet rather than opposing or in order to gain access to technology and delaying structural change, leading busi- finance, following a dual track policy. The nesses should seek to embrace and seek policy consists of liberalizing foreign direct to benefit from first-mover advantages. investment and inflow of imported inputs This strategy is one being followed in the to selected industries while supporting Republic of Korea, where government technology acquisition and absorption has defined green growth as a national by domestic enterprises in those sectors strategy and aligned major private com- to the point where they are ready to face panies behind it. competition with imports and even over- seas (Gallagher and Porzecanski 2010). Resource-efficient and cleaner production unleashes the potential of industries The case of resource-rich developing and enterprises to produce more with countries is particularly challenging, as less, and to reduce their environmental the motivation for a transition to a green footprint while at the same time deliver- economy is not obvious. The additional ing value-added goods and services revenues generated by commodity and creating jobs. Eco-industrial parks, exports, however, could be used to invest green clusters and eco-cities can be in upgrading environmental performance instrumental in reconfiguring traditional of technologies and adding value in exist- one-way industrial systems into circular, ing resource-intensive sectors as well as closed-loop systems. Resource efficiency in human, infrastructural and social capital is promoted and waste is transformed to facilitate industrial competitiveness and from a liability into an asset that yields diversification into new sectors. National economic benefits. high-speed broadband networks, which enable the uptake of green applications Further benefits can be attained by green such as smart grids, could be promoted.43 process and product design, designing The effective fiscal strategy would not be out pollution and wastes at their source. to keep natural resource revenues in sov- Such approaches not only enable the ereign funds heavily invested in foreign reduction of the use of virgin materials equity markets. Rather, a more effective and waste by the design of products strategy would be to use the revenues that are non-toxic and can be reused, for financing domestic or regional low- repaired or recycled, but can also stimu- carbon infrastructure and other projects late economic growth and create local that facilitate economic development and employment opportunities and can be a structural change for the transition to a driver in the establishment of sustainable green economy (Lin 2009). communities or eco-cities. At the industry level, innovative models such as industrial symbiosis, green industrial clusters with industries from the same value chain and eco-industrial parks provide collaborative opportunities to reduce waste and

43 For further examples see ITU, UNESCO and the Broadband Commission (2011).

Part Il – Investing in Physical Infrastructure and Dynamic Growth 79 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective pollution, efficiently share resources (such Other innovative approaches that could as information, materials, water, energy, fundamentally change production and con- infrastructure and natural resources) and sumption systems and decouple material help achieve socio-economic gains while consumption and value creation include improving environmental quality. product service systems and Payment for Ecosystem Services. Product service What these models have in common is that systems such as Chemical Leasing offers they reduce costs and generate new sales concrete solutions for sound management for the companies involved, as well as of chemicals and reduction of emissions creating significant environmental benefits to the environment.44 In the case of such as reduced landfill, water pollution and PES, experience from Uganda shows greenhouse gases. The economic activity how individual farmers can be rewarded generated also has further social benefits for meeting targets for establishing and with the creation of new businesses and maintaining woodlots. Their payments jobs. Experience shows that eco-industrial are funded by corporations eager to earn parks, industrial symbiosis and green carbon credits, a diverse range of com- clusters can contribute to the critical mass panies such as Tetra Pak, Nedbank and needed for an increased deployment of African Safaris.45 green technology and services. 5.6 A new, dynamic growth Through such green hubs, new growth pathway drivers can be created for regions to enhance their competitiveness and revi- talize economic activity. Such cooperation The nature of economic growth in the can also constitute a core element for coming decades will have to be fundamen- the establishment of eco-cities. These tally different from the resource-intensive are cities where urban planning, urban growth of the past and it will need to be and peri-urban agriculture, industrial assessed against the criterion of whether zoning, and environmental management it satisfies demands for higher living stand- approaches are integrated to pursue ards for a larger global population while synergies in resource utilization, indus- adjusting to the tightening environmental trial and urban development. Urban and constraints. A number of structural factors peri-urban agriculture can have important underlying the global growth picture need benefits for food security and safety by to be addressed by the international com- providing growers with food for their own munity in any proposals about a green consumption; a source of income genera- and inclusive economy. tion; and local markets with an immediate supply of fresh and micronutrient-rich A breakdown of the major sectors of food at competitive prices. Further social aggregate demand in different countries benefits include better health and nutri- is important in defining a new economic tion, increased income, employment, growth path. Policymakers will need to food security within the household and distinguish between (i) those macroeco- enriched community life. The success of nomic aggregates that should be strictly such market gardens is attributed to the limited, such as resource intensive con- use of few external inputs, the application sumption, investment in energy-intensive of agroecological principles and the reli- infrastructure and transport, and (ii) those ance on locally available resources. that could expand over time, such as

44 In the United Nations System, UNIDO plays the leading and coordinating role for the implementation and further development of Chemical Leasing systems.

45 See www.agriculturesnetwork.org/magazines/global/trees-and-farming/payments-rewards and Mwaloma (2011).

80 Part Il – Investing in Physical Infrastructure and Dynamic Growth A United Nations System-wide Perspective

energy-saving and natural capital invest- may result in the most vulnerable sectors ments, as well as human capital-intensive not being able to share in the gains from services such as in areas of health care green growth. and education. The urgency of the global environment Public policies will have to be used strate- and equity problems requires countries to gically to orient the process of economic share skills, best practices, technologies growth towards a green economy path- and methods in resource efficiency in way, and issues of fairness in distribution order for poverty reduction and industrial and social investment, such as education development to be sustainable. For the and health, as well as planning for long- private sector, the existence of an inte- run energy and resource use need to be grated framework of incentive structures, included in the redefined set of economic policies and regulations to encourage policy goals. Care has to be taken, the development of green industries that however, that even if growth promoting generate green jobs will be crucial as a policies are put in place and are success- driver for moving the economy along a ful, initial conditions of inequality in access green and inclusive growth path. to productive inputs, education and land,

Part Il – Investing in Physical Infrastructure and Dynamic Growth 81 HUMAN CAPITAL

ACTION

INSVESTMENT STIMULUS

LOCAL GLOBAL SOCIETAL PROGRESS HUMAN INFRASTRUCTURE

SOCIAL CAPITAL CONCEPTUAL

ACTION

PROGRESS HUMAN CAPITAL

ACTION

INSVESTMENT STIMULUS

LOCAL GLOBAL SOCIETAL PROGRESS HUMAN INFRASTRUCTURE

SOCIAL CAPITAL CONCEPTUAL Part III InvestingACTION in Human Capital and Societal Infrastructure

PROGRESS Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © FAO / Giuseppe Bizzarri © FAO Farmers control soil erosion through crop cultivation. Rural Development in Southern Lempira, Honduras.

84 Part Ill – Investing in Human Capital and Societal Infrastructure A United Nations System-wide Perspective Chapter 6: Making the green economy work for the poor

6.1 Introduction

Despite significant gains in many coun- What are the links between poverty reduc- tries, poverty remains a key challenge tion and a green economy? The concept across the developing world and affects discussed in this report shows that human more than one billion people (UN 2010). well-being and equity are core goals of Apart from income poverty, other indicators greening the national economy. How of well-being such as nutrition, maternal could this become a reality in different and child health, women’s empowerment countries? There is widespread consen- and inequality are also ongoing matters sus today on how poverty and inequality of concern. The task of improving well- can be reduced within and across genera- being along these multiple dimensions is tions. These include the following: only expected to become harder as the impacts of climate change and ecosys- • Sustained economic growth, which is tems decline become more acute, with necessary but not sufficient for poverty largely negative consequences predicted reduction.47 for millions of poor and vulnerable people in developing countries. • Economic growth in specific sectors that provide employment, production While it cannot be assumed that progress and entrepreneurship opportunities to towards a green economy will improve on the poor. These include sectors where the rate of poverty reduction achieved by the poor are more likely to find their conventional developmental paths, there livelihoods, such as agriculture, fishing, are ways to maximize the potential for this to forestry and other natural resources, happen and avoid trade-offs. As illustrated construction, transport infrastructure earlier in this report, a green economy is and other primarily urban sectors, one where growth in income and employ- as well as others where unskilled ment is driven by investments that: and manual labour is important. In addition, a growing body of evidence • Reduce carbon emissions and suggests that access to energy by the pollution poor can lead to benefits across multiple dimensions ranging from income • Enhance energy and resource to education and health outcomes efficiency and the well-being of women (UNDP 2010b). • Prevent the loss of biodiversity and ecosystem services.46

46 Ecosystems services are the benefits (goods and services) to human well-being provided by ecosystems, and include provision- ing, regulating, supporting and cultural services (Millennium Ecosystem Assessment, 2005).

47 For example, a joint report on MDG progress by the African Development Bank, African Union Commission and United Nations Economic Commission for Africa (2010) finds that despite recent strong and persistent economic growth in the region, the jobless- ness of growth remains a major impediment to reducing poverty. Cross-country studies confirm that, on average, growth tends to be positively correlated with improvements in the incomes of poor people overall (World Bank, 2005). Growth also tends to be positively correlated with improvements in food supply and protein and calo¬rie intake (Haddad, 2003). Averages, however, conceal the fact that the poor often gain proportionally less.

Part Ill – Investing in Human Capital and Societal Infrastructure 85 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

• Redistribution of the benefits of growth to exhibit possible tradeoffs and possible through public spending in the provi- synergies. Understanding and balancing sion of equitable, quality services (in, these overall goals would require accu- e.g., health, education, water and rate assessments as well as carefully sanitation) and social protection for calibrated policies and measures. the poor that helps improve their – and their children’s – skills and productivity. As it is the poor who are predominantly In turn, the poor boost growth when dependent on ecosystem services, green they are equipped with assets and economy initiatives to prevent the ero- resources to take part in the develop- sion of these services can be important ment process. in reducing poverty levels to the extent that they also safeguard the livelihoods • Proactive focus on women, the of the poor who draw upon them. On the excluded, and hard to reach population other hand, investments to reduce carbon groups who may need special help to emissions and pollution need not gener- gain access to employment and quality ate jobs in sectors that employ the poor, services. These may have important even though reducing polluting impacts multiplier effects, positively affecting that often have the worst impact on the several dimensions of well-being. poor. Clearly, improved health and qual- Educated mothers, for example, tend ity of life due to avoided pollution needs to have better nourished and educated to be accompanied by improved income children. and quality of life due to direct and formal employment. In some economies, green • Empowering the poor and marginal- investments could also help offset any ized – including women – to play an potential increases in emissions and pol- effective role in the decisions that lution as a result of growth in sectors that determine their long-term well-being. actually employ the poor, thus enabling In some countries this includes refu- the economy as a whole to move to a gees, some of whom are refugees due greener path while achieving poverty to ecological insecurity or resource reduction objectives. conflict and who would benefit from employment generation if govern- In general, a green economy that works ments would allow them to participate for the poor might be expected to display fully in the labour market. the following characteristics:

• Providing protection against negative • It maintains growth and reduces emis- shocks – including those arising from sions for the economy as a whole, while global crises such as those due to high promoting the creation of jobs and other food prices – so as to avoid slowdowns economic opportunities in sectors that or reversals in poverty reduction. predominantly employ the poor.

Comparing these with the three priority • It generates adequate amounts of investment targets of a green economy public revenues to allow investment in – reducing carbon emissions and pol- social protection and quality services lution; enhancing energy and resource with equitable access by the poor. efficiency; and preventing the loss of biodiversity and ecosystem services – it • It retains biodiversity and ecosystem is clear that the relationship between the services, while seeking to maintain in green economy and poverty reduction is sustainable ways the livelihoods of the not straightforward, but can be expected poor who are directly dependent on them.

86 Part Ill – Investing in Human Capital and Societal Infrastructure A United Nations System-wide Perspective

• It enhances energy and resource The movement to a green economy will efficiency in the economy, including take place against a backdrop of other through the equitable access to energy longer-term transitions, such as increasing by the poor and the promotion of its urbanization, altering demographic struc- efficient use. ture and structural change in developing country economies. These transitions are • It ensures resilience to environmental taking place concurrently, albeit at differ- (and other) risks through developing ent rates and in different ways, in each adaptive capacities. country. They present both challenges and opportunities. Policies and measures Achieving these objectives will require that promote a green economy with lower governments to weigh apparent trade-offs levels of poverty would need to recognize and dilemmas of short- versus longer-term and be responsive to these. investment returns, identifying alternative policies and measures. Maintaining biodi- 6.2 Helping a green economy versity and ecosystem services might, for to work for the poor example, limit the number of sustainable livelihoods that can be supported, thus Several policy and programme requiring the consideration of other forms approaches in recent years have been of economic opportunity for the poor. proven to be effective in promoting a pro- Possible policies and measures might poor economy, one that also has green also provide opportunities for developing foundations. These include: synergies. As an example, South Africa’s Working for Water initiative started during • Low carbon, sustainable agriculture the 1990s to advance a public employ- to maintain growth, address poverty, ment approach by employing the poor in food security and ecosystem services: the highly labour-intensive work of clear- A majority of the poor live in rural ing invasive alien vegetation to restore areas and depend on farming for stream flows and water availability. The their livelihoods (World Bank 2008). resultant improvements in land pro- Low carbon, sustainable agriculture ductivity and biodiversity enhanced the has the potential to promote growth, provision of ecosystem services, while employment and food security while also strengthening the livelihoods of those assisting with nutrient cycling and dependent on them. maintaining ecosystem services. This potential can only be realized if poor The externalities associated with some men and women farmers can be of these green economy initiatives may helped to access the relevant knowl- require the active use of well-designed edge, technologies and green markets. policy instruments to maintain appropriate Similar examples exist for sustainable incentives. For example, the protection ecosystems management in sectors of forests in one place to improve carbon such as fisheries and forestry, with sequestration and mitigate climate real potential for growth, employment change would have global benefits. Yet and poverty reduction. In addition, lower levels of income might accompany opportunities also exist in the urban this in the short term for those whose environment. Urban and peri-urban livelihoods are tied to the forest, requiring agriculture is important for deliver- some form of transfer from beneficiaries ing food in critical areas, supporting in other locations. small-scale farmers through improved access to formal and informal markets and reducing farm-to-table distances.

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• Improved off-grid, green energy • Fiscal mechanisms for pro-poor sources. These sources have good environmental change. Environmental potential to provide poor people fiscal reforms offer the potential of access to energy, with correspondingly internalizing the costs of ecosystems large multiplier effects in employment degradation and resource-intensive creation, small enterprise generation, use through the use of green taxes and poverty reduction, the achievement of user fees, as well as removing envi- health and education outcomes and ronmentally harmful subsidies (e.g., in improvements in the well-being of agriculture and energy). Environmental women.48 In well-designed systems, fiscal reforms have been applied ina the increase in emissions can be small number of developing countries and and reduced to zero (in aggregate have achieved triple wins in terms of terms) through a proportionately revenue generation, environmental greater reduction in emissions from improvement and poverty reduction other parts of the economy. Enabling (OECD 2005). Public resources gener- the access of the poor to credit and ated have been used to invest in the skills can help these to deliver their full provision of quality services to the poor. benefits. These can also be used for social protection expenditure to cushion the loss • Creating green jobs – for poor men, of jobs and to provide training in new women and youth – that align poverty green job areas along with investment reduction and employment creation in in renewable energy, energy infra- developing countries with a broader structure, energy efficiency and related set of investments in ecosystems energy services. conservation and rehabilitation to pre- serve biodiversity, restore degraded • Enabling business to innovate, adopt land, combat erosion, and remove and disseminate green methods of invasive species, as well as recycling production. The private sector is the and waste management in urban driving force in most national econo- areas (UNDP 2009). There is also tre- mies and plays an important role in mendous potential to generate jobs for influencing sustainable production and the poor through developing climate consumption patterns. With the capac- resilient infrastructure and adaptation ity to invest and innovate, the sector is investments, especially in the urban uniquely positioned to create solutions building and transport sectors, to that reduce emissions and resource sustain growth. In most cases, the use, while at the same time generating assets created or refurbished through growth and employment opportunities these jobs continue to deliver benefits for the poor. An example from Ghana is that can be harnessed by the poor for Toyola Energy Limited, which produces continued improvements in their well- cooking stoves and lanterns that target being. Examples can be found in many rural dwellers who largely depend public employment initiatives, such on firewood and charcoal for their as South Africa’s Working for Water, domestic cooking and on kerosene India’s National Rural Employment for lighting. Toyola provides cleaner, Guarantee Scheme and the creation healthier and cost-effective means to of green microenterprises in ecotour- meet the energy needs of the poor, ism in Kenya. and has expanded products, generated new jobs and offset carbon emissions (UNDP 2011a). 48 See UNDP (2010). Multifunctional platforms in Burkina Faso, Ghana, Mali and Senegal have created income-generating opportunities for women, while reducing the time they spend on collecting firewood and water.

88 Part Ill – Investing in Human Capital and Societal Infrastructure A United Nations System-wide Perspective

• Building the resilience of the poor. • Decentralized approaches. There are Climate change scenarios present a number of successful decentralized new challenges to the poor and food- ecosystem management initiatives insecure by altering ecosystems and around the world that have worked to their services (despite where access is generate incomes and lift people out of provided or ecosystems maintained). poverty. The UNDP GEF Small Grants It brings the risk of disrupting growth Programme has supported many and livelihoods, reducing food produc- such efforts, but these cases often tion and access to food, changing remain islands of success. Where they disease patterns, increasing vulner- have been taken to scale, such as ability due to climatic shocks and the community-based forest management occurrence of environmental refugees. in Nepal, evidence suggests that the This necessitates protecting the more affluent take control and that, poor from shocks as well as building at a national level, political groups their assets to increase resilience. and parts of the government are keen Ethiopia’s Productive Safety Net to extract a share of the profits. The Programme, for example, provides challenge lies in establishing effective transfers to chronically food-insecure governance mechanisms for the poor to people while helping create assets at play a role in making the links between the community and household level national and subnational planning, and through public works (soil and water in decentralizing budgets to allow local conservation, feeder roads, water authorities to be effective contributors supply, small-scale irrigation, etc). to the achievement of sustainable development. • Catalysing climate finance and mainstreaming pro-poor green economy 6.3 The role of international in national development plans. There agencies in making is tremendous potential to raise climate finance through the Reducing green economies work Emissions from Deforestation and for the poor forest Degradation (REDD) initiative, carbon markets, climate adaptation It is important to recognize that a transi- finance and supplemental govern- tion to a green economy can exacerbate ment resources to pursue pro-poor, poverty and inequality (jobs could be lost, green economy goals through national for example) if not managed properly. development plans. Increased public Therefore, a pro-poor and inclusive financing will be vital to address approach needs to prioritize and sequence upfront investment costs associated measures that guard against this by with the transition to a green economy. protecting the poor during the transition It will also be vital to ensure that such through social protection programmes. financial mechanisms include social Moreover, the transition to a green econ- and environmental safeguards that omy with pro-poor impacts as priority will protect and promote the interests require a two-pronged approach: climate/ of the poor, so as to fully realize this environment-proofing growth and poverty potential. Safeguards for biodiversity reduction, while poverty-proofing climate/ and indigenous and local communi- environmental protection responses. ties are being developed under the Convention on Biological Diversity.

Part Ill – Investing in Human Capital and Societal Infrastructure 89 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

Table 6 summarizes some key strate- improved coordination to dealing with gic and policy issues associated with cross-cutting aspects such as gender and national transitions to green economies, youth. A range of highly relevant agency and outlines the possible roles of inter- mandates and institutional capacities at national agencies such as those of the all levels is available to strengthen support United Nations and the Bretton Woods to governments and others in all regions. Institutions. It highlights a place for work This also requires improved integration in that ranges from the global normative to approach and planning of goals across country level support with implementa- the economic, social and environmental tion, from research to activation, from dimensions of sustainable development.

Table 6. Key strategic and policy issues and the role of United Nations and Bretton Woods Institutions

Strategic issues Policy issues Role of United Nations and BWIs Shaping the shift to a Global policy coherence on Help ensure synergies global pro-poor, green green economy, climate and between the green economy, economy approach MDGs agenda MDGs and climate change agendas in different global settings.

Measuring progress Define pro-poor green Support efforts at defining towards a pro-poor economy targets and green economy indicators green economy with indicators to guide and and ensure that they are appropriate indicators motivate policy decisions and sensitive to measuring achieve results pro-poor and equitable outcomes.

Supporting countries Overall key policies for Provide capacity and policy to shift to a green pro-poor green economy support to developing economy drawn by linking up pro-poor countries on nationally led growth debates and green pro-poor green economy growth debates. For example: actions:

- Green redistributive policies – to - Institutional arrangements and pro-poor sectors (health, education, reform, including coordination water supply) structures and alignment for national - Support for specific sectors which policy coherence are crucial for the poor (agriculture, - Integrated assessments to link and fisheries and forestry) assess the impacts of climate risks - Green tax-financed social and ecological scarcities on growth protection to protect and build assets and multidimensional poverty - Community participation opportunities - Prioritizing pro-poor green (off-grid power with renewable energy) economy policy response and innovative options - Green job creation via development of the finance sector and increased - Costing and budgeting of policy investments in ecological and physical responses and identifying and infrastructure accessing a variety of climate and environmental financing mechanisms - Pro-poor forest and land use policies - Identifying and addressing - Differentiated policies for the rural implementation bottlenecks and urban poor, recognizing their different contexts

90 Part Ill – Investing in Human Capital and Societal Infrastructure A United Nations System-wide Perspective

Supporting countries Ensure that women and men Provide capacity and policy to address the nexus participate in and benefit support to government to between gender, equally from the green incorporate gender issues in green economy and economy. the green economy’s policies, sustainable programmes and budgets. development Identify and respond to the specific impacts on women Support civil society organi- and men in the transition to zations working on women’s green economy. economic empowerment in relation to the green economy.

Supporting implemen- Strengthen poverty reduction As climate finance increases, tation through aid objective in measures to the United Nations and BWIs coordination and progress towards green can help ensure that it is improved development economy. coherently linked to official effectiveness development assistance to Ensure that REDD options ensure synergies and that its are pro-poor. implementation learns from past work on aid effective- Support access to climate ness to promote ownership, financing for pro-poor alignment, harmonization, development. managing for results and mutual accountability.

Strengthening the Improve knowledge on The United nations and BWIs interface between integrated approaches to to enter into strategic research and policy- poverty eradication in the partnerships for development making context of climate change research and analysis to and ecosystems decline. ensure that policy guidance and implementation are Build evidence based on founded upon, and feed into, impacts of sustainable empirical evidence building agriculture on poverty, food and the elaboration of sound security and environmental conceptual frameworks. sustainability, its feasibility and how to scale it up.

Build evidence based on impacts of energy reform on poverty and related institutional reform.

Integrated assessment tools for interlinking climate change and human development.

Part Ill – Investing in Human Capital and Societal Infrastructure 91 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © FAO / Giulio Napolitano © FAO To assist the Government of Egypt in its efforts to control and eradicate HPAI in the domestic poultry population and avoid the risks of human infection.

92 Part Ill – Investing in Human Capital and Societal Infrastructure A United Nations System-wide Perspective Chapter 7: Investing in social capital

7.1 Basic human rights as Changes in current consumption and pro- point of departure duction patterns will cause some sectors to decline and others to flourish. While far Improving human well-being and equity more jobs will be created in the transition are at the centre of the green economy. than jobs lost, the challenge is to ensure The rights of human beings are both that the process is fair and just. negative (freedom from) and positive (right to), individual and collective. To Moving away from the conventional “grow honour these rights requires the careful first, clean up later” path of development assessment of the impacts of economic by increasing investments in human and growth in the shorter and longer term, and social capital can help to firmly establish the assurance that individuals and com- a green path for future development. munities have the necessary capabilities Investing in social sectors is fundamental to participate in determining the direction to achieving resource-efficient growth and of growth and to share its benefits. strongly linked to environmental policy goals. For example, improved access to This chapter examines opportunities at safe drinking water and sanitation could the level of society, and considers public improve school attendance, reduce a health, lifestyles and culture. A green wide range of health risks and reduce economy should effectively invest in the the number of work days lost. Therefore, social and human capital dimensions of ensuring policy coherence and integra- sustainable development, helping com- tion in delivering balanced outcomes in munities and individuals build capacity in the social, economic and environmental areas such as health, education, culture pillars of development will be crucial to and employment. A green economic model achieving a successful transition. will need to prove its ability to enable all human beings to fulfill their basic needs in Empowerment of the world’s poorest and food, housing and mobility. most vulnerable through the promotion of human rights in policy making recognizes Achieving sustainable development the fact that the poor have both needs requires going beyond the transformation and rights, entitlements – enshrined in of national economies to transforming soci- law – that give rise to obligations on eties. Building inclusive, green societies the part of others.49 The application of requires a shift to sustainable production a human rights approach to a green as well as consumption, the latter high- economy model implies the treatment of lighting the need for a shift in patterns of individuals and groups as active agents behaviour, attitudes and lifestyles. This of change and not merely as passive is especially critical as rapidly urban- victims. A human rights-based approach izing communities with growing levels of is a conceptual framework that is norma- income in developing countries change tively based on international human rights their habits and increase demand for standards and operationally directed to products and services that cause increas- promoting and protecting human rights. It ing pressure on the natural environment. seeks to analyze obligations, inequalities

49 See for more information a background paper on human rights, poverty reduction and sustainable development: health, food and water (2002), available from http://www.ohchr.org/Documents/Publications/HRPovertyReductionen.pdf.

Part Ill – Investing in Human Capital and Societal Infrastructure 93 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective and vulnerabilities, while redressing In practical terms, a human rights-based discriminatory practices and unjust dis- approach can be used to guide the fun- tributions of power that impede progress damental principles and approach behind and undermine human rights. The human various policies and measures in advanc- rights-based approach demands policies ing green economies. It can inform impact and programmes that are anchored in a assessments and strengthen processes, system of rights and corresponding obli- ensuring access to essential information, gations established by international law. effective participation, and the provision of This helps to promote sustainability and access to justice. States should consider empower people as right-holders – espe- in what ways, and to what extent, antici- cially the most marginalized – to participate pated changes towards a green economy in policy formulation and hold accountable will promote economic and social devel- those who have a duty to act.50 opment and environmental quality at relevant levels, including consideration of To take human rights fully into account, human rights and social equity. the process of formulating green economy strategies and measures must include the 7.2 Human health and social following elements and principles: well-being • Identifying and prioritizing action to improve the conditions of the poorest The first principle of the 1992 Rio Declaration states, “Human beings are • Analysing the underlying power at the centre of concerns for sustain- relations and the root causes of able development. They are entitled to discrimination a healthy and productive life in harmony with nature.” Scenarios for projected • Ensuring that the process and targets population growth in the coming decades are consistent with international depend on policies that governments human rights standards are implementing today, especially with respect to sexual and reproductive • Ensuring close links between mac- health care and family planning. Without roeconomic policy design, sectoral such policies, population growth may initiatives, governance components well exceed current medium-variant and principles such as transparency projections. In addition, the quality of and accountability life of increasing numbers of citizens will depend on economic policies and invest- • Ensuring basic standards of civil and ments that have direct implications for the political rights guarantees for active, health of both humans and the environ- free and meaningful participation, ment. Economic analysis shows clearly including freedom of information, of that increased investment in sustainable association and access to remedies and more efficient transport systems, housing energy efficiency improvements • Identifying indicators and setting and greener agricultural practices can benchmarks so that the progressive yield significant co-benefits for human realization of socio-economic rights and environmental health. Consider the can clearly be monitored. following areas:51 50 More information about a human rights based-approach to development cooperation is available from http://www.ohchr. org/Documents/Publications/FAQen.pdf.

51 In order to assess these health co-benefits and (where relevant) risks more systematically, WHO is comprehensively reviewing evidence on, and mapping, health co-benefits of green economic development in key economic sectors. The WHO Health in the Green Economy initiative covers housing, transport, household energy, agriculture and health facilities.

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• Health, transport and the built environ- pollutants significantly, in particularly ment. Transport-related health risks sooty particles containing black carbon, currently affect millions of people. Urban one of the most powerful shorter-lived air pollution and traffic injuries together kill climate pollutants. They would also pro- about 2.5 million people every year, mostly duce substantial co-benefits for poverty in low- and middle-income countries. reduction and development. Active transport (walking and cycling) can help prevent a significant proportion • The greening of health care facilities. of the 3.2 million deaths annually attribut- Many health care facilities in developing able to physical inactivity. Green transport countries suffer from serious forms of strategies that would yield the greatest energy poverty. Health sector adoption health co-benefits include investments of (clean) onsite energy co-generation, and policies to support (i) active transport; together with use of renewable technolo- (ii) rapid transit; and (iii) improved urban gies such as solar power, can both save land use. The inherent subsidiarity of energy and ensure more reliable energy local governments puts them in an ideal supply to the health sector.53 Access position to lead this transition. And while to health care can also be enhanced vehicle and fuel efficiencies have so far through green, renewable energy received the most emphasis in climate systems. Particularly in remote, resource- mitigation analysis, behavioural change poor settings, small renewable energy and shifts in modalities must accompany sources can supply basic electricity for increased efficiency to avoid rebound life-saving procedures that might not effects in which efficiency gains provoke otherwise be feasible, such as maternal increased consumption. deliveries, basic suturing and night-time emergency procedures, blood bank and In the urban environment, mutually support- vaccine storage and basic laboratory ive climate and health gains require spatial equipment. Enhanced use of natural planning that favours compact settlements ventilation strategies in health facilities with dedicated infrastructure for non-motor- can significantly help reduce both energy ized transport. Health gains from transport costs as well as risk of infectious disease strategies that emphasize active transport, transmission. Furthermore, health risks public transport and more pedestrian and to health workers, patients and com- transit-friendly land use include: reduced munities will be reduced by improved cardiovascular and obesity-related diseases management of the health care water due to physical activity gains from active supply and waste stream. Some 15–25 transport; reduced respiratory and cardio- per cent of health care waste is infectious vascular disease from less air pollution; and waste. Scavenged needles and syringes reduced exposure to traffic injury risks from from dump sites represent health threats, more transit and pedestrian-friendly land use. as do dioxins, furans and other toxic pollutants emitted by poor incineration. • Healthy and green household energy in Better management of solid, liquid and developing countries. The health of an gaseous health care products, as well as estimated 3 billion people can be dra- emissions from infectious, chemical and matically improved by replacing simple radioactive agents, can reduce exposure biomass or coal stoves with improved to risks of hepatitis B/C and HIV infec- stoves and cleaner fuels.52 These inter- tions as well as to reproductive problems ventions also reduce climate change and cancers.

52 For more information, see www.who.int/indoorair/publications/fuelforlife.pdf

53 See WHO (2010) on co-benefits to health from climate change mitigation opportunities in the health sector.

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• Healthy housing. Cities’ inherent Agricultural workers, the majority of agglomeration advantages and large them in developing countries, often number of dwellings mean that hous- work in conditions that make them par- ing upgrades – whether measures for ticularly vulnerable to environmental risk increased energy efficiency, shared factors (e.g., the effects of temperature energy sources or climate change changes, such as heat stress, dehydra- resiliency – can be undertaken at tion, UV exposure and extreme weather advantageous economies of scale. events) in addition to occupational risk Greener housing policies can help factors (such as exposure to pesti- reduce health risks from extreme cides). More sustainable agricultural weather and thermal stress, from strategies also need to consider health household-related respiratory dis- equity and food security issues relevant eases such as asthma and pneumonia; to low-income and subsistence farmers from vector-borne diseases such as in developing countries, paying special dengue or malaria; from home injuries; attention to their food security, liveli- and from diarrheal diseases due to hoods and access to health services. insufficient access to safe drinking water and sanitation. Green economy opportunities need to be communicated more powerfully in main- • Health, agriculture and the environment. stream United Nations debates about public More sustainable agriculture systems health, health-related MDG achievement can improve health in a number of and the prevention of communicable and ways, including by reducing exces- non-communicable diseases. The health sive use of fertilizers and pesticides, benefits of greening require mainstreaming integrated vector control management, in the key health-related actors in the donor improved food safety management, community. Conversely, health, food and improved nutrition and preserving water nutrition security issues also require main- resources, biodiversity and ecosystem streaming in the environmental and climate services upon which long-term food change discourse. Health and nutrition production depends. Soil carbon security is a powerful argument to support sequestration strategies offer important climate change mitigation and greening short-term benefits for climate mitigation efforts more generally. The health benefits while also potentially increasing yields of such measures are very often immedi- and improving ecosystem services, a ate, personal and local/communal – rather double win for health and environment. than deferred and diffuse. Healthier patterns of food consumption in higher-income countries and higher- Health is also a cross-cutting issue and income population groups may also inextricably linked to environment and help reduce environmental pressures development objectives. The health sector that arise from livestock production. can provide evidence-based arguments These include the conversion of forests of exactly how green economies are also and rainforests to livestock grazing healthier and food secure. In many cul- and/or cultivation of crops for livestock tures, health professionals are regarded consumption on farmland that could with respect and can provide inspirational otherwise be dedicated to human con- leadership on preventive health measures sumption. Excessive use of antibiotics and lifestyle measures that are best buys in livestock production, as well as poor for health and environment, and can be management of animal waste together delivered affordably by using currently pose a range of human health problems available technologies. that require careful management.

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Mainstreaming the green economy There are now more than 700 million cars approach also requires more policy-oriented in use globally. It is anticipated that by research (qualitative and quantitative) 2050 the global car fleet will triple. More within the health sector and intersectoral than 90 per cent of this growth will take collaboration on the health co-benefits place in non-OECD countries.54 At home, of the green economy. In addition, more daily life habits such as heating, cooling donor support is required for pilots that or lighting require extensive energy and showcase and systematically scale up cause large amounts of GHG emissions. health gains due to health sector access to The dietary habits of young and urbaniz- renewable energy sources, gains such as ing populations in emerging markets also reduced mortality from more reliable elec- add to the strain that consumers from the tricity access in health facilities, reduced OECD world have historically placed on morbidity from poor water and sanitation in the natural environment. health facilities. Research can also be used to assess, pilot test and scale up adaptive As cities seek green urban solutions, mitigation or green adaptation strategies in they are well advised to consider histori- developing countries to demonstrate how cal innovations that can be found in rural a suite of green economy measures can areas. There is much to learn from the bring integrated benefits. environmental management skills embedded within rural or indigenous peoples, 7.3 Culture and lifestyles including multi-use strategies of appro- priation, small-scale production with little surplus and low-energy needs, as well as Culture in all its diversity has an impor- a custodial approach to land and natural tant – yet often underestimated – impact resources that avoids waste and resource in attempts to address current ecological depletion. Culturally based knowledge and challenges, including climate change, indigenous know-how are core resources biodiversity loss and resource scarcity. for sustainable development. Not only are Cultural factors influence lifestyles, biological and cultural diversity linked to a individual behaviour and consumption wide range of human–nature interactions, patterns, values related to environment but they co-evolve, are interdependent stewardship and the ways in which we and mutually reinforcing. interact with our natural environment. The rebound effect of more efficient tech- Culture is also a vehicle for pro-poor, green nologies leading to intensified resource development and the generation of jobs. use due to increased consumption is a Global cultural industries account for more reminder of the importance of addressing than 7 per cent of global GDP. In Mali, for the demand side, user and consumer example, the culture sector accounted for aspects of any attempt at the greening of 5.80 per cent of employment in 2004 and economic activity. 2.38 per cent of Mali’s GDP in 2006, including the informal component (accounting Three fundamental components of for 57 per cent of the national economy; lifestyles worldwide – food, mobility and UNESCO 2011). Worldwide cultural herit- housekeeping – have great impacts on age destinations, especially UNESCO environments and societies (cf. UNEP and World Heritage sites, produce revenues MTF 2011). For example, personal and from visits and sales of local crafts, commercial transport consumes about 20 music and cultural products, generating per cent of the global energy supply, 80 employment for communities. The same per cent of which comes from fossil fuels. applies to intangible cultural heritage,

54 On the growth in transport globally and related climate neutral initiatives, see www.unep.org/climateneutral/Topics/Trans- port/tabid/154/Default.aspx Part Ill – Investing in Human Capital and Societal Infrastructure 97 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective which sustains living cultural expressions populations. Green job objectives will and traditional know-how, as well as the require the provision of capacity-building performing arts. Museums and other cul- and training in least developed countries tural institutions significantly contribute to in areas such as biodiversity conserva- economic benefits. Investment in tourism tion, cultural tourism, eco-tourism and stimulates investment in infrastructure and cultural heritage conservation. The private helps to boost local development. sector need also be engaged along with civil society organizations to strengthen In the framework of the World Heritage local creative and cultural industries for Convention, UNESCO is fostering green development in poor countries, including livelihoods jobs in the least developed creative industries related to tourism. A countries. In Ethiopia, UNESCO has key aim of this would be to broaden the helped to create local labour opportunities access of developing countries to regional through the training and capacity-building and international markets for cultural of local workers in traditional building industries, with relevant technical assis- conservation skills, as well as local crafts tance provided. people and tourism guides in the Lalibela region where the Lalibela Rock Hewn 7.4 The media and network Churches are located. Lalibela is one of communication the poorest regions of Ethiopia, but one of the richest in terms of architecture, opportunities religion and liturgical music. In the town of Lalibela, cultural assets are a primary The last decade has seen a virtual source of income. democratization of the media market with individual citizens feeding in con- Green jobs in the cultural industries can tent online from all corners of the Earth. only be developed sustainably when As readers, listeners and viewers face cultural entrepreneurs have access to key potential information overload, finding and resources for meeting growing market presenting relevant information becomes demands. Providing training services to all the more challenging. This includes cultural entrepreneurs on how to access information and analysis on recent crisis microcredit loans, and on entrepreneur- events and how this impacts markets and ship and marketing could help to capture consumers worldwide. While undergoing the opportunities cultural enterprises offer revolutionary changes itself, media in as a tool to alleviate poverty. Promoting all its forms can play a major support- awareness among craftsmen, designers ing role in helping decision makers, and other creators and manufacturers on managers and consumer–citizens make using sustainable materials and energy informed choices for a green economy sources, and providing training and transition. Building the capacity of media access to ICTs, could help to put cultural professionals to investigate and report entrepreneurs in direct contact with inter- on sustainable development issues is ested customers. Where the latter buy an essential component of improving the green products directly from the produc- awareness among the public and deci- ers, local communities will receive greater sion makers of where business as usual benefit as well. is leading.

Identifying appropriate policies and In many developing countries, journalists measures for transitioning to a greener lack the analytical skills to interpret green economy, needs to consider local cul- economy issues and report on sustain- tural realities and the needs of the local able development trends. Reporting on

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the green economy also requires the incorporates a syllabus on specialized ability to deal with empirical data, statis- journalism that addresses the conceptual tics and economic analysis, something and practical strategies for reporting on that not all reporters are familiar with. issues related to greening. This includes Comprehensive journalism education, the science and economic analysis behind which focuses on how to cover issues in it, as well as relevant economic policies a credible manner and employ economic and instruments. analysis must therefore be included at the tertiary level, and through trainings Information and communications technol- for media professionals. Some journalists ogies provide wide-ranging opportunities investigate environmental malpractices for enhancing citizen participation, par- such as illegal logging, land clearing, ticularly by encouraging user-generated biodiversity destruction, hazardous waste content that can be used by conventional mismanagement and corrupt permitting, media. Online media can also be used to and often face life-threatening encounters. promote access to scientific and public It is therefore also important for states policy information, facilitating more to guarantee the freedom and safety of informed coverage of green economy journalists, so that the media can be an issues and policy debates. Journalism effective partner in investigating and edu- education and training can be comple- cating on relevant issues. mented by media fellowships to support specialized journalism on green economy Efforts to enhance the role of the media in issues. educating citizens and raising awareness about the green economy should include Open Educational Resource Platforms focused research on media coverage of such as that of UNESCO can be relevant issues as a way of uncovering expanded online with targeted informa- and addressing capacity gaps in journal- tion and expert analysis related to the istic practice and education. Access to green economy, including its relevance relevant information and visibility of issues in the midst of global economic, financial related to the green economy should be and resource crisises. Multi-stakeholder ensured with both media professionals initiatives such as the ITU-UNESCO and the citizenry in mind. Broadband Commission for Digital Development can be used to advocate An independent and pluralistic media improved use of ICTs for the dissemina- based on Media Development Indicators55 tion of information on green economy should be promoted through capacity- trends and opportunities. This includes building for specialized reporting on due consideration of key market seg- matters such as renewable energy, water ments, including policy decision makers, scarcity, sustainable consumption and industrialists, scientists, employee repre- other challenges of the green economy. sentatives, consumers and youth groups. This would need to involve journalism education curricula focused on green economy issues as part of programmes in education for sustainable development. The UNESCO Model Curricula for Journalism Education, for example,

55 Media Development Indicators provide a framework for assessing media development at the country level. They are promoted through the UNESCO Programme for the Development of Communication. See www.unesco.org/new/en/communication-and-information/resources/publications-and-communication-materials/publications/full-list/media-development- indicators-a-framework-for-assessing-media-development.

Part Ill – Investing in Human Capital and Societal Infrastructure 99 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © UNDP / Saikat Mukherjee © UNDP Fishermen from West Bengal and Orissa, work together to bring in the sea’s harvest, India.

100 Part Ill – Investing in Human Capital and Societal Infrastructure A United Nations System-wide Perspective Chapter 8: Investing in human capital

8.1 Introduction

Transforming the national economy into Providing relevant education and training one that is resource-efficient and that opportunities for a new, green workforce produces optimal socio-economic results will be critical to achieving a successful requires targeted policies and investments transition, as will be developing mecha- not only at the level of society, but also nisms to support the most vulnerable at the level of individual citizens and their population segments of society. Major ability to be employed productively in the social crises could be addressed, including economy. This chapter explores risks and the 1.3 billion working poor who cannot lift opportunities at the level of the individual themselves and their dependents above as student, trainee, employee or unem- the poverty line of US $2 per day, the 190 ployed. It highlights ongoing challenges million who are unemployed, the 500 mil- not only in providing jobs to new market lion new young job seekers until 2020 and entrants and the unemployed, but also the 5.3 billion without any social security ensuring that those who are employed coverage.56 Access to and extended work under appropriate conditions. coverage of social protection systems can help facilitate the transition to an inclusive Consider, for example, that an estimated economy and industries that operate on 60 per cent of those employed in least sound ecological principles. developed countries also live in extreme poverty, and that 80 per cent of the To sustain positive transformation, green population in least developed countries policies and investments will need to suffer from vulnerable employment (ILO, address gender equality and the needs 2011). According to the United Nations of marginalized segments such as the Population Fund (2011) estimates, at poor, indigenous people, migrants and least one quarter of those who work are youth. To start with, the seeds of a longer- underemployed. As the population of term transformation need to be planted these countries double in coming years, at the level of educating young people, including significant growth in the youth equipping them with the necessary skills population, the employment challenge in and knowledge they will need in a more these countries will increase. This comes interconnected and resource-constrained at a time when many countries struggle world. to maintain per-capita spending on health and education.

56 See ILO response to the Survey on United Nations System organizations, IFIs and other stakeholders on Experiences, Success Factors, Risks and Challenges with Regard to Objectives and Themes of UN Conference on Sustainable Develop- ment (UNCSD), available at www.uncsd2012.org/files/responses-un-system/Questionnaire-Email-submission-%20ILO.pdf

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8.2 Education and training new development paradigm, one in which to meet new realities Education for Sustainable Development (ESD) will be a core foundation. ESD Research on green jobs has shown that helps to encourage changes in indi- different economic sectors and industries, vidual behaviour, attitudes, lifestyles, old and new, are likely to go through consumption and production patterns. It their own unique transitions towards advances the teaching of relevant skills, greener operations and markets. The competencies and research capacities in Green Jobs report (UNEP and others all segments of society, considering the 2008) has identified four ways in which educational needs of individuals at differ- employment is likely to be affected as ent stages of their career development. economies green and become oriented toward sustainability: The ESD concepts must be fully integrated into learning and teaching processes in i. In some cases, additional jobs will all types, levels and settings of education, be created – as in the manufacturing ranging from early childhood care and of pollution-control devices added to education to higher education, as well existing production equipment as in the non-formal system and through lifelong learning and teacher training. ii. Some employment will be substituted Curricula and learning materials will need – as in shifting from fossil fuels to to be revised through the integration of renewables, or from using landfills internationally recognized standards and and waste incineration to recycling guidelines for education on global sustainability challenges. New course materials iii. Certain jobs may be eliminated would include interdisciplinary education without direct replacement – as when for climate change as well as for responsi- packaging materials are discouraged ble consumption and lifestyles. ESD seeks or banned and their production is to impart trans-disciplinary understanding discontinued of social behaviour, cultural attitudes, sustainability principles and ethical values. iv. Many existing jobs (especially plumb- ers, electricians, metal workers and ESD is contingent upon a vision of the construction workers) will simply be world where everyone, particularly girls transformed and redefined as day- and women has the opportunity to benefit to-day skill sets, work methods and from quality education and to gain the profiles are greened. knowledge and skills required for sustainable development and positive societal These transitions have important impli- transformation. It looks holistically at the cations for both the education of new interdependence of the environment, the entrants to the job market as well as economy, society and cultural diversity building the expertise, skills and capacity at the local to global levels. The aim is of existing employees through training to nurture a common understanding of and other programmes including lifelong sustainable development and how daily learning. Greening the national economy activities in the economy have significant, requires a set of short-, medium- and long-term material consequences for long-term policies and approaches for humans and the environment.

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Education is also a prerequisite for More inclusive education and learning breaking the cycle of poverty. The systems require governmental institutions fact that millions of people are denied to improve access and affordability for access to basic education is a major excluded groups by lowering cost barriers, obstacle to building sound economies bringing schools closer to marginalized and achieving sustainable development. communities and developing second- A firm commitment is needed to provide chance programmes. This needs to be for long-term investment in education, complemented by initiatives to improve the an investment that has the potential to learning environment by deploying skilled offer high returns including accelerated teachers equitably, targeting financial and development. Each year of additional learning support to disadvantaged schools schooling could increase individual earn- and providing ESD in different languages. ings by 10 per cent, empowering people Equal opportunity needs to be ensured by to lift themselves out of poverty. Exclusion enforcing laws against discrimination and and inequalities linked to wealth, gender, providing social support programmes, ethnicity, language, location and dis- and by developing disaggregated data ability are holding back progress. Girls collection systems to identify marginal- are disproportionately affected by these ized groups and monitor their progress. trends. To reach out to the marginalized and engage them in the development of The content of existing curricula needs inclusive green societies and economies to be revised to integrate relevant green will require creating inclusive education aspects and ingrain the requisite atti- systems. Social protection measures such tudes, knowledge and values needed as school feeding can help to ensure the for responsible eco-citizenship. This also education of the poorest and most vulner- requires assessments to define new skills able segments of society, especially girls. and expertise required to meet emerging requirements of green markets. In light of Overall, the green transition requires transitional arrangements required, formal innovation in education, helping to create and informal education and training needs the relevant knowledge, expertise, skills to be provided to train or retrain employees and values by increasing public aware- for green jobs, supporting their ability to ness and understanding. It requires innovate and adapt. Effective mechanisms transforming education and learning sys- need to be in place to link the evolving tems, including formal education, training, needs of green labour markets in par- professional development, non-formal ticular pressing technical and vocational and informal learning – and placing all training needs,with the offer provided by of these within a framework of lifelong educational programmes. With respect to learning. This implies systems that are the skills of those presenting revised cur- inclusive in meeting the needs of different ricula, teacher training programmes need age groups as well as disadvantaged to be updated to advance teachers’ ability groups, reaching the marginalized and to promote awareness and understand- enabling them to be active participants in ing, and to teach about green economic green economic activity and sustainable and low-carbon growth options. development processes.

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At the higher education level, national • Reduced incomes and employment capacities in science, research, technol- opportunities due to environmental ogy and advisory services in key areas challenges: climate change, scarcity of the emerging green economy (e.g., of water resources, chemical pollution green technologies, ecosystem services, and biodiversity loss, in sectors such green finance, green accounting) need as agriculture, fisheries and tourism to be strengthened. Advancing applied science in relevant contexts needs to go • Employment creation and new hand in hand with enhancing the applica- business opportunities as a result of tion of scientific and technical knowledge policies to address these challenges to address development challenges such in, for example, agriculture, forestry, as integrated resource management energy, construction, water infrastruc- and to stimulate eco-entrepreneurship. ture or tourism Promoting new educational and training programmes will also need to take special • Job substitution within and among care in engaging ministries of education, sectors of the economy. labour, environment, industry, agriculture, tourism and others and securing com- Evidence shows that coherent and holistic plementary policies. Equally important climate action and transition policies can is the engagement of national education be designed to maximize social benefits and training institutions in country-driven and therefore improve living standards. capacity self-assessments, which can Clear synergies exist in, for example, be an important starting point to catalyse energy-poverty, energy-efficiency and strategic action to strengthen human energy-security. If renewable energies resources and relevant skills. are more intensively utilized, green jobs and income will be generated and poverty 8.3 Employment risks and tackled in an environmentally friendly opportunities manner. What used to be the prohibitive price of renewable energy is approach- The world of work is impacted in different ing parity with traditional energy sources ways by environment problems (e.g., whose dwindling stocks provide an incen- climate change) and policies to address tive for an earlier, cheaper transition to these problems (e.g., adaptation and more sustainable jobs in the long term. mitigation measures). Similarly, significant transformations will take place in compa- In Kenya, feed-in tariffs designed to nies and labour markets as a result of the give energy access to the rural poor are changes in the current production and expected to increase rural electrification consumption patterns that are needed rates massively. An additional capacity of to achieve sustainable development. 1,300 MW in the next 20 years is expected Institutions should adapt to support and to generate positive effects on health, cope with these changes, in particular by gender, housing, education, income and responding to the resultant need for new employment (UNEP 2010b). In Germany, skills for green jobs. Employment impacts ecological tax reform that put a price on can be summarized under the following GHG emissions while reducing non-wage categories: labour costs is resulting in an estimated 250,000 additional full-time jobs since the year 2000 (Kohlhaas 2004). It is estimated that in 2010 there were 320,000 green jobs in the German renewable energy sector alone.

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Other resource use areas and efficiency in solar water heater installing and servicing improvements provide further examples of will be created. In addition, reduced electric- how greening economic activity can deliver ity demand during peak hours will reduce clear socio-economic benefits. An example carbon emissions.57 is sustainable as well as organic agriculture, an economic sector on which least devel- Public investment in infrastructure is oped countries from Africa remain highly essential, as a green economy requires dependent. In Uganda, a government-sup- major structural changes in areas such as ported programme has led to the increase in energy, water and transportation. In the the number of organic farmers from 20,000 developing world these investments must in to 400,000 over the last decade. This has particular be pro-poor, allowing vulnerable led to reduced unemployment, reduce groups to gain access to basic services. poverty, and increased export and income Employment intensive initiatives such through premium prices. as the South African Working for Water programme and the Indian National Rural The creation of and transition to green Employment Guarantee Act programme employment opportunities is crucial for the combine investments in greening the success of a green economy. Diversifying economy, building much needed infrastruc- the economy and focusing on the most ture (transport, buildings, water-related) and vulnerable, including women, youth, infor- alleviating poverty by creating employment mal workers and the unemployed will lead and development. to sustainable development and inclusive economic growth. Green jobs have been Measures to foster the creation of green created in all categories of countries, includ- jobs for young people can learn from the ing the developed and least developed. Two Youth Entrepreneurship Facility of the ILO of the most promising areas for new jobs in East Africa. Youth account for 28 per cent are green building and retrofitting buildings of the population in sub-Saharan Africa, as well as transport infrastructure. The vast making it the youngest region in the world. majority of buildings and transport works The youth unemployment rate is 33 per are in cities that are absorbing the most cent in Kenya. The facility seeks to address rapid increases in population. This requires this issue through the promotion of green infrastructure expansion and increased job entrepreneurship and small business devel- provision, both of which necessitate explic- opment targeting the youth (ILO 2010b). itly green employment strategies. The jobs secured, transformed or created The government of Brazil in consultation should involve occupational activity that with ILO designed an urban social hous- meets the requirements of being environ- ing programme, My House, My Life, as mentally sound as well as decent. Figure a way to tackle poverty, unemployment, 3 gives some illustrative examples for inadequate housing and carbon emissions. employment that can be described as either The International Labour Organization green or decent or both. While technologies reports that over 500,000 new social homes and local conditions continue to evolve, the equipped with solar water heaters will examples are indicative of key aspects to provide adequate housing for poor families, consider when assessing the direct, indirect decrease their energy expenditures and and induced impacts of green economic increase their budget for food, education measures at enterprise and industry level. and health. An estimated 18,000 new jobs

57 The Government of Brazil announced in 2011 that it will invest US $44.2 billion in building 2 million homes in the second phase of the My House, My Life program by 2014. See http://www.brasil.gov.br/news/history/2011/05/13/my-home-my-life- program-to-invest-more-than-r-71-billion-in-2-million-homes/newsitem_view?set_language=en.

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Figure 3. Tracking the environmental soundness and decency of occupations

Green, but not decent Green and decent Examples: Examples:

• Electronics recycling without • Unionized wind and solar adequate occupational safety power jobs

• Low-wage installers of solar • Green architects panels • Well-paid public transit • Exploited biofuels plantation day employees labourers

Neither green nor decent Decent, but not green Examples: Examples: Environment • Coal mining with inadequate • Unionized car manufacturing safety workers

• Women workers in the cut flower • Chemical engineers industry in Africa and in Latin America • Airline pilots

• Hog slaughterhouse workers

Decent Work Source: UNEP and others (2008)

Giving rights to workers serves to ensure • Include not only an economic and the full support and sustained participa- environmental assessment but also tion of those who will eventually drive the a social cost-benefit analysis, with green economy. Ultimately, it will enable due consideration to those vulnerable the transition of economies and mindsets groups. to respect and protect the environment and the services it supplies. For policies Measures to be introduced include active to advance social development and foster and passive labour market polices. a green economy, they need to: Active labour policies in particular aim at strengthening the capacity of labour • Respect and promote the implemen- market institutions to match demand and tation of ILO labour standards supply in the labour market and improve workers’ skills through training. This is par- • Ensure active participation of employ- ticularly important during periods of crisis ers’ and workers’ organizations as and structural change. As an example, the well as labour ministries and related USA Green Jobs Act includes training ele- institutions though social dialogue ments for workers and entrepreneurs in green sectors such as energy efficiency, • Promote decent work opportunities for all renewable energies and sustainable construction. This forms part of the American • Be based on socio-economic Recovery Act of 2009.58 impact, vulnerability and opportunity assessments

58 The US Congress passed the American Recovery and Reinvestment Act in February 2009. A direct response to the economic crisis, the Recovery Act has three immediate goals: (i) create new jobs and save existing ones, (ii) spur economic activity and invest in long-term growth, and (iii) foster unprecedented levels of accountability and transparency in government spending. See http://www.recovery.gov/.

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Assessments are key in understand- predetermines the modes and reach of ing the social dimensions of a green the transportation networks, and therefore economy. Two types of assessments are access to employment and services. Work relevant. First, an assessment of social that requires daily commuting whose time impacts, vulnerabilities and development and financial costs significantly erode opportunities will help to identify winners, income is not decent work. The quality losers and policies for a just transition. of life that city-regions with well-planned, Second, cost-benefit analysis of specific green, public infrastructure offer is there- policies and measures will allow for fore just as important a component of realistic choices and programmes. A livelihood as the jobs themselves. Cities study commissioned by ILO (2010c) are also hotbeds of innovation. Local and conducted by the Chinese Academy authorities should actively facilitate the for Social Science on Low Carbon development of green industry clusters Development and Green Employment in that leverage local academic institutions China provides an example of a realistic to provide training aligned with emerging stock-taking of likely winners and losers labour supply and demand. and the scale of direct and indirect impact involved to identify net gains. It has found Overall, green economy policies and that while 800,000 workers in small coal measures require a just transition frame- power plants are likely to lose their jobs work to manage the transition in a manner due to climate mitigation actions, some that mitigates negative impacts and 2.5 million jobs can be created in the wind boosts green employment opportunities energy sector by 2020. through the promotion of a decent work agenda. If structural changes arising from Social dialogue between governments the transition to a green economy are to and civil society including workers’ and be beneficial for enterprises and workers employers’ organizations is a powerful in line with the basic pillars of decent work, tool for collective action towards a green a just transition framework is essential. economy and meaningful industrial This framework should cover four areas. restructuring. At the national political It needs to include an assessment of risks level, examples are the French dialogue and opportunities of the transition to a low- Grenelle Environnement and the Spanish carbon economy. The assessment should roundtables to implement Kyoto protocol include an analysis of potential job losses, measures (ILO 2010d). Agenda 21 is job transition and job creation. Its results clear that success at all levels of action will will support economic diversification and require the active and informed participa- the minimization of job and income losses tion of people in the design, development, through social protection. It also needs to financing and implementation of develop- provide for social dialogue as the principal ment activities. mechanism for facilitating a just transition. And finally, it needs to cover programmes Spatial planning is also crucial for ensur- to build the capacity of workers, employing that policies and measures actually ers and public institutions in a coherent reach those who need them locally. The manner. configuration of development heavily

Part Ill – Investing in Human Capital and Societal Infrastructure 107 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective 8.4 Social protection: absence also slows down or significantly A safety net for change delays economic recovery a following economic shocks. Experience from The transition to a green economy is various countries shows that those with best understood as a process of struc- sufficient social protection coverage for tural change. Climate change, natural their citizens have been able to recover disasters, desertification and other envi- faster, more efficiently and in a more cost- ronmental problems are powerful drivers efficient way from social, economic and of poverty, unemployment, food insecurity, environmental crisis than those countries gender inequality and negative impacts with poor social protection systems. South on human health. These environmental Africa, India, Brazil, China, Ethiopia and factors exacerbate existing conditions Thailand are some examples of success- of vulnerability associated with local ful cases where this “prevention is better socio-economic circumstances. Social than cure” approach has been followed. protection systems as main risk management mechanisms should therefore be Social protection therefore needs to be designed and implemented to cope with at the core of a just transition to an envi- different drivers of vulnerability. ronmentally friendly and climate-resilient economy. Investing in a national social The net impact of a green transforma- protection floor has positive economic tion will be more jobs (cf. UNEP 2011), effects, as societies are able to move but the challenge is to ensure that the towards developing their full productive transformation is fair and just. Previous potential. It represents an investment in crises have proven that sound social a country’s social infrastructure and is protection systems serve as powerful no less important than investments in its socio-economic stabilizers, helping to physical infrastructure. Social protection alleviate the negative consequences of systems are fundamental in two main disasters. They help to address financial ways. Their investments help to create needs, social problems as well as socio- a population that is sufficiently healthy, economic adjustments. well nourished, educated and more employable in the formal economy. They Nearly 80 per cent of the world’s popula- also contribute to effective recovery from tion currently lives without any access to situations that affect people’s health, social protection (ILO 2008). This implies incomes, food security and proper shelter, no access to health services, child educa- whether it is due to environment, financial tion, unemployment coverage, pensions and economic or social-related causes. and food provision when it is needed. The In addition, social protection as safety lack of social protection not only directly networks also boosts the risk-taking affects individuals and the standards of and entrepreneurial activity that a green living of a large portion of the popula- economy requires. tion, but through aggregate demand, its

108 Part Ill – Investing in Human Capital and Societal Infrastructure A United Nations System-wide Perspective

Part Ill – Investing in Human Capital and Societal Infrastructure 109 GREEN MARKETS

COST

MOBILIZING GROWING

CHANGE TRADE PUBLIC PROGRESS PRICING FINANCE

PRIVATE FINANCE TECHNOLOGY

ACTION

MOBILIZING GREEN MARKETS

COST

MOBILIZING GROWING

CHANGE TRADE PUBLIC PROGRESS PRICING FINANCE

PRIVATE FINANCE TECHNOLOGY

ACTION Part IV Enabling Policies and Measures

MOBILIZING Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © Shutterstock / Maxim Tupikov © Shutterstock / Maxim Cranes at coal terminal at port Vladivostok, Russia.

112 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective Chapter 9: Private finance

9.1 Introduction 9.2 Transformation in mainstream finance There is no complete estimate yet of resources needed to make the transition Opportunities exist to meet the long-term to a green economy. The highest estimate financing needs of a green economy at for climate mitigation action over coming the required scale. A range of public and decades suggests required financing private green financial and investment of some 5.5 per cent of global GDP by instruments such as carbon finance, 2050. This amounts to no more than 0.15 green stimulus funds, microfinance, per cent of global GDP per year over thematic funds (e.g., cleantech funds, the period 2010–2050. Estimates by the green infrastructure and real estate funds, private financial sector underline the scale socially responsible investment funds) and of the challenge. The World Economic green bonds have emerged in the 2000s Forum (WEF 2010) and Bloomberg New and can potentially open up the space Energy Finance calculate that clean for large-scale financing. In addition, energy investment must rise to US $500 essential infrastructure and instruments billion per year by 2020 to restrict global that facilitate finance and investment warming to 2°C. HSBC estimates the flows into markets underpinned by valued transition to a low carbon economy will biodiversity and ecosystem services have see a total growth in cumulative capital evolved as important mediums that facili- investments of US $10 trillion between tate capital flows towards greening. These 2010 and 2020 (Robins 2010). instruments include payment for ecosystem services, emissions trading schemes The Green Economy Report (UNEP 2011) and investable climate or sustainability assumes the investment required to kick- indexes. Microfinance has a potentially off the transition to a green economy important role at the community level globally to be in the region of 2 per cent to enable the poor to invest in resource of global GDP or US $1.3 trillion per year management, agricultural production and at the current level of global GDP over trade and energy efficiency as well as the coming 40 years. The report high- increased resiliency to the risk of droughts lights that addressing the misallocation and floods. of capital in public finance and spending can raise substantial capital. This will require actions such as subsidy reform and the use of green tax policies to unlock and raise capital. Yet rising public debts (increase in debt/GDP ratio) will necessitate a greater share of capital from private sources, in certain areas up to 80 per cent of the required capital. If insufficient action is taken, the environmental and social cost is likely to exceed the amount of financing required.

Part IV – Enabling Policies and Measures 113 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

A number of United Nations programmes as signatories, representing assets under have set up specialized financing facili- management of over US $30 trillion, or 20 ties, projects and industry initiatives that per cent of global capital. Its membership are contributing significantly in creating is made up of asset owners (236, includ- the enabling environments for green ing the United Nations Joint Staff Pension economy opportunities.59 Scaling up these Fund), investment managers and profes- initiatives is essential in mobilizing addi- sional service partners. Actual integration tional or supplementary funding to assist of ESG factors into investment criteria developing countries in the fight against today stands at 7 per cent of the total global climate change. Their scaling up is also market of assets under management, and critical to foster greater application of what integration within the PRI signatory base investors refer to as environmental, social stands at approximately US $10.7 trillion and governance (ESG) criteria, supported (PRI 2011). The growing take-up of the by greening investment strategies at the principles in the mainstream investment global level. community, including engagement with problematic investee companies through Long-term public and private institutional the PRI clearinghouse mechanism, rep- investors (such as pension funds, their resents a highly significant trend in the asset managers and insurance com- greening of investment worldwide. panies) have increased their interest in acquiring portfolios that minimize ESG Current green capital flows are, however, risks while capitalizing on emerging still small compared to overall invest- green technologies. This trend has led ment needs and they rapidly need to to greater interest in green assets and be scaled up if the transition to a green hence the creation of industry initiatives economy is to take off in the near term. such as the UNEP Finance Initiative Concentrated pools of assets such as (FI); United Nations-backed Principles those controlled by institutional inves- for Responsible Investment (PRI); P8 tors; pension systems and insurance public pension funds group; International companies with combined industry Investors Group on Climate Change; and assets of some US $40 trillion; the US Investors Network on Climate Risk.60 $39 trillion-plus controlled by the high net These initiatives seek to mainstream the worth community of private equity; and integration of social responsibility criteria the growing assets of sovereign wealth in the investment process, understand funds, will all need to be drawn upon in green investment opportunities, build up support of a green economy in the coming and share expertise in emerging green decades. asset investment strategies and foster improved dialogue with policymakers to With limited public funds at their disposal, bring down barriers to green investments. governments vying to scale up finance and investing may wish to establish enabling Launched in 2006 by UNEP FI, the United environments that allow green economy Nations Global Compact and industry projects to tap into concentrated pools of partners, the PRI today has over 900 capital at scale, first and foremost through investment institutions from 49 countries a reorientation of existing investment. But

59 Examples of financing facilities include the Global Environment Facility and the ongoing work for the Green Climate Fund. The United Nations has set up industry initiatives that engage financial institutions to understand the impact of the environmental, social and governance issues in the investment, lending and insurance activities. Such initiatives include the UNEP Finance Initiative, United Nations-backed Principles for Responsible Investment, Principles for Sustainable Insurance (forthcoming) and The Sustainable Stock Exchanges initiative.

60 For more information on these initiatives see: www.unepfi.org, www.unpri.org, www.cpsl.cam.ac.uk/Leaders-Groups/ P8-Investment.aspx, www.iigcc.org/, and www.ceres.org/incr/.

114 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective

smart financing mechanisms and focused • Make the application of appropriate incentives will be needed to leverage ESG criteria common practice in all capital at scale from institutional investor components of the financial system, segments. Equally important, policy and including intermediaries (such as banks regulatory changes and incentives are and insurance companies), capital mar- needed to ensure that markets are better kets (such as investors and their fund structured and governed to incentivize and asset managers), infrastructure sustainable business behaviour by fund- (such as stock exchanges and rating ing their activities. agencies) and the body of related stand-setters and industry networks. 9.3 A financial system for the green economy • Require accountable disclosure in the form of sustainability and integrated reporting by financial institutions The financial system is the central (banks, investors, insurance) and nervous system of the economy. Its their clients from all economic sectors, components – intermediaries, capital encouraging use of relevant indica- markets, infrastructure and the body of tors as can be found in the Global standard-setters – enable the alloca- Reporting Initiative guidelines and tion of capital to end-users. Currently, integration approaches as defined by however, the way the capital is allocated the International Integrated Reporting to corporate activity largely undermines Committee,61 as well as application of investment in green business and cleaner these tools in collaboration with stake- industries. As evidenced at the onset of holders and regulatory bodies such as the financial crisis, investment decisions stock exchange authorities. are largely underpinned by short-term thinking. Hence the incentive structures Full assessment, pricing and accounting along the investment food chain are not of environmental and social externalities fit to award green business activities with are key factors for internalizing the respec- a longer-term focus. Incentive structures, tive costs in investment and financing therefore, will need to be rethought and activities. Governments, therefore, should designed to reward socially responsible put in place clear, credible and coherent businesses that contribute to the achieve- regulatory frameworks to enable the pric- ment of a green economy through equity ing of environmental and social costs, their and other types of funding. proper reflection on companies’ balance sheets and on individual asset prices, The inclusion and mainstreaming of ESG facilitating the integration of ESG issues considerations into traditional investment into financial and investment decisions. decision-making, adoption of integrated Governments should involve the private reporting frameworks and mandatory sector in identifying systemic barriers disclosures – initially based on a comply- to green investments and the ways and or-explain approach – are integral to an means to bring down those barriers jointly. enabling environment for aligning institutional investors’ investment strategies To this end several United Nations and capital allocations at large with green initiatives work together with the global economy investments needs. To this financial sector to promote the internali- effect, it is essential to: zation of externalities in the investment decision-making, bridge knowledge gaps

61 See www.globalreporting.org and www.theiirc.org for more information on the relevant sustainability, financial and integrated reporting standards.

Part IV – Enabling Policies and Measures 115 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective and encourage greater financial sector 9.4 Building a green participation in the achievement of green economy through project economy goals at the global and national investment and public- levels. Better understanding of systemic private collaboration issues that impede proper pricing of environmental and social costs will be required At the project level the challenge is in order to design a global financial archi- the lack of incentives for investors to tecture that is aligned with green economy channel financial resources towards goals. This includes the use of incentives greening. The Equator Principles, applied and revised valuation tools to deal with to project financing by private banks dilemmas in balancing short-term pressures to projects of over US $10 million and with longer-term results, including results based on standards developed earlier from investment in infrastructure, natural by the International Finance Corporation resource exploitation and other economic (IFC), has made good progress with areas with intergenerational consequences. over 70 signatory financial institutions today.63 Still, concerns related to effective Addressing the full spectrum of systemic application of principles and take-up in issues identified above is an imperative the broader finance community remain. for unlocking finance at large for business Relevant investment targets for a green activities that contribute to the development economy scenario will not be achieved of green markets and achievement of a without incentives, credible policy green economy. In this sense, re-fitting (or frameworks and regulatory certainty that aligning) the structures, management and stimulates funding from institutional inves- investment practices and governing stand- tors towards green economy goals. It is ards of the financial system components in crucial to introduce focused incentives for ways that significantly contribute to efficient the scaling up of green investments and allocation of investments towards the green to design financing mechanisms to over- economy presents a challenge that requires come existing investment barriers. The bold commitments and systematic action gap in required funding is reinforced by by governments, the financial sector and the lack of adequate public financing. This the international community. Building on its poses funding limitations for green and experience with the international financial socially inclusive infrastructure projects, sector, United Nations agencies through especially in developing countries. their private sector and industry initiatives are well positioned to advance the incorpora- Financing mechanisms that mitigate risks tion of ESG considerations into international associated with, for instance, climate policy and financial sector standard-setting policy and regulatory uncertainties will be processes. An example is the Sustainable needed to leverage institutional investors’ Stock Exchanges initiative of the United capital for green economy investments. Nations Global Compact, the United Nations Creating public-private mechanisms Conference on Trade and Development and pooling capital and expertise from 62 (UNCTAD), UNEP FI and PRI. Involving international and national public finance industry partners such as the International institutions and private sources through Securities Commissions, this initiative builds the use of public financing mechanisms on the experience of stock exchanges such (PFMs) could be effective in mobilizing as those of Johannesburg and Sao Paulo in funds for green and socially inclusive setting ESG requirements and hosting their infrastructure projects in developing own sustainability indexes. countries.

62 See www.unpri.org/sustainablestockexchanges.

63 See www.equator-principles.com for more information on progress with implementation of its principles by participant banks. 116 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective

Overall, the role of the public sector is At the international and regional level, indispensable for triggering a transfor- multilateral development banks have mation and in catalysing the required an important role to play to support the flow of private finance. Although public investments required (see next chapter). resources are significantly smaller than They can use a range of instruments those of private markets, public spend- to fund climate change interventions, ing can primarily focus on specific public catalyse energy and resource efficient goods such as access to water and investments by the private sector and sanitation, biodiversity promotion and provide technical advice and capacity poverty alleviation. Governments should support to governments in areas such as also use their own resources – through project implementation and green market a combination of PFMs and financial development. The heads of the MDBs instruments – to leverage financial flows and the International Monetary Fund have from the private sector and channel them pledged to build upon their respective towards green and socio-economically mandates, expertise and resources to beneficial opportunities. As important as help developing countries and their public the public investments are, the public and private sectors respond to the chal- policy frameworks, the fiscal systems, lenge of climate change while achieving the rules and regulations, green public the MDGs. procurement and similar public leadership initiatives that help establish the rules of Development Finance Institutions (DFIs) the game create a credible and predict- beyond the United Nations system and able policy environment, and reduce the BWIs can play a complementary role in uncertainty surrounding the potential supporting key elements of the emerging returns to socially responsible investment. green economy. Issues such as climate change, energy security and food security Under the auspices of the United Nations- were key considerations in the decisions backed PRI, over 20 governments work of shareholder governments to provide today with the United Nations to indentify significant capital increases to the multi- enabling conditions for green investment lateral development banks in the last two opportunities and formulate country or years. These DFIs play a critical role in sector-specific development strategies funding macroeconomic policies, sectoral that take into account ESG issues. Building policies, major infrastructure projects on its expertise, the United Nations can and private sector development. Their assist countries in more effectively build- contribution to the greening of national ing environmental and social dimensions economies is already significant. They into national development strategies fund major sectors such as water, renew- through a participatory approach. The able energy, forestry and agriculture. United Nations in conjunction with other Development Finance Institutions have international agencies can assist coun- been instrumental in mainstreaming micro- tries in the design of appropriate fiscal finance and supporting the development instruments to raise capital and engender of private industries in risky green sectors behavioural change in the marketplace. at early stages of development. But their This will need to be accompanied by role could be strengthened further, taking implementation and capacity support to advantage of the prominent position they ensure these instruments are operation- occupy in the funding of domestic invest- alized effectively in the macroeconomic ment programmes. Steps in this direction management process. would include better identification of green

Part IV – Enabling Policies and Measures 117 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective economy aspects in their strategic targets, mechanisms. Deployment of innovative greater share of their activities devoted financing mechanisms alone will, how- to these aspects, improved cooperation ever, have limited impact if regulatory, among themselves and the sharing of technical, institutional and information best practices. Donor governments are barriers are not addressed a priori or in a position to task these institutions to taken into account upstream in the finance support green economy developments, value chain. backed by concrete goals and targets. A global transition towards a green econ- While private capital is many times more omy will require substantial redirection of than the financial resources available from public and private investment to increase the public sector, many developing coun- funding at scale for key priority areas, tries have limited access to it. Therefore, the bulk of which will need to be mobi- MDBs in conjunction with national and lized through financial markets. Public local DFIs can play a key role in catalys- financing is, however, essential for the ing private green investments at scale transition to a green economy, and more through the use of risk-mitigating instru- than justified by the positive externalities ments, grants and innovative financing that would be generated.

118 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective

Part IV – Enabling Policies and Measures 119 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © UNEP / Hassan Partow © UNEP Regional Green Economy workshop held in Kigali, Rwanda, November 2011.

120 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective Chapter 10: The role of international financial institutions

10.1 Introduction

The roles of lending, investment, insur- Over recent years the multilateral develop- ance and public finance all remain critical ment banks and Bretton Woods Institutions in greening different economic sectors have responded to this challenge with and establishing more resource-efficient a special focus on climate change miti- societies. While global official develop- gation and adaptation, considering ment assistance, typically processed by relevant policies, regulatory frameworks, government-owned development finance technical assistance and special financ- institutions, was estimated to be around ing instruments in, for example, project US $108 billion in 2010,64 annual private development and the development of finance goes into the trillions. The criti- carbon markets. Experience with climate cal role for public finance lies in being a financing has also been used increas- catalyst, early stage investment provider, ingly for developing new thematic funds co-sharer of risk and guarantor of public and markets in areas such as ecosystem infrastructure and services. This is the services and the greening of industry. approach followed by agencies such as UNDP in promoting climate finance, What is required today is a mainstream- providing advice to governments on the ing of ESG criteria and the development design and establishment of national funds of green economy service packages that to achieve climate change priorities.65 do not treat different aspects or pillars of sustainable development in isolation. Supportive initiatives in this transformation would be tools such as the Green Growth Knowledge Platform of the World Bank Group and its partners as well as its development of a new vision of a Green, Clean and Resilient World for All.

64 See www.un.org/millenniumgoals/global.shtml.

65 UNDP has published a guidebook with step-by-step guidance on how to select and deploy an optimal mix of public policies and financing instruments to assess and catalyse climate finance in line with national development priorities. See UNEP (2011a and 2011b).

Part IV – Enabling Policies and Measures 121 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

10.2 The World Bank Group stakeholders from key ministries, such as finance and planning, to civil soci- Helping developing countries obtain the ety. Through Strategic Environmental finance required and implement reforms Assessments (SEA), efforts have been necessary to move along a green econ- made to strengthen institutional capacity omy path are priorities for the World Bank to manage negative effects as well as Group, including channels through which take advantage of the positive. The Bank green or environmentally sustainable is also using Poverty and Social Impact growth can operate. This includes run- Analysis and related approaches to iden- ning ongoing assessments and technical tify and manage the distributional impacts support to help reduce inefficiencies from of green policy reforms. uncorrected environmental and resource market failures, as well as other market In the field of climate change, research failures related to technology and invest- has been done on the economics of ment in research and development. adaptation and low carbon growth. Work has also been conducted on wealth There are opportunities for improving accounting and different types of capital. both development and environmental The Pollution and Prevention Abatement impact by assessing the role of natural Handbook has been taken to a new phase capital in growth and more systematically over the past two years. Its technical integrating consideration of natural capital guidelines for over 63 industry subsectors in development strategies. One way this have been revised under leadership of the is being done in the World Bank is by IFC. The policy part is being updated to promoting the use of comprehensive go beyond regulation by environmental wealth accounting and adjusted net sav- agencies to embrace a broader set of ings, which integrate natural capital into stakeholders, from large companies and the national accounting framework used their supply chain, financial institutions’ by Ministries of Finance, planning agen- requirements from their clients in industry, cies and other institutions. The Wealth the trade regime, the judiciary and active Accounting and Valuation of Ecosystem citizenry and public disclosure. Services program of the World Bank is an important contribution on metrics to The Green Growth Knowledge Platform the Rio+20 process. It seeks to dem- will facilitate continued work on clos- onstrate ways of incorporating natural ing knowledge gaps and implementing capital, including ecosystem services, green growth policies in developing in national income accounts. It will also countries. The knowledge platform is also support collaboration with the United a mechanism to develop partnerships Nations Statistical Division, UNEP, OECD and join conversations with an emerging and others on green economy and green community of practice involving academ- growth metrics. ics, think tanks, policymakers, and other concerned individuals and institutions A wide range of tools and instruments are in developed and developing countries. used by the World Bank Group to promote This is being developed in partnership green growth. Country Environmental with UNEP, OECD and the Global Green Analysis, conducted in 40 countries to Growth Institute that was established by date, has had some success in linking the Government of the Republic of Korea the environment with broader develop- in 2010. ment priorities by engaging national

122 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective

Financial tools employed by the Bank The World Bank Group’s FY2010 marked include development policy lending and an all-time record in renewable energy investment lending. The former includes and energy efficiency financing, as well support to countries to help them better as a new record in the Group’s low- integrate environmental considerations carbon financing. There was a 62 per cent in sector policies, to strengthen country increase in low carbon commitments to environmental management frameworks US $5.5 billion compared to FY2009, and and to support countries to strengthen low-carbon energy financing accounted policies and institutions so they can for 42 per cent of the all FY2010 energy respond to climate change. This greening commitments. Additionally, 30 out of of investments has resulted in the follow- 34 country assistance and partnership ing outcomes in the Environmental and strategies prepared in FY2010 address Natural Resource Management (ENRM) climate change. The World Bank Group portfolio: has also made a commitment to reduce the impacts from its daily operations • In fiscal year 2010, the World Bank through a comprehensive programme to approved 78 projects with ENRM measure, manage, reduce and report on content amounting to US $4.3 billion GHG emissions. million in commitments. On average, ENRM activities have accounted for The World Bank Group is assisting a about 9 per cent of total new Bank number of client countries – including lending over the past six years. Brazil, China, India, Indonesia, Mexico and South Africa – in developing low-car- • The largest recent lending project with bon studies. Support is given to identify an ENRM theme was a Framework opportunities and related financial, tech- for Green Growth Development Policy nical and policy requirements to move Loan in Mexico (total amount: US $1.5 to a green growth path. This initiative is billion) that addressed the develop- currently being expanded to Morocco, ment of a regulatory, monitoring and Nigeria and Poland. financial framework for reduced GHG emissions in the transport and energy 10.3 International Monetary sectors. Fund • As of the end of fiscal year 2010, the In line with its mandate and expertise, IMF total active portfolio of projects with work on the green economy addresses ENRM activities amounted to US the macroeconomic, fiscal and financial $15.2 billion. This represented about challenges of environmental issues and 10 per cent of the total Bank portfolio policies. Climate change is a key focus during the same period. Of this, the of this work, which centres on provid- core ENRM portfolio (projects with ing advice and technical assistance to more than 65 per cent ENRM con- member countries in which climate tent) amounted to US $6.2 billion in change can have a significant impact on commitments. economic and financial stability, and on conducting research on related issues. The Fund also aims to take forward understanding of the difficult issues of international fiscal policy cooperation and the financing of responses to climate change in developing countries.

Part IV – Enabling Policies and Measures 123 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective

The Spring 2008 World Economic Outlook climate change adaptation and mitigation. sets out the macroeconomic challenges Efforts can also be made to explore the posed by climate change, emphasizing potential for an innovative use of Special that policies to mitigate climate change Drawing Rights to serve the aim of financ- can have wide-ranging macroeconomic ing green investments. consequences. Pricing emissions of greenhouse gases is necessary to control Climate change is not the only environ- the problem, but could affect countries’ mental issue of direct macroeconomic economic growth, saving and invest- significance. Others include local pollu- ment. Simulations in the World Economic tion, the management of forests and other Outlook show how these costs can be renewable resources and the appropriate made manageable by well-designed structure of environmental tax systems. policies. In particular, policies should Wherever environmental issues are sig- be long-term and credible, yet flexible nificant to macroeconomic performance, enough to be able to adjust to emerging the International Monetary Fund seeks to information and changing economic con- identify and help address them. ditions, and be implemented as broadly as possible, while being sensitive to the 10.4 Regional Development need for an equitable distribution of costs. Banks The Fund has also stressed that current macroeconomic difficulties do not justify 10.4.1 The African Development Bank inaction on climate issues. Recognizing that the estimated annual Climate change will directly affect net economic costs of climate change countries’ tax bases and spending impacts in Africa are very high, at about requirements. Beyond this, deploying the 2.7 per cent of GDP each year by 2025 (or fiscal instruments (taxes or cap-and-trade around US $40 billion per year), but also schemes) required to mitigate emissions that opportunities exist for mitigation and raises conceptual and implementation for developing a low-carbon economy by problems, requiring worldwide efforts harnessing the continent’s vast renewable and solutions. Public expenditure for energy potential, the African Development adaptation will need to include better Bank (AfDB) has endorsed as a corporate infrastructure, coastal protection, educa- priority the promotion of a climate-resilient tion, health and water services. The Fund and low-carbon development in Africa. secretariat will continue to analyze these issues, and to explore how subsidies on The AfDB emphasis in the next 5 years food and fuel products affect efforts to – as established in its Climate Change address climate change. Action Plan – will be on expanding access to renewable energy and implementa- There is broad agreement that sustainable tion energy efficiency initiatives in the growth in developing countries requires continent; supporting REDD+ initiatives large-scale, long-term investments in through sustainable land use and forestry adaptation and mitigation, for which sub- management interventions; assisting stantial additional financial assistance is African countries to design, develop needed. As a contribution to the debate on and implement Nationally Appropriate how to achieve this, the Fund proposed a Mitigation Actions; supporting the devel- Green Fund, which could give developed opment of sustainable and low-carbon countries the coordinating, commitment transport; and implementing sustainable and burden-sharing mechanism needed urban systems. to assist developing countries’ efforts on

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The provision of advisory services, support 10.4.2 The Asian Development Bank to policy reform, knowledge generation and competency building will be a central cross- Asia and the Pacific are home to the cutting component in delivering investments world’s most dynamic economies but also in priority sectors. Africa has an enormous the greatest number of people at risk from potential for clean energy development and climate change and the fastest growing much higher levels of energy efficiency. But emissions of GHGs. Much of the world’s green growth needs to go beyond this, as new energy and urban infrastructure will significant potentials exist in the agriculture be built in Asia over the coming decades, sector or innovative tourism concepts. locking in the region’s greenhouse gas Hence, AfDB intends to explore the poten- emission pattern for another 30 to 50 tial of existing green technologies to spur years. As a result, the Asian Development economic growth and contribute to poverty Bank is increasing efforts to help devel- reduction across the continent. oping member countries move onto low-carbon paths and promote greener The African Development Bank is leading economies. As a financial institution, ADB the development of new financing tools to focuses on innovative finance and financ- support climate change actions in Africa. ing for innovation. Put succinctly, the ADB Examples are the Sustainable Energy Fund climate change programme addresses for Africa, the ClimDev-Africa Special Fund, the priority issues facing Asia and the the Fund for Private Sector Assistance Pacific, specifically: and the Africa Green Fund. In addition, it is catalysing private sector support to • Expanding the use of clean and renew- generate additional resources for green able energy. The Asian Development economy investments through the launch Bank is massively scaling up clean of clean energy bonds and through carbon energy investments, reaching more than finance. Moreover, it is participating in the US $1.6 billion in 2008 and setting an implementation of programs and projects annual target of at least US $2 billion in funded by global funding platforms, such as clean energy investment by 2013. The the Climate Investment Funds. program also includes an increasing focus on energizing the poorest in the The African Development Bank has region through the Energy for All Initiative. joined UNDP, the Asian Development Bank (ADB) and OECD in a consultative • Encouraging sustainable urban and process to see how the principles of Aid transport development. The ADB Effectiveness apply to climate finance. Sustainable Transport Initiative helps Case studies show that climate finance is ensure that future transport projects poorly tracked and/or reflected in national take into account expected effects of cli- budgets and planning. As a response to mate change. The Cities Development these shortcomings, a Climate Fiscal Initiative for Asia works with cities, devel- Framework has been devised as tool to opment partners and the private sector link climate change priorities with expend- to implement needed investments for iture and taxation decisions through the sustainable urban development. The budgeting process, using domestic and Clean Air Initiative for Asian Cities pro- external finances most effectively. Case motes reduction in vehicle emissions studies have been conducted in six through improved fuel quality, vehicle African countries over recent years and a maintenance, emission control technol- regional roadmap for an accountable and ogy, alternative fuels, promotion of public effective country-led approach to climate transport, better traffic management and finance is under preparation. other sustainable initiatives.

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• Promoting climate-resilient development. • Strengthening partnerships. The ADB The Asian Development Bank provides financing partnership facilities serve as policy and technical guidance to address platforms for cooperation, the exchange climate change and variability issues of ideas and information, exploration in agriculture, infrastructure, transport, of new approaches and technologies health, water and other sectors. Water and alignment of common strategies sector initiatives are designed to cope toward achieving shared goals. The with the impacts of climate change by Clean Energy Financing Partnership reducing water losses and applying Facility (CEFPF) was established to integrated water resources management help finance transition to low-carbon to improve the resilience of communities economies through cost-effective and economies to climate change. investment in technologies and practices that result in GHG mitigation, • Managing land use and forests for without compromising energy security. carbon sequestration. Projects in East By the end of 2009, CEFPF had sup- and South-East Asia are developing ported 37 projects in 34 developing capacity to tap financing under REDD, member countries, leveraging US $528 and support protection and sustainable million in clean energy investments, use of forests for the benefit of com- and is expected to mitigate 3.8 million

munities and regional development tons of CO2 annually and generate 1.1 while capturing benefits from carbon terawatt-hours of energy savings. sequestration, biodiversity conservation and ecosystem services. • Mobilizing finance. Through its in- house private sector department, ADB • Strengthening policies, governance and is establishing mechanisms to facilitate capacities. All ADB actions are supported and leverage direct investments by the by policy analysis and the strengthening private sector in sustainable investment of capacity, including governance sys- projects. Support for carbon market tems. For example, through support to the development is available through Greater Mekong Subregion Economic the Carbon Market Initiative, which Cooperation, ADB is promoting the use includes the ADB Future Carbon Fund. of Strategic Environmental Assessments The latter provides more than US $100 and Environmental Impact Assessments million in upfront financing to projects to mainstream green growth into country extending beyond the current Kyoto development plans. Protocol commitment period to support continued regional commitments to The Asian Development Bank has identi- green growth. As of September 2010, fied enabling mechanisms that make it the ADB Clean Energy Partnership possible to effectively deliver assistance Facility had supported a total of 67 in these priority areas: projects amounting to US $58 million.

• Knowledge dissemination. The Asian 10.4.3 The European Bank for Development Bank will continue to Reconstruction and Development; meet demands for timely knowledge, The European Investment Bank policy advice and capacity enhancement by further developing such The European Bank for Reconstruction knowledge products, including eco- and Development (EBRD) found- nomics of climate change studies for ing agreement commits the Bank to Central and West, East and South Asia promoting environmentally sound and as well as the Pacific. sustainable development in the full range

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of its activities. This important aspect of change, with a particular focus on energy its core mandate is carried through into efficiency. It responds to the specific policies, strategies and operations in a needs of energy transition in the EBRD number of mutually reinforcing ways. countries of operations, as well as to the Environmental and social considerations call of the G8 at the 2005 Gleneagles inform country strategies and sector- Summit for the international financial specific operational policies. They are institutions to scale up climate change important factors in the transitional impact mitigation investment. The SEI pursues and additionality of Bank investments, climate investments across all sectors in particularly in key sectors such as infra- which EBRD is active. structure, transport, energy, agribusiness and financial markets. The Bank consults By September 2010, a milestone of widely with civil society organizations at 300 SEI projects since 2006 with a total both a local and international level on draft investment of €5.2 billion had been country strategies and policy revisions. reached. The total project volume was around €30 billion, and annual carbon Each investment and technical coop- emissions reductions had reached 30.5

eration project is scrutinized to ensure mtCO2, equivalent to twice the volume of that environmental and social issues Slovenia’s annual emissions. The SEI is are taken into account at the planning, recognized as a core tool for achieving financing and implementation stages. positive environmental impacts in the This appraisal and monitoring is a formal medium-term strategy of the Bank. part of the project cycle, as set out in the EBRD 2008 Environmental and Social The European Bank for Reconstruction Policy. Each project is also assessed for and Development experience in climate its contribution to a core Bank mandate of mitigation finance shows what can be supporting transition to efficient and open achieved by maintaining a strategic focus. market structures. The Bank has explicitly The global nature of the challenge has now recognized in project assessment that a led to EBRD working much more closely transition to a low-carbon economy is an with the other international finance institu- important ingredient of a transition to a tions, donors and governments to address well functioning market economy. climate mitigation. This collaboration is nascent, but is already delivering results The European Bank for Reconstruction on the ground, for example, in the form of and Development finances efficient a US $250 million energy efficiency and energy use that cuts demand and imports, renewables credit line in Turkey, or the joint reduces pollution and mitigates climate establishment of a green growth fund in change through carbon emission reduc- south-east Europe. Over the coming years, tions. Financing is the key to achieving the EBRD will continue to deepen this collabo- targets for climate mitigation. It has to be ration with the aim to achieve the transition large-scale, targeted yet flexible and easy of its region to grow in a sustainable way. to use, and it has to be deployed quickly if we want to be able to meet the challenging While EBRD seeks to foster the transition targets. Spanning across several sectors, towards open market-oriented economies EBRD has already achieved an important and promote private entrepreneurship impact in a number of countries. in the countries of Central Europe and Central Asia, its sister bank the European In May 2006, EBRD launched the Investment Bank (EIB) and the European Sustainable Energy Initiative (SEI) as Investment Fund (EIF) are focused on the a strategic vehicle to address climate promotion of integration, development,

Part IV – Enabling Policies and Measures 127 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective economic and social cohesion as well as Indicative targets ranging between 20 and support for small business development 25 per cent of total lending for the period are within the European Union (EU). The also included. Almost €17 billion in loans in European Investment Bank and EBRD 2009 for projects contributed to a reduction collaborate in, among others, projects that in greenhouse gas emissions, including meet the EU priority of financing major infra- renewable energy (€4.2 billion) and energy structure. Among the core lending priorities efficiency schemes (€1.5 billion), research of EIB in support of sustainable develop- and development for cleaner transport ment are the protection and improvement of (€4.7 billion), investment in urban transport the natural environment and the promotion (€ 5.5 billion) and projects outside the EU of sustainable communities, contributing addressing climate change. Adaptation to the MDGs. From a general policy per- is another area of work of the Bank, for spective, EIB ensures that its corporate instance through scaling up technical assis- objectives, targets, principles and stand- tance and lending for projects that help ards are aligned with the EU and evolving countries tackle the inescapable impacts of international environmental policy. climate change through sustainable access to water, protection of costal zones flood The sector lending policies of EIB include risk management. an appropriate emphasis on reducing greenhouse gas emissions, in particular Another area of action concerns the as far as energy, water, transport, waste, development of financing instruments and forestry, research, development and inno- technical assistance for renewable energy vation are concerned. Projects financed by and energy-efficiency projects and in EIB have to satisfy three criteria: they must particular for SMEs and municipalities. The comply with EU environmental and social European Investment Bank has widened principles and standards in support of EU the range of facilities available for energy policies; they should protect and improve efficiency, in order to accept a slightly higher natural and urban environments and risk profile than that of ordinary EIB loans. foster human well-being in the interests of The Bank has also integrated energy as a sustainable development; and they should key objective in its operational plan, and has have a minimum environmental footprint, widened the range of financial instruments consistent with the project’s purpose. available. It has substantially stepped up its energy lending, reaching €10.2 billion in The proportion of loans for environmental 2008 and €14.7 billion in 2009. protection and sustainable communities has been on average between 30 per cent The European Investment Bank plays a and 35 per cent of the overall lending of the major role in the mobilization and leverag- Bank, both inside the EU and in non-EU ing of private sector finance for low-carbon countries. Despite the financial crisis, this growth in developing and middle-income principle was respected in 2009 with a countries. This implies both energy effi- volume of €25.3 billion for environmental ciency and renewable energy investments, loans, up from €18.0 billion in 2008. including the transfer of European technologies that reduce costs and increase The fight against climate change has also reliability. In addition, EIB is expanding its gained momentum in recent years and product range in order to enhance its role in as a result a new climate change indica- support of the carbon market. In collabora- tor has been developed and included tion with EBRD, KfW, the World Bank, CDC for the first time in the operational plan Development Solutions and other public in 2010, to report on projects supporting and private partners, EIB has established a climate change mitigation and adaptation. diversified selection of carbon funds.

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10.4.4 The Inter-American in LAC countries. In the first three years Development Bank of operation, the REST-AP is expected to generate a total of US $745 million in new The recent capital increase by the Inter- finance in the region. American Development Bank (IDB) mandates the Bank to be better equipped In the energy field, IDB is strengthening to assist the region in its transition to a its sustainable energy portfolio through green economy. The goal is that by 2015, lending and technical assistance in: 25 per cent of all IDB lending will be geared (i) energy efficiency; (ii) renewable towards climate change, promotion of energy by supporting wind, solar, small renewable energy and environmental hydro, geothermal and bio-energy while sustainability. This is a significant increase addressing the financial challenges and from a baseline of 5 per cent during 2006– institutional barriers; (iii) biofuels; (iv) 2009. This lending target mandates the switching towards lower emitting fossil fuel Bank to be better equipped to assist the in energy generation; and (v) the promo- region in its transition to a green economy, tion of innovative financial instruments for including the development of the institu- the adoption of sustainable energy solu- tional and regulatory frameworks to allow tions, such as green financial products investments in areas such as sustainable for financial intermediaries. In agriculture transport, renewable energy and energy and rural development, the Bank objec- efficiency. It will help the region adapt to tive is to aid countries to weaken the link climate change impacts, particularly in between agricultural production and GHG sectors such as water supply, agriculture emissions from deforestation and food and energy. production.

The Inter-American Development Bank In trade and regional integration, IDB has pursued three main lines of activ- intends to strengthen research and ity directed towards the objectives of knowledge regarding the impacts on trade a green economy: (i) developing and of a movement towards the greening of strengthening institutional and regulatory national economies and to disseminate frameworks to foster investments; (ii) its findings within regional and subre- providing technical assistance; and (iii) gional initiatives. The Inter-American providing financing instruments for public Development Bank will also support the and private sector operations. integration of green economy and trade negotiating objectives in multilateral The Inter-American Development Bank forums and in regional integration plat- is setting up sectoral efforts to help forms, while clarifying objectives for future Latin America and the Caribbean (LAC) negotiations. It will scale up investments countries in transitioning towards a low- and leverage private sector investments carbon economy. For example, with the through the following: (i) promotion of financial sector, IDB has various initiatives carbon cooperatives designed to help to strengthen the capacity of financial producers participate effectively in carbon institutions, both private and public, to trading; (ii) support to the establishment scale up investments in energy efficiency of public-private partnerships intended to and renewable energy. In transport, IDB tap the sophistication and technology of is strengthening its competence through global firms as well as providing a conduit the formulation and implementation of the for their exports; and (iii) support to the Regional Environmentally Sustainable private sector to implement standards and Transport Action Plan, which provides new accounting requirements. guidance for a low-carbon transport sector

Part IV – Enabling Policies and Measures 129 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © Shutterstock / Zbynek Jirousek Power plant with smoking chimney on green grass.

130 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective Chapter 11: Full-cost pricing

11.1 Introduction 11.2 The case for full-cost pricing Pricing policies are a central element in the transition towards a greener economy. Full-cost pricing66 is a powerful way During the past decades, many govern- to support the transition to a green ments have introduced environment-related economy. Prices guide people’s deci- taxes and charges to put a price on pollu- sions on what, when and where to buy, tion, for example, on carbon emissions, and on what, how and where to produce nitrogen and sulfur oxides or waste disposal. and invest. Market prices, however, will A closer look at these policies, however, not properly reflect the true social costs reveals that they are often poorly designed. of transactions if production or consump- Carbon pricing, for example, generally has tion causes environmental damages. In a narrow scope and is often imposed on that case, decisions are misguided by final products rather than on inputs, thus market prices. Full-cost pricing means foregoing cheap emission reduction pos- that prices are corrected for the external sibilities. In other countries, governments costs of transactions, and ensures that still subsidize polluting behaviour, such as consumers and producers face the right fossil fuel use, usually for social reasons. price, one that restores socially efficient Setting prices right on the principle of full- decision-making. cost pricing appears to be difficult, and the road towards it is full of obstacles. Common Full-cost pricing ensures that least-cost problems relate to social implications, fears alternatives are exploited, implying that for competitiveness and political resistance the green economy is achieved efficiently. due to vested interests. At the margin, agents will equate the social cost of each mitigation option to It is possible, however, to overcome the price of pollution. With carbon pric- these obstacles by employing a rich set ing, for instance, there is a whole range of complementary instruments when of options: power generators may seek introducing full-cost pricing. For instance, new technologies for fuel substitution new or existing policy instruments can be (e.g., from coal to renewables); electricity used to protect vulnerable groups, miti- consumers will switch to power-saving gate competitiveness effects or ease the technologies and buy fewer power-inten- implications during the transition phase. sive products; transportation will decline Moreover, international cooperation (less car use, holidays closer to home); between developed, emerging and devel- and new fuel-efficient modes of transport oping countries is necessary to obtain will be developed (fuel switching, smaller efficient pricing in global environmental cars, more efficient engines). One carbon issues such as climate change. This price would ensure that the marginal cost calls for leadership of developed nations of each alternative is equalized, so that and support and guidance. International the total cost of emission reduction is organizations such as the United Nations lowest. Pricing is generally preferred to are vital to facilitate the necessary regulation, as the latter might not reduce coordination. emissions efficiently.

66 In this chapter the term “full-cost pricing” is used to refer to pricing that reflects the full social cost of transactions that involve environmental damages, i.e., the marginal private costs and the marginal external costs.

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Full-cost pricing goes a long way to set gradually increasing path to address the the right incentives for emissions-saving growth in damaging externalities. technologies. Establishing a credible future path for these prices is vital for technologi- The ability to raise substantial amounts cal development, since investments often of public revenue in an efficient way is an have a long time horizon and involve a important side benefit of full-cost pricing. large sunk cost. Credible pricing ensures For instance, with global emissions of 8.5 a continuing search for the least-cost tech- billion tons of carbon a year, a global tax nological options and innovations to curb of, say, US $23 per ton of carbon would emissions. Green innovation may redirect raise approximately US $200 billion, or 0.4 growth towards a sustainable path. Pricing, per cent of world GDP. It is important that however, may not be sufficient if innovators governments spend such revenue wisely, are not rewarded for the spillover benefits to such as by reducing public debt, reducing other firms. In that case, actively stimulating other distortional taxes or by increasing technology development may be a desirable productive public spending. Governments tool, as a complement to pricing. should not forego the revenue, for example, by grandfathering emission permits Full-cost pricing can be implemented free of charge or by granting tax-free allow- through alternative instruments, such as ances, as this would substantially raise the taxes or cap-and-trade schemes. Whereas social costs of the environmental policy. taxes directly impose a price on damaging Indeed, grandfathering tends to create activities, a cap-and-trade regime generates windfall profits to existing firms by leaving an equivalent price through the market for scarcity rents in private hands. It would be emission permits. In principle, both regimes much more efficient for the government can thus yield the same outcome in terms of to capture the scarcity rents to spend in a emissions and costs. If there is uncertainty productive manner. about costs or damages, however, equiva- lence fails. In the case of carbon, uncertainty Full-cost pricing can be applied much more about the price is particularly distortive for broadly than just to carbon, but pricing long-term investments. This makes a case is not always desirable or sufficient. For for carbon taxing as the preferred instrument example, in agriculture the use of pesticides compared to cap-and-trade schemes. and fertilizers reduces habitat diversity and harms soil and water quality. In fisheries, The full-cost price of carbon is equal to the property rights are often ill defined, leading monetized damage from emissions, referred to overexploitation and depletion of stocks. to as the social cost of carbon (SCC). The Local pollution or waste disposal can harm SCC includes changes in agricultural the quality of soil, reduce biodiversity and output, harm to human health, damages hurt ecosystems. In all these areas, pric- from increased flood risk and the reduced ing policies are generally more efficient value of ecosystem services. There are than regulation to achieve environmental several studies estimating the SCC, with an objectives. Pricing is only feasible, however, equally large variation in outcomes. A meta when damaging activities can be effectively study by Tol (2008) based on 211 estimates monitored. Moreover, such policies are reports an average of US $23 per ton of particularly attractive when pollutants are carbon. To put this number into perspective: heterogeneous and widely dispersed. If a price of carbon of US $23 per ton would emissions are difficult to measure or in the be equivalent to US $3 per barrel of oil, or presence of severe administrative problems, 7 cents per gallon of gasoline. In the future, regulation may be more appropriate. It can the SCC is likely to rise due to increased also be desirable to complement full-cost damages from extra emissions. Hence, pricing with other policies, such as green efficient carbon pricing should follow a public investments.

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11.3 Existing policies and emissions trading scheme (ETS) for large full-cost pricing carbon emitters. In 2011 the trade price was around US $18 per ton of carbon, and it Despite its appeal and conceptual sim- has been fluctuating substantially over the plicity, applying the principle of full-cost years. Today the ETS covers less than half pricing is generally not well understood. An of all carbon emissions in Europe, does not examination of current pricing instruments cover non-carbon GHGs, and the majority in countries, most notably carbon pricing, of permits are grandfathered on the basis shows that they are often ill-designed and of previous emissions. Estimates suggest usually far apart from the application of that governments thus forgo between 0.3 full-cost pricing. and 0.6 per cent of GDP in revenue. Hence the scheme is still a long way from efficient, A number of developed countries tax full-cost pricing. carbon implicitly, but the design of these pricing policies does not generally align to Several countries spend considerable carbon content. Countries in the OECD, for amounts of public resources on inefficient example, raise more than US $400 billion a fossil fuel subsidies. The International year through taxes on fossil fuels, excluding Energy Agency estimates that fossil fuel general consumption taxes. Governments subsidies in developing and emerging implement these fuel taxes for a variety of countries amounted to US $409 billion reasons – as a general source of public in 2010. A recent OECD (2011b) study revenue, as benefit taxes to cover the identified over 250 (tax) expenditures cost of infrastructure or as an incentive to that support fossil fuel use in 24 OECD encourage energy-saving behaviour. countries, adding up to US $47–$75 billion per year. Although these numbers fluctu- The design of fuel taxes, however, is gen- ate substantially year-by-year, the figures erally inconsistent with appropriate carbon indicate that many countries do the oppo- pricing. Coal tends to be underpriced rela- site of full-cost pricing. For instance, coal tive to its carbon content in many countries, subsidies – supporting the most carbon- while natural gas tends to be overpriced. intensive fossil fuel – create substantial Some countries tax electricity consump- inefficiencies in the fuel mix and consider- tion but do not distinguish with respect to ably raise global carbon emissions. whether it is generated by coal or renewables. It thus gives no incentive for fuel In most emerging and developing coun- substitution in electricity production, one of tries, subsidies for kerosene, coal or the key mechanisms for carbon reduction. electricity are motivated on equity grounds: Cars are generally taxed, for example, on they give poor households access to the basis of the average carbon emissions basic needs. Yet studies suggest that the generated by their engines. Yet such pric- benefits of most fuel subsidies in emerging ing policies do not affect driving behaviour. and developing countries accrue mainly to higher-income households (Coady Where explicit carbon pricing has been and others 2010). A number of countries introduced, coverage is generally too have recently announced plans to phase narrow. The Scandinavian countries, the out fossil fuel subsidies. These include United Kingdom and the Netherlands have China, India and Indonesia, Russia. Such introduced explicit carbon taxes, some- efforts will free public resources for other times even exceeding the estimates for the purposes and improve efficiency of the fuel SCC, but carbon taxes in these countries mix. Model simulations suggest that phas- generally exempt large emitters and thus ing out all fossil fuel subsidies between

do not exploit all options for emission 2011 and 2020 could reduce global CO2 reductions. In 2005, the EU introduced an emissions by 6.9 per cent by 2020.

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Outside the area of fossil fuels, countries 11.4 Towards full-cost pricing: spend hundreds of billions of dollars on Following the three E’s subsidies that damage the environment, especially in agriculture, fisheries and The gap between current practice and full- water. In 2008, OECD countries spent cost pricing reflects the ample obstacles US $400 billion on agricultural subsidies. to the implementation of full-cost pricing. Many countries also subsidize fisheries Yet these obstacles can be overcome if and water supplies. Subsidies that stimu- governments are dedicated to embrace late production by lowering costs or the concept of full-cost pricing and able increasing prices, however, damage to employ a rich set of complementary ecosystems and biodiversity. They lead instruments. In designing reforms, gov- to the depletion of fish species and over- ernments should respect three principles, exploitation. Water subsidies can cause each starting with an E: Environmental wastage of water and intensify water effectiveness, Efficiency and Equity. stress in vulnerable areas. Phasing out When guided by these principles, full-cost such harmful subsidies is essential for the pricing should be a feasible way going transition to a green economy. This has forward. been recognized by governments in the Strategic Plan for Biodiversity 2010–2020, Environmental effectiveness requires that where Parties have committed to reform, policies target all emissions. In addition, eliminate or phase out subsidies that the full-cost price should be set at the harm biodiversity. appropriate level. If policies are formulated in terms of emission reductions – common Pricing is difficult in international sectors in international climate agreements – the such as transportation. As governments appropriate price should be set so as to are concerned about competitiveness and achieve these objectives. carbon leakage, they tend to be reluctant to move towards full-cost pricing in sectors Efficiency requires that all agents face that are internationally highly competitive. the same price. An upstream tax on the Pricing emissions from international trans- emissions ensures that agents exploit portation sectors can only be done under all possible options for abatement. And large-scale coordination. The International by setting one price for all emitters, Maritime Organization (IMO) has started agents will continue with their abatement efforts until the marginal cost equals to undertake global efforts to reduce CO2 emissions through mandatory efficiency the price. Government should not forgo standards for vessels. While construc- revenue from full-cost pricing, but spend tive and important, efficiency initiatives revenue wisely to minimize the social for airplanes and vessels can have only cost. Earmarking revenues, for example, limited environmental effectiveness and for green investment tends to hamper will need to be supported by carbon pric- efficiency as this forgoes efficient public ing schemes. The IMO is also considering investment decisions based on proper market-based instruments to encourage cost-benefit analysis, but earmarking can investment in more fuel-efficient ships be justified temporarily to the extent that and technologies as well as more energy it helps to overcome resistance against efficient shipping operations. Such pricing full-cost pricing and to ease the transition. could be organized through contribution schemes or emissions trading, with a rebate mechanism to accommodate the impact on developing countries.

134 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective

Equity considerations are critical to gain • Global effectiveness. In the case of public support. Full-cost pricing will affect cross-border problems such as climate the household income distribution. Such change, international cooperation is distributional effects can generally be necessary to obtain efficient pricing offset through targeted measures. For policies. As long as carbon is priced instance, increased fossil fuel prices will only by a subset of countries, this also likely have a regressive impact. But devel- induces carbon leakage – a shift of oped countries have access to a variety of emissions to nonparticipants. To the instruments to offset these adverse effects extent that carbon pricing by a subset on equity, such as conditional transfers in of countries reduces the world price of cash or in kind. The cost of compensation fossil fuels, this would also increase will generally be less than the revenue emissions by non-participants. raised by carbon pricing. Subsidy removal International cooperation is therefore requires government’s commitment to necessary to ensure effective achieve- compensate vulnerable groups. ment of a greener economy.

In developing countries, the absence of • Global efficiency. The social damage effective governance and social protec- from polluting emissions is the same, tion systems raises concerns that price wherever in the world they arise. increases could have dramatic effects on Efficiency requires that marginal people’s lives. A transition toward full-cost abatement costs are also the same. pricing in these countries requires other This calls for identical (e.g., carbon) reforms that include scaled-up social prices. If this is not feasible, countries protection systems aimed at protecting may commit to a minimum price to be the most vulnerable. This should enable imposed by, for example, a carbon tax a transition to a green economy, without or cap-and-trade scheme. Incomplete endangering human security in vulnerable participation could cause significant countries and regions. inefficiencies as the costs of reducing emissions differ markedly across The same three principle E’s can be countries, implying substantial gains applied to international agreements on from trade by free riders. full-cost pricing, and international organizations such as the United Nations can • Equity between countries. International play an important role to enable the nec- transfers may be necessary in sustain- essary coordination to make this happen: ing cooperation and in including less developed countries in global agreements. Indeed, the fastest growth of carbon emissions in the coming decades will come from rapidly industrializing developing countries.

Part IV – Enabling Policies and Measures 135 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © Shutterstock / Anweber © Shutterstock / Solar panels in front of wind energy plants and wheat field.

136 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective Chapter 12: Regulatory instruments

12.1 Introduction

Regulatory approaches are among the It is also important that mandatory elements in the policy toolkit67 used by regulations and standards to promote policymakers to support the transition to a the green economy do not become a green economy, approaches that at times source of green protectionism, respecting require revision as societies and markets Principle 12 of the 1992 Rio Declaration. evolve. Governments can employ manda- Good regulatory practice, conforming tory technical regulations and voluntary to relevant international trade rules, is standards, including information-based essential. Relevant multilateral environ- instruments, to achieve desired green mental agreements (MEAs), international outcomes, promote greener production standards and guidelines should be used and consumption, curtail unsustainable as a legitimate reference for national use of resources and enhance greener regulations and standards. markets. The multilateral system offers the poten- Such regulatory approaches may be used tial to promote the mutual supportiveness to fulfill legitimate objectives such as pol- of environmental, economic and social lution prevention and abatement, waste dimensions of the green economy on management, energy efficiency, emis- a level playing field and in an equitable sions reduction, sustainable resource way. Within this context, the United management, biodiversity and wildlife Nations system and the Bretton Woods conservation, decent work or related Institutions have an important role to play green economy objectives. Regulatory in supporting the transition to a green approaches can be taken particularly economy, for instance, by encourag- to support market-based measures ing the ratification and implementation or – when a ban or binding limitation is of relevant MEAs, developing relevant deemed necessary – to stop certain dam- international standards and guidelines, aging activities or bring about behavioural promoting good regulatory practice at the change in favour of a green economic international and national level and build- transition. ing national capacity for the preparation and enforcement of relevant regulations Command-and-control regulations and and standards. The contribution of social technical standards require updating and norms, standards and regulations is an revision to stay relevant. Their application area that deserves particular attention in needs to avoid the pitfalls of stifling inno- making a green economy transition. vation, losing track of new technological developments and constraining market activity across national economies.

67 Alongside command-and-control regulations, the toolkit includes economic and market-based instruments to internalize environmental costs, as well as financial instruments and voluntary initiatives (such as environmental information disclosure) to promote, e.g., the development and deployment of environmentally friendly goods and services.

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12.2 Complementary for all new cars are below the permitted regulatory approaches levels. The same applies to regulatory and tools framework and emission targets in the energy sector that send a signal for research and innovation in renewable Regulatory frameworks are needed to energy. Regulatory however, uncertainty support the greening of certain key sectors can stymie investment. or activities and, in particular, in sectors that rely directly on natural resources To alter consumption habits and promote (e.g., agriculture, forestry, transport and demand for greener goods, services and energy) for more sustainable production technologies, information-based instru- methods and goods. Compliance with ments such as eco-labels can play an regulations may necessitate changes important role in raising consumer aware- in production processes, switching to ness of the environmental impacts and the different inputs and fuels or alternative availability of cleaner alternatives. Labelling technologies. Some regulations are tied schemes that take into account the to operating licenses for production. For environmental consequences of products instance, many countries enforce maxi- allow consumers to make more rational mum limits for GHG emissions and the purchasing decisions and be more aware release of hazardous substances across of non-wasteful consumption while stimu- the various industrial sectors. Waste and lating manufacturers to design and develop its associated emissions or releases is an more environmentally performing products. important area for the green economy, one where governments need to enforce A growing number of countries have modernized regulations on waste man- adopted mandatory or voluntary labelling agement and recycling. schemes to promote energy-efficient appliances and organic food products. Other There is also considerable potential for information-based tools, such as pollutant regulation to advance increased energy release and transfer registers, make envi- efficiency in the building, transport, indus- ronmental information publicly available. try and agriculture sectors. Increasingly, These can be used for benchmarking pur- mandatory requirements are used in coun- poses, and along with public advocacy can tries to promote the use of energy-efficient deliver better environmental outcomes. A equipment and appliances, thereby reduc- regional example of this is the Protocol on ing the GHG emissions associated with Pollutant Release and Transfer Registers their usage. Moreover, various standards under the UNECE Convention on Access and certification schemes are in place to to Information, Public Participation in promote good agricultural practices. Decision-making and Access to Justice in Environmental Matters. Regulations can help provide enabling conditions and incentives, establishing The use of strategic environmental the required market signals and certainty assessment and the adoption of SEA for business to make investment decisions legislation can also contribute to envi- to deploy green technologies, accelerate ronmental mainstreaming. The United green innovation and foster cleaner tech- Nations system and other international nology development and diffusion. For agencies provide support for coun- instance, regulations that set emissions tries’ efforts in the use of SEA aimed performance standards for vehicles pro- at establishing institutional processes vide the incentive for business to invest in within governments at the national and new technology to ensure that emissions local levels and the wider stakeholder

138 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective

community to ensure decision-making example, the ILO Labour Conventions that is better informed of the emerging and Recommendations, together with risks associated with business-as-usual.68 the ILO Declaration on Fundamental The United Nations associated Protocol Principles and Rights at Work (1998) and on SEA to the Espoo Convention on the ILO Tripartite Declaration of Principles Environmental Impact Assessment in a Concerning Multinational Enterprises and Transboundary Context is an example of Social Policy (1977/2006), constitute the an instrument that is global in reach.69 most authoritative international guidance on labour practices and related social 12.3 Relevant international issues. Governments need to carefully agreements consider these when defining green jobs and seeking complementarities in the implementation of international International law including multilateral agreements. environmental agreements under the auspices of the United Nations remains The MEAs reflect current international a key reference for the development understanding for collective action on and enforcement of national laws and global environmental issues such as regulation in support of a green economic climate change, land degradation, biodi- transition. There are today over 500 versity, hazardous substances and waste. international treaties and other agree- Each requires countries as Parties to ments related to the environment. Over develop implementation mechanisms to 320 of these agreements are regional and fulfill their obligations. Every country is some 60 per cent have been negotiated different, and measures will need to be since 1972 (cf. UNEP 2001). This signals tailored to the national context. In some what some refer to as the increasing cases governments choose to adopt spe- density of international environmental cial laws and regulations to further MEA law. About 40 of the agreements are core objectives. MEAs of global significance, including close to twenty framework conventions Among the core MEAs to support the such as the United Nations Framework transition to a green economy is the United Convention on Climate Change, the Nations Framework Convention on Climate Convention on Biological Diversity and Change and its Kyoto Protocol. To meet the Basel Convention on the Control of their agreed emission targets, countries Transboundary Movements of Hazardous inter alia adopt regulations and standards Wastes and Their Disposal. The core to promote renewable energy supply, MEAs are clustered into the following improve energy efficiency or reduce GHG five groups: atmospheric, biodiversity, emissions in products and their production chemicals and hazardous wastes, land processes. The Kyoto flexibility mecha- and regional seas. nisms assist Parties in meeting their targets in a cost-effective way and help stimulate The three Rio Conventions (CBD, additional green investment. This includes UNCCD and UNFCCC) are noteworthy the use of emissions trading and crediting in that they centrally place the overall schemes, an area in which substantial goal of sustainable development. Such international experience has been gained MEAs as these can be compared with in the last two decades. agreements in other issue areas. As an

68 Such support is provided by, for example, the OECD Development Assistance Committee, the World Bank and the UNEP/ UNDP Poverty Environment Initiative.

69 For more information see www.unece.org/env/eia/sea_protocol.htm

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Also in the cluster of atmospheric conven- in Endangered Species of Wild Fauna tions along with the UNFCCC, the Vienna and Flora regulates international trade in Convention targets adverse effects resulting wildlife for conservation and sustainable from human activities that modify or are likely use purposes. Governments adopt regula- to damage the ozone layer. Its Montreal tory measures to ensure that trade is not Protocol on Substances that Deplete the detrimental to the survival of wildlife species Ozone Layer was adopted to establish and traded specimens are not obtained in controls on ozone-depleting substances, contravention of national laws for the pro- including phase-out schedules for the tection of fauna and flora. production and consumption of such substances. Relevant regulatory frameworks The Rotterdam Convention, focused on have been established in most countries, international trade of hazardous chemicals to having direct impact on diverse industries protect human health and the environment, such as manufacturing, mining and agricul- creates legally binding obligations for the ture. Implementation has been supported implementation of Prior Informed Consent by a Green Customs70 capacity-building procedures. The Stockholm Convention initiative and international network of ozone on Persistent Organic Pollutants (POPs) officers in national governments facilitating requires member states to take regulatory the exchange of learning experiences. measures to eliminate or reduce the release of POPs into the environment. The Basel The Convention on Biological Diversity sets Convention on the Control of Transboundary goals and establishes general principles to Movements of Hazardous Wastes and their achieve conservation of biological diversity, Disposal requires its members to control sustainable use of its components and fair and reduce transboundary movements of and equitable sharing of the benefits arising wastes, prevent or minimize their genera- out of the utilization of genetic resources. tion and manage them in environmentally Its Protocols on Biosafety and Access and sound ways. All three of these conventions Benefit Sharing provide global frameworks from the chemicals cluster clearly deal with for the safe handling, transport and use of human health and environment issues living modified organisms resulting from associated with the development of global modern biotechnology, and for the fair and industries and their supply chains. equitable sharing of the benefits arising out of the utilization of genetic resources. Its Multilateral environmental agreements Strategic Plan for Biodiversity 2011–2020 whose scope is mainly regional, such as commits countries to eliminate, phase out the regional seas conventions, also have a or reform harmful subsidies and promote role to play in fostering the green transition positive incentive measures such as pay- by addressing region-specific problems ments for ecosystem services or promotion such as degrading ecosystems and engag- of markets for biodiversity-based goods. In ing industries – marine and other – most addition to such measures, many threats active within the region. In Europe, the to biodiversity can be tackled through Convention on the Protection and Use regulatory frameworks that establish envi- of Transboundary Watercourses and ronmental standards and liability regimes International Lakes, and the Convention to eliminate harmful activities. These are on Long-range Transboundary Air Pollution explicitly based on principles such as the provide examples of longstanding agree- polluter pays and full cost recovery. The ments that support political and economic related Convention on International Trade collaboration on a regional scale.71

70 See www.greencustoms.org for more information on its work to train customs officials to trace illegal trade and smug- gling of ozone depleting substances between countries with different commitments under the Convention and its Protocols.

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The United Nations system has an It promotes cooperation among relevant important role in assisting Parties to international instruments, within clusters implement and comply with international and processes to enhance policy coher- obligations, including monitoring, report- ence. It ensures that other international ing and verification provisions. It engages processes support the implementation of in capacity-building, education and advo- agreements in a manner consistent with cacy efforts to raise awareness of the their respective frameworks. This provides relevant issues. It helps to mobilize and the opportunity of ensuring that resources improve the targeting and coordination of are pooled effectively at relevant regional national, bilateral and multilateral financial and global levels, considering economic and technological resources in order to risks and opportunities faced in different increase their impact and effectiveness. parts of the world.

71 While the Convention is not yet open to non-UNECE Member States, its Protocol on Strategic Environment Assessment, which recently entered into force, is a global instrument.

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12.4 Relevant international and non-governmental organizations. standards or guidelines In view of the growing production and international trade in organically produced A number of United Nations agencies foods, the Codex Committee on Food have been involved with other interna- Labelling developed the Guidelines for tional organizations and stakeholder the Production, Processing, Labelling and groups in the development of international Marketing of Organically Produced Foods norms, standards or guidelines to be to facilitate trade and prevent misleading used as a basis for national regulations claims. The Guidelines include sections or standards to support greening (e.g., on labelling and claims; rules of produc- in the agricultural, forestry, industrial and tion and preparation, including criteria transport sectors). The Johannesburg for the substances allowed in organic Plan of Implementation (JPOI 2002) production; inspection and certification also recognized the role of institutions systems; and import control. They help to such as the International Organization harmonize requirements for organic prod- for Standardization (ISO) and Global ucts and may also provide assistance to Reporting Initiative in developing and governments wishing to establish national promoting standards for improved social regulations. and environmental performance by industry, advanced via voluntary tools such as Consumer concerns about forest manage- environmental management systems, ment, conservation and illegal logging have codes of conduct, certification and public driven the growth in private certification reporting (JPOI: 18). schemes such as the Forest Stewardship Council. The increased demand for forest International labour standards developed products and services and the reduction by ILO based on its labour conventions can of the forest resource base also raise contribute to ensuring that green growth concerns over whether demand can be provides benefits to all. These standards met in a sustainable manner. International are engrained in the ISO 26000 standard guidelines on sustainable forest manage- on Social Responsibility, one to which ment and on sustainable forest harvesting United Nations agencies contributed. have been developed by FAO. Its Code They are aimed at promoting opportunities of Practice for Forest Harvesting aims for women and men to obtain decent and to improve harvesting practices, support productive work, in conditions of freedom, implementation of sustainable forest man- equity, security and dignity. Their effective agement and promote forest productivity enforcement worldwide is a matter of and maximum economic return from the ongoing concern, and includes the need forest. It can also be used as a guideline to ensure that green jobs created today for conservation measures for flora and also reflect the standards of decent work. fauna. This is of particular relevance as regulators and industries start to consider The field of food production needs new use of new market instruments such as standards that consider a full food value payment for ecosystem services and chain from the farm to the fork. Within the goals such as Net Positive Impact. framework of the Joint Food Standards Programme established by the Food and Today both government and industry Agriculture Organization (FAO) and the worldwide are challenged to put in World Health Organization, the Codex place systems for improved energy and Alimentarius Commission promotes water efficiency, including appropriate coordination of all food standards work standards for measurement, account- undertaken by international governmental ing, disclosing and monitoring progress.

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Industrial energy management makes commercial vehicles. The United Nations good economic sense, leading to cost Economic Commission for Europe regula- reduction and improved reliability, tions have also been amended to include thereby contributing to greater productiv- electric and hybrid vehicles as well as ity and improved competitiveness. The vehicles with engines using cleaner fuels. United Nations Industrial Development Within its environmental mandate, the Organization and ISO collaborate on International Maritime Organization has implementation of the ISO 50001 Energy developed and adopted 21 international Management Standard, a tool for long- instruments to address marine pollution term energy management in industry. It arising from international shipping, the recognizes that a successful programme most important being the International in energy management begins with a Convention for the Prevention of Pollution strong corporate commitment to the con- from Ships. Under this convention IMO tinual improvement of energy performance recently adopted mandatory measures to through energy efficiency and energy reduce GHG emissions from international conservation and the increased use of shipping, creating the first ever global and renewable energy. The United Nations legally binding GHG reduction regime for Industrial Development Organization is an entire economic sector. In addition, a scaling up its efforts through its technical range of mandatory and voluntary guide- assistance programmes and is working lines and codes have been developed in cooperation with specialized agencies and adopted to provide international and other stakeholders to assist develop- standards for the safe transport, storage ing countries to develop energy efficiency and handling of harmful substances. programmes. The International Civil Aviation In the area of transport and manufactur- Organization (ICAO) is working to ing, the UNECE World Forum for the develop global solutions to address GHG Harmonization of Vehicle Regulations has emissions from international aviation. In served for over 50 years as a platform for 2010 ICAO adopted a resolution on inter- developing harmonized global regulations national aviation and climate change with for vehicle construction and performance. an agreement on global aspirational goals The World Forum currently administers of improving fuel efficiency by 2 per cent

three Agreements, including the 1958 annually and stabilizing CO2 emissions Agreement which provides procedures by 2020.72 The Assembly also agreed on

for establishing uniform prescriptions for the development of a global CO2 certifica- new vehicles and equipment, and the tion standard for aircraft. The ICAO will 1998 Agreement which aims inter alia to continue to facilitate the development decrease environmental pollution and the and deployment of sustainable alterna- consumption of energy. The World Forum tive fuels for aviation. States agreed on previously adopted amendments to the voluntary submission by June 2012

UNECE regulations to limit the maximum of action plans on CO2 emissions reduc- admissible level of vehicle emissions tion activities, enabling ICAO to assess for various gaseous pollutants. These progress towards the achievement of have resulted in substantially abating the the global goals and to address country emissions levels of new private cars and specific needs.

72 For more information, see http://www.icao.int/env/ .

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12.5 Good regulatory practice It is important that regulations and and enforcement standards to promote the green economy do not become a source of protection- The success of the regulatory approach, ism (see Chapter 13). The World Trade from hard to soft regulations, hinges on the Organization deals with the rules of quality and credibility of regulatory institu- trade between nations at the global level. tions and their compliance mechanisms. It aims at helping producers of goods Regulatory institutions should be transpar- and services, exporters and importers ent and accountable, offer appropriate conduct their business, while allowing appeal procedures and be efficient in the governments to meet social and envi- sense of keeping transactions costs to ronmental objectives. For example, the the minimum. Effective penalties for non- WTO Agreement on Technical Barriers to compliance or associated compliance Trade (TBT), recognizing the important mechanisms should be designed to disci- role of standards and regulations, seeks pline economic actors in order to achieve to ensure that they are not discriminatory the desired outcomes. The effectiveness and do not create unnecessary barriers of regulatory frameworks also depends to trade. The TBT Agreement seeks to on contextual factors (e.g., the rule of law, achieve a balance between member transparency, social accountability and states’ rights to take measures for the civil society participation) that underpin achievement of legitimate policy objec- environmental institutions and govern- tives and the need to prevent unnecessary ance. Fostering environmental regulatory trade barriers. One way to promote this approaches to support a greening econ- objective is by encouraging members omy requires institutional strengthening to use relevant international standards, and improved governance, both of which guides and recommendations as a basis can lead to greater development benefits for national regulations, recognizing the besides environmental sustainability. contribution that international standards can make to improve resource efficiency When choosing regulatory approaches to and the transfer of technology from devel- foster green economies, it is necessary to oped to developing countries. avoid inefficient and ineffective interventions and to ensure that these are reviewed To help ensure that information on regula- and duly phased out over time. Command- tions and standards is readily available, and-control instruments and mandatory WTO members are required to submit standards need to avoid stifling innovation notifications and establish national and market activities. Regulations and enquiry points. The TBT Committee is the labelling schemes need to be designed forum for governments to share informa- and implemented with a view to minimizing tion and discuss specific trade concerns additional costs for businesses and con- regarding standards, regulations and sumers. To avoid unnecessary proliferation their conformity assessment procedures. of national regulations and standards in Environmental labelling, environmental the transition to a green economy, refer- requirements and market access are ences to relevant international standards regular work items in the WTO Committee are essential. Good regulatory practice, on Trade and Environment, where mem- in particular in the choice of recognized bers can jointly assess the impact of such instruments and the enforcement of the instruments and acceptable terms of their regulatory measures, is vital. This requires, usage. This cooperation and information among other things, building the capacity exchange is critical in advancing good of regulatory, enforcement and court offi- practices across economies worldwide. cials in dealing with emerging issues.

144 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective

Part IV – Enabling Policies and Measures 145 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © FAO / Ami Vitale / © FAO A woman buying tomatoes at a downtown city market, Egypt.

146 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective Chapter 13: Sustainable trade and green markets

13.1 Introduction

Trade plays an important role in the transi- Certain domestic measures taken to inter- tion to a green economy by, among others nalize environmental costs may have an things, facilitating the opening of new mar- adverse impact on trade. Multilateral trade kets for green goods and services. Chapter rules and institutions help guard against 2 of Agenda 21 acknowledges that trade environmental measures that have unnec- can have a positive environmental impact essary trade-restrictive effects. The World and can therefore make an important con- Trade Organization plays a key role in tribution towards sustainable development. monitoring and surveying members’ trade By transmitting growing environmental and policies, including trade-related environ- social preferences of firms and consumers mental measures. Moreover, the WTO in world markets, trade plays a central role dispute settlement mechanism allows in the diffusion of green goods, services, countries to challenge market access technologies and production methods restrictions established under the guise among countries. With supportive national of protecting the environment. In addition policies and institutions in place, opportuni- to resolving environment-related trade ties offered by a green economy globally disputes, WTO dispute settlement rulings can stimulate economic growth and diversi- can also inform policymakers about how fication to create jobs, raise income levels, WTO rules and principles can be applied improve living standards and assist coun- in the transition to a green economy. tries to advance their social, environmental and developmental objectives. The challenge for a green economy is to create new green markets that can raise The multilateral trading system and bilat- incomes and employment and enhance eral and regional trade agreements offer the quality and availability of social and trading partners opportunities to expand infrastructure services while reorienting the development of markets for green economic activities to reduce depletion goods and services. Cooperative mecha- of natural resources. While trade can nisms under certain trade agreements help steer an economy towards greener that promote investment, shared regional growth, growth should be inclusive by infrastructure, technology transfer and building developing countries’ human skill sharing can also facilitate the transi- and productive capacities to enable them tion to green economies. to participate effectively in the global economy, by generating employment for To deliver green growth effectively, the jobless and by increasing access of the trading system needs to be open, the poor to basic services such as energy, rules-based and non-discriminatory. The water, communications and transport. multilateral trading system provides the More attention needs to be focused on predictability, security and stability needed helping developing countries to connect to help create an enabling environment with global production and supply chains for all countries to benefit from trade. while meeting new environmental require- Such a stable and predictable system is ments. This includes facilitating the also beneficial for promoting investment, participation of low-income producers or innovation and technological change. exporters in green production and trade.

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At the national level, improving pro-poor trade barriers outside of an eventual WTO outcomes of trade depends on the ability agreement, autonomously or through of countries to implement complemen- bilateral and regional trade agreements. tary national measures to facilitate their Reduced barriers can provide oppor- participation in the trade of green goods tunities for countries to expand their and services, and to promote the broad production and export of environmental diffusion of its benefits. At the regional technologies (such as solar and wind level, the development of free trade technologies) and diversify their econo- agreements offers important opportunities mies. For some developing countries, to use shared natural resources more effi- reduced trade barriers for environmentally ciently and to allow participant economies beneficial goods (such as organic foods, to focus on their areas of strength based natural fibres, sustainably produced forest on national resource endowments. These products) and environmental services agreements need to be accompanied by (such as ecotourism) could enhance effective regional infrastructure including gains for rural communities and facilitate transport systems to support subregional integration of SMEs into green supply trade and development corridors. chains. Ideally, each developing country should be able to benefit from freer trade 13.2 Promoting green goods by identifying green goods and services of and services export interest as well as imports needed to advance national environmental protection objectives. Trade permits countries to meet domestic demand for green goods and services Continued efforts by international organi- through imports, and provides export zations and donor agencies are needed opportunities for producing countries in a to assist developing countries to identify wide range of green goods and services. green export opportunities and develop The opening of further trade on envi- capacities in the production and export of ronmental goods and services can help related goods and services. These efforts improve production methods, making include initiatives by agencies such as environmentally friendly products and UNCTAD, UNEP, the United Nations technologies cheaper and more acces- Regional Commissions and WTO, as sible. It can bring innovations to a global well as frameworks for aid effectiveness marketplace while enhancing sustainable such as the United Nations Steering economic growth and creating jobs. In the Committee on Tourism for Development medium and long term, improved access led by the United Nations World Tourism to environmental goods and services will Organization (UNWTO). To enhance their provide further impetus to green invest- competitiveness in the green market and ment and technology transfer that can to overcome challenges resulting from accelerate the adoption of less-polluting related environmental requirements, technologies and processes globally. capacity-building efforts (such as training, trade promotion, market information and As part of the Doha Round of trade analysis) remain key to assist developing negotiations, WTO members states countries. This implies technical assis- are negotiating to liberalize trade in tance for SMEs to access markets and environmental goods and services. The finance and to meet the standards and negotiations seek to increase trade of certification requirements for green goods green goods and services by lowering and services. trade barriers. Countries can also reduce

148 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective

13.3 Removing trade Besides subsidies, there are other policy distortions to further the measures adopted by governments to green economy promote the green economy, for example, environmentally related taxation and levies that aim to discourage economic Removal of trade distortions, particularly activities that work against the goals of harmful subsidies, can constitute a triple the green economy; green government win for trade, environment and develop- procurement; and standards and regula- ment. Ensuring fair and equitable trade tory requirements to prohibit the use of through the elimination of those subsidies certain hazardous materials, products and other inequitable domestic support or processes and production methods will discourage environmentally damaging that damage the environment. These production methods by reducing incen- measures, if not properly designed or tives to over-consume scarce resources. implemented, could have the potential Reform on subsidies – such as for fuels, to create trade barriers and distortions, agriculture, fisheries and forestry – that disadvantaging foreign producers. have adverse socio-economic and environmental outcomes, would contribute World Trade Organization rules, such as to the transition to a green economy. For the Agreement on Technical Barriers to instance, the WTO Doha Round negotia- Trade, the Agreement on the Application tions on fisheries subsidies seek to remove of Sanitary and Phytosanitary Measures harmful subsidizations that encourage and GATT Article XX, provide significant fishing well past biologically sustainable scope for WTO members to put in place (and economically profitable) levels. measures to protect the environment and advance the green economy, while at the To promote the green economy, govern- same time imposing disciplines to ensure ments generally aim to stimulate the that such measures are not disguised development, deployment and use of restrictions on international trade. cleaner technologies. They typically do so through a variety of fiscal incentives, price 13.4 Technology development support and investment support. The vari- and diffusion ous stimulus plans, and their emphasis on green recovery, are likely to result in a significant increase in the provision of Increasingly, firms in both developed and potential subsidies for the development developing countries are integrating green of the green economy. There is therefore purchasing, production and packaging a potential for green economy subsidies methods into their operations in order to to distort trade. The WTO Agreement on enter and continue their participation in Subsidies and Countervailing Measures global supply chains. Access to required (SCM Agreement) seeks to strike a bal- green technologies and materials is thus ance between allowing member states critical for competitive, export-oriented to provide subsidies for legitimate policy supply chain firms. Green technology purposes and preventing them from pro- diffusion to developing countries can be viding subsidies that distort international facilitated by transnational corporations. trade. Provided certain basic disciplines They provide technology transfer pack- are respected, the SCM Agreement ages to foreign affiliate firms to ensure leaves governments with substantial standardization, quality control and policy space for supporting the transition. efficiency among global production sites.

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To attract technology transfer mediated 13.5 Good governance and by transnational corporations, develop- policy coherence ing countries need to establish effective national policies and regulatory frame- The trading system has become more works to build the absorptive capacities of complex as it has become more important domestic enterprises and to promote and globally. Its impact now goes beyond the support intellectual property rights. traditional realm of trade policy, touching upon core domestic and international inter- Multilateral environmental agreements ests. Trade policy needs to be couched in also have provisions for green technology the midst of many other accompanying transfer. The UNFCCC has promoted policies in both the social and environ- the transfer of renewable and clean mental spheres. Many issues relevant to energy technologies from developed to the green economy are dealt with by inter- developing countries through the Clean national rules outside of the multilateral Development Mechanism. Recently, the trading system, and a number of chal- UNFCCC has established a Technology lenges can only be confronted effectively Mechanism under the Convention. Its through better global governance. How aim inter alia is to enhance endogenous can this be achieved? Part of the answer capacities and technologies of developing lies in the international system, building countries, including cooperative research, more bridges between specialized forums development and demonstration pro- and avoiding the compartmentalization or grammes, as well as enhancing the isolation of systems. The most important deployment and diffusion environmentally part of the answer is policy coherence at sound technologies and know-how to the national level, including the integra- developing countries. tion of environmental concerns into trade policy decision-making in the light of The multilateral trading system has an country-specific conditions. important role to play in technology development and diffusion. The WTO To achieve a transition to a green economy Agreement on Trade-Related Aspects would require reorienting production, of Intellectual Property Rights stipulates investment and infrastructure in the econ- that the objective of the protection and omy. It would also imply more sustainable enforcement of intellectual property rights lifestyles and changes in consumption pat- should be both to promote technological terns. This transition would be a gradual innovation and to facilitate the diffusion process, spanning many years, thereby of technology to the mutual advantage limiting abrupt economic dislocations of producers and users of technological and shocks. A mix of policy instruments, knowledge in a manner conducive to social measures to incentivize research and and economic welfare. Furthermore, it development and information dissemina- requires developed countries’ govern- tion to facilitate the choices of consumers ments to provide incentives for their and firms will all be essential in driving the companies to transfer technology to least transition away from business as usual. Yet developed countries. the internalization of environmental costs or social externalities is a costly effort that many countries, developing and developed alike, may not be willing to undertake unilaterally or in isolation. There is thus an urgent need for policy coherence as well as financial and technological cooperation at the regional and global levels.

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13.6 Trade as vehicle to scale fisheries and agriculture subsidies, and up solutions globally the elimination or reduction of tariff and non-tariff barriers to environmental goods The goals of a green economy are not and services. Positive steps are needed new. Much of what is implied in a green to take these negotiations forward. They economy dates back to Agenda 21. hold the promise of a win-win-win for Despite progress made, greater efforts trade, environment and development. are needed. Green economy analysis of global resource use and degradation Sustainable trade is a trading system that shows that business as usual is leading ties to important human values, welfare down a disastrous path. Trade can play goals and inclusive growth, assisting those an important role in grasping the oppor- developing countries that are marginal- tunities of an alternative growth path. ized in the global trading arena. Concerns Already at Rio de Janeiro in 1992 it was have been raised that a green economy acknowledged that an open multilateral will introduce constraints on growth, trading system, supported by the adoption competitive disadvantages and unequal of sound environmental policies, can have benefits among countries. Advancing a a positive impact on the environment and green economy agenda thus requires contribute to sustainable development. policy coherence to ensure that trade and Twenty years on, the fundamental mes- development and the protection of the sage remains that mutually supportive environment can be mutually supportive. trade and environment policies can pro- Trade policy needs to be accompanied mote sustainable development. Trade can by complementary policies in the social, help governments, business and consum- environmental and economic spheres. ers to take green solutions to global scale. At the national level, this requires close collaboration among ministries of trade, There are concerns that measures put industry, agriculture, environment, labour in place to advance the transition to a and others. green economy could potentially create trade distortions or new forms of green Capacity-building activities of international protectionism. World Trade Organization and regional organizations and interna- rules provide policy space for countries to tional programmes must be furthered promote green economic sectors. Equally, to assist developing countries to design they offer a framework to guard against mutually supportive and domestically green protectionism and to ensure that driven trade and environment policies, these measures are not disguised restric- enhance regional cooperation, identify tions on trade, and are not applied in a green import-export opportunities and manner that would constitute a means develop capacities in the production and of arbitrary or unjustifiable discrimination trade of green goods and services. These between countries. Thus, the multilateral include programmes such as the Aid trading system must continue to be for Trade and the Enhanced Integrated strengthened to meet future challenges in Framework, as well as the development this area. assistance activities provided by the World Intellectual Property Organization (WIPO) A successful conclusion of the current on intellectual property. International WTO Doha Round of negotiations could programmes in this area are important contribute significantly to an economic building blocks for developing countries to transition. These include negotiations take the opportunities that trade offers in on the removal of trade distortions, in a globalizing world economy. particular harmful subsidies such as

Part IV – Enabling Policies and Measures 151 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © UNEP © UNEP An acacia agroforestry plantation, Mampu, Democratic Republic of Congo.

152 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective Chapter 14: Innovation and technology

14.1 Introduction 14.2 Technological innovation systems

Regulation and economic incentives for The success of newly developed tech- greening need to complement innovation nologies has often been determined in the marketplace, creating favourable by the institutional and socio-economic conditions for advancing innovation and structures that affect both the rate and technology development. Innovation is a direction of technological change in broad concept that is used in many differ- society. These determine the pace of ent contexts. Most definitions of innovation transition from a technological niche to a emphasize newness and successfulness. new technological regime. When an exist- At the societal level, innovation has been at ing technological regime gets entrenched the centre of each and every major socio- through the unlimited support of existing economic transformation of society since institutional and economic structures, it the production of the first tool for hunting up leads to technological lock-ins that result to our age of high-speed and high-impact in rigid technological trajectories. information and communication technologies. Innovation can be broken down into Under such circumstances, there is a three categories, each progressively more strong need to look beyond technical significant and far-reaching (UNEP and changes and to address changes along a others 2009): broader social dimension – for example, user practices, regulation and industrial • Incremental innovation entails step-by- networks – in order to make real techno- step improvements of existing processes logical change viable (Sagar and others and organizational practices in response 2002). The science, technology and policy to changing demands and needs communities increasingly recognize the interaction between the technical and • Radical innovation drastically changes social dimensions of innovation as critical. existing processes and organizational Both technological and social innovation is practices, typically offering more opportu- necessary for enabling a paradigm change, nity for new market entrants and players notably the type of change required by a green economy transition. • Fundamental innovation depends on new scientific knowledge put into use, and usually provides the basis for new industries along with a paradigm shift.

The range of innovation possibilities between incremental and fundamental innovation is wide and needs to be supported in the context of the transition towards a resource-efficient society and green economy. This chapter provides a synoptic profile of ongoing or planned initiatives by agencies to support innovation and alternative technology development.

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Technological innovation refers to Social innovation is the process that builds innovations of all types that are aimed on knowledge sharing and communica- at developing new ways of carrying out tion processes, resulting in the formation economic activities based on expand- of networks of institutions and people ing scientific knowledge in response to whose activities and interactions initiate, sectoral competition, market needs and import, adapt and allow the adoption of social demand. It involves the develop- new technologies. In view of the highly ment of both the hardware and software entrenched dominance of the incumbent dimensions of technologies. From a green technologies, the challenge of social economy perspective, the following are the innovation is of high strategic importance three key elements of technological inno- for a transition to a green economy. Key vation that are largely being influenced by components are the following: newly emerging sustainability principles: • Policy and market innovation. These • Product innovation – the develop- are the sources of all the critical signals ment of products and product service that would ultimately determine the systems that are aimed at reducing success rate of technological innova- the overall environmental impact of tions. They are largely determined by products and services from a life- the policy and institutional measures cycle perspective, while maintaining taken by national governments and or improving the functional benefit to public institutions. society • Innovative knowledge systems. The • Process innovation – the whole range transition to a green economy is being of continuous improvement of existing promoted in parallel with another major production processes with the purpose transition that is happening in the global of reducing the resource and energy economy – the transition from an indus- intensity per unit of product produced trial economy to a knowledge economy. and the development of new, green Strong complementarities could be technologies that result in the delivery developed between these two transitions of alternative products and services by developing innovative knowledge systems that would make the maximum use • Organizational innovation – organi- of the opportunities provided by both. This zational management processes that requires adequate use of information and facilitate the promotion of both product communication technologies available and process innovations and result today, and support for the integration and in the delivery of new products and processing of relevant information includ- services with reduced environmental ing key performance indicators. impact and increased social benefit. • International support programmes. International development cooperation has the vital role of facilitating an effective interface between technological innovation, mainly led by the private sector, and social innovation, mainly led by governments and the public sector. This would require developing innovative programmes that support open participation, wider acceptance and effective use of emerging technologies.

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14.3 Strategic intervention positive gains across the following princi- points pal capital components of a new economy. Natural capital gain should contribute to Understanding change requires devel- the conservation and/or regeneration of oping an insight into the incumbent the natural environment and ensure the technology and the incumbent system in healthy functioning of basic ecosystem relation to the emerging technology and services. Financial capital gain should the emerging innovation system (Hekkert contribute to the positive accumulation and others 2006). The transition to a of financial capital through market capi- green economy is being promoted in a talization and contribute to green growth. context where there is an incumbent tech- Social capital gain should contribute to nology regime that has been supported the improvement of well-being of the com- through decades of institutional measures munity, while giving due considerations to and networks, juxtaposed with an emerg- internationally agreed ethical standards ing technological niche that promotes and preserving the positive lessons from resource efficiency and socio-economic indigenous knowledge systems. care. Supporting such a transition would require working through strategic entry 14.3.3 Creating an optimal points that would unlock the various bot- environment for private sector tlenecks for the development and diffusion investment and innovation of alternative technologies. The items below are some of the strategic interven- To enable private sector investment, tion points that need to be considered. innovation and broad adoption of greener production methods, good governance is 14.3.1 Overcoming social inertia essential. Bribery and corruption present real bottlenecks for investments. The Since the 1980s markets have witnessed same holds for the absence of the rule rapid growth in the development of new of law, clear regulations, transparency goods and services, processes and busi- and predictability. A level playing field ness models that enable higher resource as well as fair business practices will be efficiency, cleaner production and sustain- necessary for a green economy to deliver able consumption. Nevertheless, countries as required. Therefore, governments have not been able to benefit from most should involve the private sector in iden- of these innovative technologies mainly tifying impediments to a green economy due to inertia caused by the lag in the field transition and establishing clear, stable of social innovation. Addressing inertia and coherent regulatory frameworks to factors at local, national and global levels facilitate the integration of environmental, and creating favorable market conditions social and governance issues into busi- for the widespread application of greener ness planning and decision-making. technologies is a key issue that needs to be addressed by national governments, 14.3.4 Seizing leapfrogging international agencies and development opportunities organizations. Social and technological innovations 14.3.2 Ensuring sustainable could lead to multiple dividends and expo- capital gains nential benefits when they are effectively linked with existing leapfrogging opportu- Innovation that contributes to the green nities. Such opportunities are usually high economy transition has to lead to sustain- in circumstances where the effect of the able capital gains by reinforcing the net incumbent technological lock-in is weaker.

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Box 2. Defining environmentally sound technologies

The term “cleantech” has become popular with the investment community in the last decade, referring often to an asset class of climate friendly or renewable energy technologies. Broadly speaking, cleantech or greentech today refers to cleaner technologies or “environmentally sound technologies” (ESTs), the term used since the 1990s. In 1992, Agenda 21 described ESTs as those technologies that, “…protect the environment, are less polluting, use all resources in a more sustainable manner, recycle more of their wastes and products, and handle residual wastes in a more acceptable manner than the technologies for which they were substitutes. [ESTs] are not just individual technologies, but total systems which include know-how, procedures, goods and services, and equipment as well as organizational and managerial processes.”

This broad definition includes end-of-pipe and monitoring techniques, but explicitly encourages more progressive preventative approaches such as pollution prevention and cleaner production. The aspiration is towards cleaner technologies where the function is to provide a human benefit or service rather than concentrating on products per se.

Environmentally sound technologies allow organizations and societies to reduce the use of finite resources and to use existing resources more efficiently. Waste storage, treatment and disposal are costly in financial as well as in environmental and social terms. While environmentally sound technologies generate less waste and fewer resi- dues, the continued use of inefficient technologies leads to higher operating costs. It also results in a retrospective focus on control and remediation rather than prevention. As environmentally sound technologies reduce operating inefficiencies, they also lead to lower emissions of environmental contaminants. This benefits workers who are exposed to much lower levels of hazardous materials on a daily basis and results in a substantially reduced risk of accidents or technological disasters.

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These possibilities exist at all levels of the 14.3.6 Development of knowledge society, from the community and industry and skills level to a country level. Exploring these opportunities and putting more effort in The transition would require a work- transforming them into potential realities force that has a new set of skills and a would further expedite and facilitate the knowledge framework on top of the wide transition towards a green economy. arrays of knowledge and skills that have been developed over past centuries. This 14.3.5 Supporting innovation in would require various levels of retraining small and medium-sized enterprises of the existing workforce, with a particular focus on fields that are related to the pro- Besides the major contribution they ductive sector and with due consideration make to national economies, SMEs have to the participation of girls and women. proven to be one of the fertile seedbeds Appropriate training and life-long learning for the development and diffusion of would need to be based on improved defi- innovative technologies and business nition of the specific skills required by new, practices. Unleashing the enormous green technologies and occupations. The capacity for innovation that is inherent employment transition would also require in SMEs for a transition would require reorienting formal education programmes creating necessary support mechanisms. by mainstreaming sustainability issues. Such mechanisms are needed to support the transfer of knowledge and skills from 14.4 Existing initiatives and large multinationals to SMEs along supply programmes by chains, as well as the transfer and dissemination of technologies and know-how to international agencies developing country partners. Support will include financial incentive programmes The major strategic contribution that as well as targeted education and train- the United Nations agencies, BWIs and ing, making use of professional bodies regional development banks could make and intermediary organizations such as is to support developing countries to plan industry associations that represent local for and manage the technological and small businesses. This also includes social innovation processes needed to the engagement of local entrepreneurs, successfully employ cleaner technologies including young entrepreneurs involved (see box 2). in the establishment of local development partnerships and small business The following is a synoptic profile of development. existing initiatives and programmes with a focus on the common elements of interventions and modalities of support followed by agencies. (See Annex 1 for details.)

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14.4.1 Policy and decision-making 14.4.2 Product design and develop- support ment support

The policy and decision-making level is per- Some of the existing programmes haps the most strategic level of engagement, provide support in promoting the design one that influences the overall effectiveness and development of products that are of the support to be provided. While all of the more resource-efficient and have lower programmes and initiatives may have their adverse impact on the environment. This own policy and decision-making implications, includes the ICAO Global Framework for the initiatives under mainstreaming resource Alternative Aviation Fuels to facilitate the efficient and cleaner production in national development and deployment of alterna- policies and strategies could be cited as the tive fuels for aviation on a global basis, most notable with significant policy implica- the IMO Initiative to Reduce GHGs from tions. This includes the Life-Cycle Initiative International Shipping through enhanced and the Technology Assessment work led energy efficiency design and operational by UNEP. The ITU policy recommenda- considerations, the World Bank Lighting tions to ICT regulators and administrations, Africa Project to promote off-grid lighting the World Meteorological Organization-led products and services, the FAO interdis- initiative on Global Framework for Climate ciplinary work on enhancing food security Services, UNESCO work on Science, by building capacities in organic produc- Technology and Innovation policies and the tion, processing and certification, the ITU FAO Ex Ante Appraisal Carbon-balance Tool work on developing new standards for the also provide important decision-making tools use of ICT to reduce the carbon footprint that support change towards more resource- of many industrial sectors including the efficient systems. ICT sector itself and the sustainable product development programme of UNEP, The World Intellectual Property Organization which is aimed at promoting the design work to support access to its global technol- and development of sustainable products. ogy database (Patentscope) and analysis of such databases (Patent Landscapes) sup- 14.4.3 Supporting resource-efficient ports innovation and technology transfer by and cleaner production providing information on existing technologies, ownership and trends. The WIPO Green Support for resource-efficient and cleaner Marketplace provides support for the diffusion production refers to operational sup- of green technologies. The WIPO SME port that involves direct engagement programme supports the use of intellectual with industries to promote continuous property by SMEs and thereby lower barriers improvement of production efficiency for technology diffusion. Support for technol- through technical and managerial ogy policy and choice at the urban level is interventions. Notable is the Joint UNIDO- also provided by UN-ECLAC, UN-ESCAP UNEP Programme on Resource Efficient and UN-HABITAT. These agencies are and Cleaner Production, which has been collaborating on guidelines to promote the supporting developing countries and application of eco-efficiency as a key criterion transition economies since 1994. More for sustainable urban development. Some recently, the IFC launched its cleaner regional commissions are also undertaking production programme with a specific cross-sectoral assessments of the economic focus on resource efficiency and carbon impacts of climate change, in collaboration emissions reductions by adopting cleaner with ministries of environment and finance, production principles. Also relevant is to support the implementation of relevant the FAO programmes for Organic Food economic, technology and other policies. Systems, Sustainable Crop Production

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Intensification, based on Conservation on developing, implementing and moni- Agriculture, and integrated Crop-Tree- toring REDD projects. The UNESCO Livestock systems. Education for Sustainable Development and Technical and Vocational Education 14.4.4 Finance and marketing support and Training programmes pursue education on sustainability and training for Finance and marketing support is criti- green jobs. cal, particularly when it comes to seizing leapfrogging opportunities and promoting 14.4.6 Supporting networks and transition in developing and transition platforms economies. The largest contribution in this area is from the World Bank Group While most capacity-building activities with all of its projects having a financing have some element of networking, component. This includes the Cleantech there are some initiatives that have the Investment Programme of the IFC, which development of networks and platforms promotes the growth of clean technology as specified outputs. Examples are the companies; the Clean Technology Fund global network of Climate Innovation that promotes scaled-up financing for Centers under the Infodev Climate low-carbon technologies; and the Lighting Technology Programme that is imple- Africa Project. The United Nations mented by the World Bank Group, Environment Programme work on African and the Global Network for Resource Rural Energy Enterprise Development Efficient and Cleaner Production that and the FAO work under Climate Smart is established under a UNIDO-UNEP Agriculture also support financing and programme. Additionally, the activities of investment strategies. the Consultative Group on International Agricultural Research centres on climate 14.4.5 Skill and capacity development change, agriculture and food security and the FAO Communication for Sustainable All the initiatives involve some level of Development Initiative develop knowl- skill and capacity development through edge networks and platforms. The education and training. As key features UNESCO World Network of Biosphere of investing in human capital, these Reserves provides support for improved initiatives contribute to the nucleus of understanding and management of the new set of skills and capacity. Some of interaction between nature and societies, the initiatives, as in the case of the Joint and WIPO Green provides a new platform UNIDO-UNEP Programme on Resource for green technology exchange. Efficient and Cleaner Production and the Climate Innovation Centre of the World Bank Group, include the establishment of dedicated centres in developing countries and transition economies with a specific task of supporting industries on cleaner production and cleaner technologies. The United Nations Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation (UN-REDD), jointly implemented by FAO, UNDP and UNEP, supports countries to reduce GHG emissions through methodology development and capacity-building

Part IV – Enabling Policies and Measures 159 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective 14.5 Steps for an improved • Promoting synergies. From the synop- interagency effort tic review of existing programmes and initiatives that are being promoted by The selection of issues that were raised agencies, it is evident that there is con- and the initiatives that have been profiled siderable scope for complementarities in this Chapter clearly show the strategic and further collaboration. An example contribution that agencies can make in is complementarities between the supporting innovation and technology programmes implemented by UNEP, for a green economic transition during UNIDO, ITU, FAO, the Regional the coming decade. Some key points for Commissions and the World Bank consideration by international agencies Group in the area of resource-efficient and multilateral funding institutions in production and promotion of alternative supporting innovation and technology are resources. The promotion of synergies the following: among such initiatives needs to build on the added value that each of the • Global scale-up. While there are agencies bring, based on their respec- encouraging trends in terms of tive governmental mandates. increased acceptance and market share for emerging green tech- • Industry and finance platform. One nologies, this acceptance needs to of the key determinants for the trans- be scaled up many-fold before green formation of innovation into a socially technology becomes the dominant beneficial undertaking is the availability regime. Resource-efficient and of financing. This is particularly critical cleaner production has proven to lead for SMEs and entrepreneurs in devel- to multiple economic, environmental oping and transition economies that and social benefits in many industries, are prepared to move towards more but needs to be scaled up through resource-efficient and environmentally global support, building on the lessons sound production but lack the neces- and experience drawn from exist- sary financing mechanisms. Improved ing initiatives and programmes, and synergy between the programmes of taking account of lessons learned with different policy, technical and financing respect to incentives and innovative agencies could make a major con- financing to take green technologies tribution in addressing this limitation beyond the proof-of-concept phase to through the facilitation of sustainable commercialization and broader market investment platforms as marketplaces take-up. where industries and financing institutions can meet.

160 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective

Part IV – Enabling Policies and Measures 161 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © FAO / Danfung Dennis © FAO Workmen constructing an irrigation channel, Afganistan.

162 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective Chapter 15: Indicators of transformation

15.1 Introduction

An integrated policy assessment frame- A conceptual framework for indicators for work, including improved accounting a green economy transition should pro- systems and indicators to capture rel- vide flexibility for governments to use and evant information and measure progress, develop, as necessary, indicators and sup- is an essential part of making the green porting statistical frameworks that meet economic transition. Such a framework their needs and circumstances. Although should organize thinking concerning dif- the selection of specific indicators may ferent groups of indicators, their relation vary, SEEA can provide consistent statisti- to the concept of a green economy and cal classifications, concepts and methods their associated statistics. Overall, the underlying flexible indicator sets. framework would confirm sustainable development as ultimate goal and focus on action areas combined with empirical information to speed up implementation and effective use of enablers on the road to sustainable development.

The elaboration of a framework for measuring progress in building a green economy, including growth and prosperity, should draw on a range of existing frameworks and initiatives. This includes the United Nations System of Environmental-Economic Accounting (SEEA)73, an internationally recognized statistical framework for representing the relationship between the economy and the environment, and other relevant initiatives such as the Wealth Accounting and Valuation of Ecosystems (WAVES) project, led by the World Bank, and research on resource indicators by the International Resource Panel. In addition, a measurement framework should also draw on the existing frameworks for socio-economic and other indicators of sustainable development.

73 Available online at http://unstats.un.org/unsd/envaccounting.

Part IV – Enabling Policies and Measures 163 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective 15.2 A conceptual framework There is a logical link between these for assessing progress groups, as depicted in figure 4 below. The concept of a green economy entails The following conceptual framework for an increasing share of green sectors (or assessing progress towards a green activities to improve sustainability and economy divides indicators into three contribute to the greening of other sectors) groups: in the economy. This could be assessed with economic indicators of these activi- • Green investments, jobs, and sectors. ties: investment, value added, output and This group has an economic focus and employment. The Environmental Goods represents efforts to achieve a green and Services Sector (EGSS) can provide transformation of various sectors of a starting point for this disaggregation the economy. It focuses on investment within the System of National Accounts and the associated share in output and (SNA). The EGSS is incorporated in the employment. internationally agreed SEEA (as discussed below). Regarding employment, • Decoupling Impacts and Resource it may also be relevant and possible to Efficiency. This group assesses the develop appropriate indicators capturing environmental impacts of economic the extent to which employment can be activity, identifying indicators of considered as decent work. resource efficiency and the decoupling of economic activity from these impacts. Principle issues include materials and waste, energy, water, land use and ecosystem change, as well as hazardous substances, all related to economic activity.

• Aggregate Indicators of progress and well-being. This group refers to overall measures of economic progress and human well-being, including dimensions such as poverty alleviation, equity, social inclusiveness, overall well-being, capital resources and inclusive wealth (such as in the Beyond GDP initiative). This includes a wide range of proposed indicators, mostly to complement GDP with social, environmental and more detailed economic criteria.

164 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective

Figure 4. Conceptual framework for assessing progress

Mesuring Transition Towards a Green Economy

Employing a set of indicators capturing different aspects of the economic transition

Agriculture Buildings 1. Green transformation 2. Decoupling & Efficiency Cities of key sectors Energy Economy- of economy • Energy use (per $ GDP) Forests wide Fisheries • Investment ($) • Water use (per $ GDP) ICT Selected key Manufacturing sectors • Employment (jobs) • Material use (per $ GDP) Tourism Transport • Output ($) • Waste generation Waste (per $ GDP) Water } } 3. Aggregate indicators of progress and well-being

e.g. Adjusted net savings, expanded wealth estimates, indices of well-being, poverty reduction, Genuine Progress Indicator.

Source: UNEP – Green Economy Initiative

As these green or greener subsectors come European Economic Association, OECD to occupy a greater share of the economy, and UNCSD. The framework provides a the expectation is that the impact of the step-wise description of the causal chain economy on the environment in terms of between economic activity and impacts energy and resource use and waste gen- such as loss of biodiversity and diminished eration will decline. It should be possible human health, welfare or well-being. In to assess these improvements in terms of addition, the SEEA provides an agreed the second group of indicators on impacts. system for components such as material These will typically be expressed in normal- flow accounts, input-output tables, as well ized terms, or relative to economic outputs, as land and water use accounts, all of which such as in the case of resource use per unit provide the basis for measuring indicators (dollar) of GDP. such as energy and resource use at the sectoral and economy-wide scales. The work of the International Resource Panel provides a scientifically solid basis on The SEEA provides a framework to inte- which to build indicators of the environmen- grate information from different sources, tal impacts of economic activity. The Panel and provides the basis on which consistent has recently published a report on assessing indicators comparable across countries and the environmental impacts of consumption over time can be derived and disseminated. and production (IRP 2010). The report Figure 5 presents a matching of different reviews and summarizes scientific work users (left) of indicators and underlying relevant to the environmental impacts data to the information pyramid (right). and resource consumption of economic One way of disseminating indicators is the activities. Conceptually, the report takes the DPSIR framework, which has been used so-called DPSIR (Driving force – Pressure by national and international initiatives, but – State – Impact – Response) framework there are several other options for present- as a basis, a framework developed by the ing indicators derived from the SEEA.

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Figure 5. Target audiences and underlying data sources

Audiences for information Indicators and Accounts

Headline indicators Data users

Indicators on Decision makers & wider public specific subjects or industries Indicators is there an issue? Yes Managers and SEEA Advice analysts Standard tables Supplementary tables

Research Researchers Data items

Information

Source: UN-DESA

The changes in the performance of the in general. Development of the concepts economy should also be captured in the and methods for concrete measures of third group, comprised of complementary ecosystem services as natural capital is or alternative indicators to GDP, including ongoing. Eventually, it is expected that adjusted GDP measures such as GDP measures will be available to assess adjusted for natural capital depletion or ecosystem health in relation to changes net savings estimates. Many indicators in the economy, and to identify the value under this category attempt to portray of the assets and services of ecosystems many other dimensions of well-being and in their contribution to the green economy. progress beyond the environmental pillar. It should be empirically demonstrable that 15.3 An accounting framework a green economy transition contributes for the green economy to reducing poverty and enhancing social equality. Linking the pillars of sustainability suggests the use of measures of In order to assess a country’s or region’s inclusive wealth. green economy transition, data on economic production and consumption should There is also an increasing demand to be integrated with information on the envi- incorporate the link between ecosystems ronmental impacts of these activities. In and their functions to productivity, and terms of the conceptual framework above, to assess the impacts of degradation on the impacts of decoupling and efficiency those functions. Natural capital in the form in the second group of indicators should of ecosystem services, such as nutrients be related to production and consump- cycling and waste absorption capacity, are tion data as maintained in the system of now well recognized as fundamental to national accounts. In addition, changes in the green economy and human well-being the amount and sectoral disaggregation

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of production and consumption, as well terms. The accounts can be used to track as associated employment, can be char- the distribution of ownership of these acterized as part of a green transition, assets and the sustainability of natural resulting from specific investments or capital utilization. The physical flows from changes in the structure of the economy. the environment to the economy (water, energy and other raw materials) and from The United Nations System of the economy to the environment (waste Environmental-Economic Accounting is and emissions) are recorded in the SEEA becoming an internationally agreed tables according to supply and use by statistical framework for measuring the industries and households. The accounts relationship between the economy and may be combined with monetary infor- the environment. The SEEA sets the mation into so-called hybrid accounts. statistical standards for collecting and The information from the physical flow integrating economic and environmental accounts is vital for conducting analysis data for analysis of the green economy of productivity of natural resource use and and sustainability. It does not propose any cost-recovery from waste and emissions. single headline indicator. Rather it offers a multi-purpose system – with many differ- The SEEA separately identifies all trans- ent analytical applications – that generates actions that are related to the environment a range of indicators. such as taxes, subsidies and expenditures on protection, remediation or manage- For example, the SEEA provides added ment of the environment. These accounts value to the compilation of GHG emis- can be used to assess the greening of sions by integrating the information on economic policies and the implementa- emissions to economic activities and the tion of the polluter-pays principle, and to related economic statistics, thus allowing conduct comparisons of environmental for a decomposition analysis of the driv- protection expenditures across industries ing forces behind emissions. In order to and countries. A valuable contribution assess increases in the share of green of the SEEA for these accounts is the investment, employment and output, the introduction of an internationally agreed SEEA provides the framework for compil- classification of environmentally related ing economic data classified according to transactions. the internationally agreed environmental goods and services sector classification. With globalization and growth in the trade The SEEA is the reference framework for in goods and services, the SEEA makes organizing basic data and deriving indica- important contributions to understanding tors that link environment and economy. green growth by providing internationally A recent example is its application in the comparable compilations of integrated OECD Green Growth Indicators Report. statistics. The SEEA allows for analysis from both the production and consump- The SEEA covers natural capital asset tion perspectives, for example by using accounts, flow accounts of emissions, input-output modeling to understand the energy, water and materials, environmen- amounts of emissions embodied in exports tal resource management and protection or imports. Time series of such data can expenditures and aggregate economic reveal whether mitigation strategies have indicators adjusted for environmental been effective at the global level, or if the depletion and degradation. The asset sources of emissions have simply leaked accounts record stocks and changes in into other production markets. stocks of natural resources and may be compiled both in physical and monetary

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The SEEA 2003 is currently under revision agreement should be sought on a specific and a revised version will be provided to set of green economy indicators. Similarly, the United Nations Statistical Commission agreement could be sought on a subset of in early 2012 for adoption as an interna- core or headline indicators. Agreement on tionally agreed conceptual framework a common set need not imply agreement for official statistics. The revised SEEA on common headline indicators within such will comprise three volumes. Volume 1 a set. Conversely, agreement on common is for compiling asset and flow accounts headline indicators does not imply that in physical and monetary terms. It will all countries or regions adopt the same cover concepts and definitions that are broader set. One advantage of a common consistent with those of the conventional set of indicators would be facilitating economic accounts (SNA). Volume 2 will international comparison. A disadvantage provide the conceptual framework for eco- might arise if not all indicators are equally system accounting and will address certain relevant for all countries and their respec- accounting items for which an international tive circumstances. consensus has not yet been reached. Efforts should also be made to build any The ecosystem accounts aim to provide new indicators on the basis of existing information not only on the stocks and macro indicator sets such as the Human flows of resources and emissions, but Development Index and established also other forms of natural capital. These indicators for sustainable development. In include notably ecosystem services and considering the feasibility and desirability measures of the impacts of degradation of a common set of indicators for a green and depletion on the quality of those economy, it is worth noting that various sets services. Volume 3 will contain elabora- of (overlapping) indicators for sustainable tions and applications of the accounts, for development and sustainability exist. For example the use of time series data on example, the Commission on Sustainable natural resource flows to conduct resource Development produced the third set of productivity input-output analyses. Work Indicators for Sustainable Development on the revision of the SEEA and its imple- in 2007. This followed earlier versions in mentation in national statistical systems 1996 and 2001 (UNDESA 2007). This latest is led by the Committee of Experts on version contains a core set of 50 indicators, Environmental-Economic Accounting which are part of a larger set of 96 indicators. under the auspices of the United Nations Statistical Commission. It is supported by Many of these indicators are relevant for national statistical offices as well as many assessing progress in a green economy international and regional institutions. transition, and could be placed in the second group (decoupling and efficiency) 15.4 Relevant indicator sets in terms of the conceptual framework presented here. The Food and Agriculture Organization has developed a framework Based on the SEEA accounting frame- for sustainability indicators, comprised of work, various sets of indicators can be target and core indicators and based on proposed for assessing progress in meet- the Bellagio Sustainability Assessment ing green economy goals. Such sets can and Measurement Principles.74 These be organized according to the three groups also overlap with indicators of sustainable presented in the conceptual framework. development and provide some sugges- An open question is whether international tions for green economy indicators.

74 They are available online at http://www.fao.org/docrep/012/a1322e/a1322e00.pdf

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As the concept of a green economy is there have been indicators formulated on acknowledged as providing an action- environmental-economic inter-relation- oriented opportunity to contribute to ships, such as the adjusted net savings sustainable development and poverty measures published by the World Bank. It eradication, it is logical that green econ- may be possible, for example, by means omy indicators will overlap with indicators of assessments, to learn more about the of sustainable development. The con- use by policymakers and other stake- ceptual framework above does, however, holders of such information. This will be suggest the development of indicators of important in supporting the goal of better green transformation of the economy and informed decision-making and the setting key sectors that are not generally part of of targets for a green economy, building agreed sets of broad indicators of sustain- on the availability of information in the able development. form of standardized indicators.

The assessment of a green economic Many developing countries are, however, transformation, in terms of possible likely to face constraints in generating and economic indicators such as output and making the relevant information available. employment, is also being addressed by Technical assistance and capacity-build- the OECD, which is developing a set of ing will be required in order to address indicators for monitoring progress towards the special needs of these countries and green growth. The OECD framework support the development of the necessary recognizes the SEEA as the international information systems. Improved access to statistical standard on which indicators of information and communication technolo- green growth are to be based. gies experienced by these countries in the past decade provides a unique platform 15.5 Implementing relevant and window of opportunity to initiate con- 75 measurement systems crete actions in this respect. International agencies need to improve A framework for indicators to assess their ability to contribute to the further progress towards a green economy, development of the SEEA, including including the selection of relevant sets programmatic support to institutions from of indicators, poses two implementation developing economies to improve their issues. One concerns the use of such capacity to collect, organize, interpret indicators by different audiences. The and communicate relevant data. Public other relates to the needs and capacities institutions can also learn from experi- of different countries, particularly develop- ence gained by responsible businesses in ing countries. defining and applying core and additional indicators in their reporting systems, and As mentioned above, considerable efforts can learn how non-financial information have been devoted over the last twenty is increasingly linked with financial infor- years to developing sets of indicators of mation in emerging models of integrated sustainable development. Among these, reporting.

75 The report “Keeping promises, measuring results”, produced in 2011 by the ITU-WHO Commission on information and accountability for Women’s and Children’s Health highlighted the potential of ICTs to provide more accurate and timely data for monitoring and reviewing commitments, results and resources invested in improving women’s and children’s health at the global level (http://www.everywomaneverychild.org/pages?pageid=14). Similar approaches can be adopted to monitor green economy indicators.

Part IV – Enabling Policies and Measures 169 Working towards a Balanced and Inclusive Green Economy A United Nations System-wide Perspective © Shutterstock / Ronald Sumners Old wooden boats sunken at the edge of a flooded crop field, Vietnam.

170 Part IV – Enabling Policies and Measures A United Nations System-wide Perspective Chapter 16: Conclusions

An unmistakable opportunity is becom- and investment priorities towards greening ing apparent as the vision of a green infrastructure and emerging green eco- economy finds its way into the core work nomic sectors, and towards the greening of programmes of the United Nations agen- brown economic sectors. Increased invest- cies and the Bretton Woods Institutions. ments in people and societal infrastructure This trend reflects a growing recognition of are important in their own right, and can the shortcomings of business as usual, and be combined with synergistic investments conveys a sense of urgency to find lasting in the greening of physical infrastructure solutions in response to global financial and and target sectors. The following sections economic crisis. It is a trend not only driven provide detailed conclusions. by renewed awareness of risk, but also by a growing sense that opportunity lies in a 16.1 The green economy is an fundamental change in the way we govern, approach to sustainable operate markets and develop communities. development and requires This report offers a common understanding coordinated efforts of all of the concept of the green economy, and United Nations entities makes the following findings: The inter-agency dialogue on the green • The green economy can be an economy shows common concern with innovative pathway to sustainable linking the concept explicitly with funda- development mental goals related to human well-being and needs, social inclusiveness and • Infrastructure investments today offer intra-generational and intergenerational a promising entry point for launching equity, all in the context of emerging risks transformative and dynamic green and scarcities. The agencies focus on growth strategies investment in economic development, resources, human development, social • A green economy must be people- and physical infrastructure, technology and centred and invest in both human and behavioural patterns. They recognize that a social capital rights-based approach is relevant, and that progress needs to be measured in both • A green economy requires the reori- quantitative and qualitative terms. enting of public policies supported by improved information systems for The most fundamental challenge that the tracking and communicating progress. green economy debate poses to all governmental institutions is to converge, align and The green economy – like the related integrate work across the three pillars of concepts of green growth, the circular sustainable development. Part of this chal- economy and sustainable consumption lenge relates to institutional collaboration and production – is one of the vehicles and coherence of policy approaches within to carry us towards sustainable develop- and between agencies at the international ment. A major focus of the approach is the and national levels. Policy coherence transformation of the prevailing energy- and becomes all the more important in view resource-intensive economic structure. This of the growing complexity of the global transformation requires the shifting of policy economic, finance and trading systems.

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The challenge to converge, align and inte- 16.2 Infrastructure is an entry grate investments across the three pillars point in a green economy is also one of substantive integration, and transformation effectively requires the recognition that the green economy approach entails a new level of the mainstreaming of sustain- Inadequate infrastructure affects the poor able development. The linkage of green and vulnerable segments of society most and economy with human well-being directly. Inappropriate infrastructure – and equity as core goals signals a new fossil-based energy, highways primarily paradigm in which human and natural serving the expansion of automobile assets – including ecosystem services transport, water supply relying on exces- and biodiversity – are more appropriately sive extraction of underground water – is measured, valued and put at the centre of wasteful and exacerbates environmental economic planning and decision-making. problems. Meeting the overall infrastruc- This mainstreaming is critical for deliver- ture needs of the poor and integrating ing the balanced and inclusive results that those needs with the greening of exist- a green economy promises. ing and new infrastructure are essential aspects of meeting environmental and As an approach to sustainable develop- human development challenges. ment, the green economy is relevant to the mandates of all United Nations The role of ecosystems is similar to that of entities. The expertise is available at all physical infrastructure. Forests, oceans, levels, but each entity needs a better coral reefs, wetlands, fertile lands, wild understanding of how its expertise can be fauna and flora, safe water, clean air and a mobilized in a coordinated manner to sup- stable climate are the fundamental bases port green economy initiatives at regional on which our societies and economies and national levels. Such ongoing efforts exist and function. Most of the world’s poor as the Delivering as One approach of the live in close proximity to rural ecosystems United Nations can inform this effort. or near coastal areas, and investments in ecosystem conservation, sustainable International agencies of the United use and restoration contribute to poverty Nations and Bretton Woods Institutions eradication. have the opportunity to redefine the approach to delivering on their mandates Meeting these infrastructure needs can and to advance the mainstreaming of lead the way to transforming the major green economic criteria into their portfolio components of our economic structure of services. In promoting their mandates – agriculture, fisheries and forestry; indus- related to the three pillars of sustainable try; and services. This transformation development, international agencies – involves reducing the resource intensity like their national counterparts – need of production and consumption, avoiding to consider improved and effective ways and limiting waste, changing lifestyles of mainstreaming the new approach in and expanding the share of the services a coherent manner. Such efforts may sector that is low in environmental impact include institutional and programmatic but high in decent work potential. Such reform and the use of environmental and dynamic growth strategies are expected social data alongside improved economic to offer first-mover advantages to those and cost-benefit analysis, and may also who act fast. expand the boundaries of inter-agency collaboration and coordination at interna- The implementation of such strategies will tional, national and inter-ministerial levels. create winners and losers. Transitional

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policies are essential to ensure access Pro-poor economic opportunities may by the affected not only to social safety be found in sectors such as agriculture, nets, but also to the training and educa- forestry, water, waste management and tion opportunities that will equip them with sanitation services where green economy the skills required to participate in the interventions can enhance livelihoods. green economic transformation. These An investment in natural capital is also transitional measures must be additional an investment in human capital – through to the overall investments in people and enhancing food and nutrition security societal infrastructure. – particularly in low-income and environmentally vulnerable areas. It can also 16.3 A green economy must support social entrepreneurship and small be a people-centered business development, but entrepreneurs and informal businesses in poor commu- economy nities desperately need public institutions that facilitate their access to markets and A green economy requires both a healthy, green business opportunities. educated and informed workforce with green jobs skills and consumers with The transition to a green economy will rely awareness of sustainable consumption. In heavily on innovation and entrepreneur- addition, a green economy must invest in ship, dynamic areas which government people and social capital – through health regulatory and control mechanisms must care, education services and access to take care in enabling rather than limiting. social safety nets – independent of the What societies need is technological and consideration of individuals as human social innovation that is of the fundamental capital, and should ensure that the benefits rather than incremental kind. In consider- of economic growth are equitably shared. ing ways of making this transition happen, This emphasis on investing in people international agencies and governments helps to safeguard respect for human alike need to consider how their interven- rights, including the rights of children, tions can help citizens and organizations women and employees. Investments in to overcome the problem of social inertia. people should help empower individuals This highlights the apparent convenience and groups to become agents of positive of business as usual and unsustainable societal change. patterns of consumption that continue to be engrained by inappropriate incentives. Employees and managers should explore opportunities to collaborate in building A people-centred green economy implies workplaces that are greener, safer and the changing of consumer behaviour in more decent. A green economy will resource-intensive consumption areas create job opportunities in some sec- such as food, housing and mobility. tors while shedding jobs in others, and Effecting this change in behaviour will the formulation of any green economy require innovation in knowledge, manage- policies, programmes and projects should ment systems and incentive mechanisms. identify new goods and services as well International agencies need to scale up as transitional arrangements that can their support programmes in education accommodate the shifting of jobs within and training, research and development, and across sectors. This effort requires small business development, continual inter-agency and inter-ministerial col- improvement in resource efficiency and laboration and coordination, ensuring that access to innovative financing. the predicted net positive benefits in job creation become a reality.

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A central component in the transformation While providing positive incentives for a is appropriate education for all ages and green economy transition through public both genders in areas such as science finance, governments can also direct and economics. It also requires revisit- economic activities with laws, regulations, ing the role of communications and the standards, taxes, labelling and reporting media in shaping culture and lifestyles. It requirements, and can further the global implies a fundamental rethinking of basic objectives of agreed international con- concepts such as quality of growth, well- ventions. In addition, governments need being and life styles. Historical data on to reform perverse incentives – such as human development show that improved those for the production and consump- well-being is linked not only with improve- tion of fossil fuels – in order to provide ment in material well-being but also with a level playing field for green investors. the quality of education and health ser- The absence of appropriate regulation vices. Increasing human well-being and and pricing is causing a failure to create citizen participation also means taking markets in carbon trading, ecosystem culture into account. Considering cultural services and environmental goods and specificities in the design of green poli- services. Such markets could be designed cies will help ensure the engagement of to provide new sources of income and local populations and secure a desirable jobs for developing countries. outcome of development efforts. The reform of subsidies and pricing 16.4 A green economy is systems must take care to minimize about reorienting public and compensate for any adverse impact on households, especially on the poor. policies Governments should also consider alternative use of subsidies to support a A transition towards a green economy green economy transition. United Nations requires shifting public policy priorities entities can help member states find from business as usual towards the green- appropriate ways of reforming subsidies ing of industries and the empowerment and pricing systems. A transparent, rules- of people. An important instrument at based multilateral trading system has the disposal of all governments is public an important role in promoting collective spending, which needs to target the provi- action on subsidy reform, preventing sion of urgently needed public goods and trade protectionism disguised as green services including green infrastructure, economy interventions and opening up research and development that spur trade in environmental goods and ser- green technologies and innovation, health vices. International intellectual property care and education services. Public rights regimes can complement the role spending is also essential for leveraging of trade in a green economy by facilitating private green investments in productive developing countries’ access to appropri- economic sectors. As some countries ate and affordable green technologies. are experiencing tight fiscal conditions, innovative green economy financing A new information system is needed to mechanisms at the international level support the orientation of public policies need to be explored and developed towards a balanced and inclusive green quickly. Governments also need to be economy. Such a system should capture, supported in revising the base of existing in both physical and monetary terms, sources of revenue and exploring options the income and employment generation for alternative taxes and pricing incentives opportunities from the rapidly growing that target environmental externalities. environmental goods and services sector

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and the resource efficiency gains from 16.5 Rio+20 is an opportunity sustainable consumption and produc- to adopt the green tion measures. It should show how economy approach as a improvements to ecosystems and the practical solution to natural resource base result from green multiple challenges economy policy interventions, and how the poor benefit from a green economy facing a world transformation. in economic recovery

The United Nations System of The global challenges that gave rise to Environmental-Economic Accounting, the emergence of the green economy which will become an internationally approach are still with us. The financial and agreed statistical standard in 2012, economic situations in major developed has evolved over the last two decades, countries are precarious and present seri- and provides a statistical framework for ous risks to the sustainable development regularly measuring the changes to the and poverty eradication prospects of devel- environment and natural resource base oping countries in a globalized world. High as a result of economic activities. It pro- unemployment, especially among youth, is vides a common international basis for destabilizing even well established democ- measuring resource efficiency relative to racies, and the threats to food and energy GDP, and includes guidelines for identify- security continue to increase worldwide. ing the contribution of environmental Climate change has not shown signs of goods and services to GDP and jobs. abating and the frequency of climate- United Nations entities should provide related natural disasters is increasing. The programmatic support to institutions in loss of biodiversity, land degradation and developing economies to improve their the deterioration of our oceans and their capacity to collect, organize, interpret and vital resources are accelerating. communicate the relevant data. The green economy approach is no The SEEA, however, is not designed to panacea, but it does represent one of fully capture human and social dimensions the practical solutions to the multiple in the nexus between the environment and challenges facing humanity today. The economy. Dedicated efforts are needed key to this solution is reinvigorating the to measure the distribution of benefits role of the public sector in mobilizing and among different segments of society and directing attention and resources towards the extent to which poverty has been issues that truly matter to societies – job reduced as a result of green economy creation, wealth generation and equitable policy interventions. There is also a need distribution of income; a stable climate, for measuring overall societal progress clean air, healthy oceans and access to and human well-being over time in all renewable energy and safe water; food societies with or without green economy security; and healthy, educated and transformations. Efforts in this area empowered citizens. There are syner- should build on decades of experience gies among these societal objectives. in the compilation and use of the Human Shifting towards sustainable agricultural, Development Index. for example, has the potential of creating more jobs than conventional agriculture, generating more income for small-holder farmers while saving water and energy, reducing GHG emissions, improving food safety and contributing to food security.

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International agencies of the United The United Nations Conference on Nations and Bretton Woods Institutions Sustainable Development in 2012 pro- have the opportunity to redefine approach vides an opportunity for international in delivering their mandates and advance organizations, national and local gov- the mainstreaming of green economic ernments, businesses and civil society criteria in their portfolio of services. to appreciate the potential of a green Agency mandates address key enablers economy transformation for sustainable for delivering results along the three pil- development and poverty eradication. lars of sustainable development in a more It is also an occasion where member coherent manner. In promoting these, states can make collective commitments international agencies like their national to adopt such an approach and request counterparts need to consider improved coherent and coordinated policy advice and effective ways of mainstreaming the and technical support from the United new approach. This includes institutional Nations System. and programmatic reform, incorporating in their work the use of environmental This report, with contributions from some and social data alongside economic and 40 United Nations entities including cost-benefit analysis into mainstream BWIs, includes common messages and decision-making. Externally, this also proposals for coordinated support to expands the boundaries of interagency member states. It is expected to inform collaboration and coordination – both at member states of the shared views on international and national, inter-ministerial the green economy within the United level. Nations System. The group that produced this report stands ready to follow up on related outcomes from the conference in June 2012.

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180 A United Nations System-wide Perspective

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181 Annex 1: Agency programmes and initiatives supporting green innovation and technology

Implementing Title of Objective Modality of Support Expected/Achieved Agency/ the Programme/ Accomplishments Agencies Initiative

CGIAR - CIAT Climate Change, Identify and test pro-poor • Research to identify • Improved understanding Agriculture and Food adaptation and mitigation and test technologies, of the underlying drivers Security practices, technologies and practices and policies and of social differentiation policies for food systems, enhance partnerships, to and gender disparities http://www.cgiarfund. adaptive capacity and rural decrease the vulnerability as influenced by climate org/cgiarfund/sites/ livelihoods. of rural communities to change cgiarfund.org/files/ climate change Documents/PDF/fc3- Provide analysis to ensure • Strategies to provide CRP7_Proposal_Docu- cost-effective investments access to emerging ment%20%28Aug_%20 and mutual inclusion of agri- investments, tools and 2010%29.pdf culture and climate change policies issues in relevant policies.

FAO, UNDP United Nations Col- Support countries to reduce • Coordination of multi- • Methodologies, designs and UNEP laborative Programme GHG emissions from defor- stakeholder preparatory and data to meet forest on Reducing Emissions estation and forest degrada- processes and prepara- policy, planning, manage- from Deforestation and tion caused by fire, insects, tion of implementation ment and international Forest Degradation in diseases, other pests or and capacity building reporting needs Developing Countries poor harvesting practices strategies (UN-REDD) and to enhance carbon • Strengthened policies, stocks through responsible • Capacity building strategies, national http://www.un-redd.org/ management of planted and workshops, demonstra- forest programmes and indigenous forests. tion projects and training management practices in http://www.fao.org/ resources fire, forest health, planted forestry/nfma/en/ Support developing forests and harvesting to countries in multi-purpose • National forest monitor- support achieving sustain- monitoring and assessment ing and assessment able forest management, of forest resources, land programmes (NFMA) livelihoods and REDD+ use and land use change, forest uses and users to • Measuring reporting and meet their national forest verification (MRV) compo- policy, forest programmes nent of UN-REDD and international reporting

FAO Green House Gas Support member countries • Training materials. • Improved national (GHG) Assessment to increase the accuracy of protocols, guidelines and regional and global esti- for the Agriculture. estimates of emissions and methodology sheets. mates of GHG emissions. Fisheries and Forestry potential sinks in agricultural Sectors production systems, improv- • National capacity building • Life Cycle Analysis (LCA) ing capacity of countries programmes. for various agricultural GHG appraisal of to gather, analyze and use products. Projects, value chain the data for improving the • C-balance appraisal to and policies with EX- efficiency and sustainability appraise over 20 projects, • Policy briefs and technical ACT tool of production systems and and growth scenarios in guidance on improv- http://www.fao.org/tc/ increasing opportunities to 15 countries ing sustainability and tcs/exact/en/ access CDM type financial efficiency of systems. mechanisms. • Ex-ACT outputs used in Guide project design and financial and economic decision making on funding analysis of the projects aspects, complementing the usual ex-ante economic analysis of investments projects.

FAO Climate Smart Agri- Promote agriculture, fisher- • Through FAO national • Technical and policy guid- culture ies and forestry that sustain- projects and through a ance on methodologies, http://afcconference. ably increase productivity, central portal practices, institutional and com/images/the-hague- resilience (adaptation), policy options, financing conference-fao-paper. reduce/remove GHGs and investment strategies pdf (mitigation) and enhance the achievement of national food security and development goals 182 FAO Communication for Promote communication • Knowledge networks and • Up scaling of decentral- Sustainable Develop- methods and services in platforms at the regional ized communication ment Initiative support of natural resource and global levels services management, agricultural http://www.csdinitia- innovation and climate • Pilot activities imple- • Strengthened capacities of tive.org adaptations. mented in 4 countries: rural knowledge institutions Bangladesh, Bolivia, Congo, Jamaica • Improved information and communication networks among stakeholders

FAO Organic Agriculture Assist countries in the • FAO Interdepartmental • Comprehensive infor- http://www.fao.org/ development of organic Working Group on organic mation dissemination organicag/en/ agriculture, includ- agriculture systems and networking ing national capacity to arrangements effectively produce, store, process, inspect, certify and • Effective decision-support market organic foods and tools for organic agricul- fibers ture systems

• Topical studies and policy advice to countries

IAEA Regional and inter- Build capacities and trans- • Providing wide range of • Dissemination of knowl- regional Technical fer technology, knowledge training and internship edge Cooperation Projects and skills for peaceful use programmes and Environment of nuclear and related • Regional Capacity building Programme technologies • Supporting the transfer of nuclear and related • Sustainability of know- technologies how transfer

• Promoting collaboration through Coordinated Research Programme (CRP)

• Promoting networks

ICAO ICAO Assembly Reso- Develop and facilitate the • Develop a global CO2 certi- • Achieve ICAO’s global lution A37-19 “Con- implementation of compre- fication Standard by 2013 aspirational goals of solidated statement hensive mitigation meas- improving 2 per cent of continuing ICAO ures to limit or reduce GHG • Facilitate the global imple- annual fuel efficiency and

policies and practices emissions from international mentation of operational stabilizing CO2 emissions related to environmen- aviation measures at 2020 levels tal protection – Climate change” • Develop a global scheme for market-based measures http://www.icao.int/env/ • Facilitate the development and deployment of sustainable alternative fuels for aviation

• Identify assistance needs of States and develop mechanisms to facilitate the provision of assistance

ITU Development of Green Reduce GHG emissions • Develop common method- • Limit and ultimately ICT Standards through the use of new ICT ology to measure reduc- reduce greenhouse gas standards tion of GHG emissions (GHG) emissions, foster www.itu.int/climate from the ICT industry and sustainable development Facilitate increased from other sectors through and promote new services Bridging the standardi- participation of developing the adoption of ICTs and applications in exist- zation gap countries in standardization ing industrial sectors • Adopt energy efficiency http://www.itu.int/en/ as one of the key criteria ITU-T/gap/ for approving new ICT standards for networks and devices, and raising awareness of its benefits

• Develop new standards for ICT applications to be used by other industrial sectors (smart grids, intelligent transport systems, etc) 183 ITU Radio communications Development of interna- • Develop operational, tech- • Collection and exchange use for earth observa- tional regulations for protec- nical and regulatory stand- of Earth observation tion application tion of satellite and ground ards of Earth observation date for monitoring and radio systems which provide radio communication understanding, modeling www.itu.int/climate Earth observation data predicting and verification • Make world-wide spec- of all aspects of climate trum allocation and adopt change and for related international protection policy-making measures

• Improve the recognition of the essential role and global importance of Earth observation applications and understanding of its management

IMO IMOs Initiative to To reduce GHG emissions • Development of an • Amendments to MARPOL Reduce GHGs from through improved design Energy Efficiency Design Annex VI on EEDI and international shipping and propulsion tech- Index (EEDI) for improved SEEMP formally adopted nologies, and operational ship design and fuel in 2011, expected to enter www.imo.org measures efficiency into force in 2013. These are the first ever global • Ship Energy Efficiency and mandatory GHG Management Plan reduction standards for an (SEEMP) for operational industrial sector. A MBM efficiency work plan will be discussed further at MEPC • Market Based Mecha- 63 in 2012 nisms (MBM) for emission charges (under review)

IMO The Hong Kong Convention reflects ‘cradle • National capacity building • Convention specifically International Conven- to grave’ responsibilities of programmes intended to help improve tion for the Safe and shipowners from the time of • Training materials health, safety and envi- Environmentally Sound a ship’s construction to its ronmental conditions in Recycling of Ships final demolition. It regulates recycling yards, thereby (2009) actions which should be improving wider social approved by ships` flag and working conditions of www.imo.org states and authorities in ship recycling activities ship recycling nations

IMO Marine Biosafety Initia- Aims to prevent the poten- • Mandatory requirements • Significant reduction in tive, incl its International tially devastating effects to install Ballast Water risk from marine invasive Convention for the of the spread of harmful Management (BWM) species Control and Manage- aquatic organisms trans- systems onboard ships as ment of Ships’ Ballast ferred by ships from one defined in the Convention • Technologies in place to Water and Sediments region to another region. through technical assis- address ballast water and (the Ballast Water Man- tance and co-operation bio-fueling issues agement Convention) (2004), and Guidelines • IMO/GEF/UNDP Global • Capacity building in devel- for the control and Ballast Partnership oping regions management of ships’ Project assists developing bio-fueling to minimize countries to implement the the transfer of invasive convention. The Global aquatic species (MEPC Industry Alliance (GIA) on Resolution 207(62), Marine Biosafety encour- 2011) ages technology innovations. The IMO/GESAMP www.imo.org Ballast Water Working Group reviews and http://globallast.imo.org approves ballast water treatment technologies

UNEP and Joint Programme on Promote wider application • Development of tools and • Developed more than 10 UNIDO Resource Efficient and of innovative and resource guidelines on resource effi- training kits and numerous Cleaner Production efficient production methods cient and cleaner production sectoral guides (RECP) in Develop- in industries ing and Transition • Building capacities for • National Cleaner Economies technical support services to Production Centers and industries at countries level Programmes established http://www.unep.fr/ in 48 countries scp/cp/ • Mainstreaming of RECP in national development 184 policies and strategies http://www.unido.org.cp • Thousands of industrial experts trained and hundreds of industrial demonstrations supported

• Global Network on RECP established

UNEP Life Cycle Initiative Bring science-based life • Enhance the global con- • Developed three train- cycle approaches into sensus and relevance of ing kits and numerous http://www.unep.fr/scp/ practice worldwide through existing and emerging life supporting tools and lcinitiative/ Business, Academic, and cycle methodologies and guidelines; Governments working related data together • Engaged over 2000 • Encourage life cycle think- individuals collaborating ing in decision-making in globally business and industry, as well as government and • Accepted as one stop the general public shop for life cycle approaches • Support regional networks to expand capability worldwide in applying and improving life cycle approaches.

UNEP Sustainable product Support industries and • Development of guide- • Design for Environment development and countries to develop and lines on sustainable (D4E) guideline produced marketing market more resource products development efficient and sustainable • Regional Ecolabelling and http://www.unep.fr/scp/ products • Supporting regional and product specific labeling design/ national Ecolabelling supported programmes • Tools for SPP produced • Promoting sustainable and more than 10 coun- public procurement tries supported

UNEP Technology Assess- To enable technology • Methodology development • Developed earlier meth- ment and selection decision-makers carry out a for assessing the sustain- odology on Environmental http://www.unep.or.jp/ sustainability assessment of ability of technologies Technology Assessment ietc/publications/tech- different technology options (EnTA) and provided publications/techpub- and thus make a more • Development of training training 14/2-enta6.asp informed decision kit and provision of training on how to use it • Currently finalizing the development of a new tool • Testing the application of on Sustainable Technol- the methodologies in pilot ogy Assessment projects

UNEP Sectoral programmes Promote and support organ- • Support establishment • Supporting the Sustain- and initiatives on sus- izational innovations and of sectoral initiatives able Building and Climate tainable production and technologies that promote with membership of Initiative (SBCI), UNEP consumption resource efficiency and the businesses and relevant Finance Initiative (UNEP- transition to low-carbon public institutions FI), Partnership for Clean http://www.unep.org/sbci/ economies Fuel and Vehicles (PCFV) http://www.unepfi.org/ • Develop sectoral guide- and Global Partnership http://www.unep.org/ lines and tools that would on Sustainable Tourism, transport/pcfv/ be promoted through the UNEP Basel Convention http://www.unep.fr/scp/tour- sectoral initiative Partnership for Action on ism/activities/partnership/ Computing Equipment http://archive.basel.int/ • Provide support to the (PACE) industry/compartnership/ Secretariat of the sectoral index.html initiatives

UNEP African Rural Energy To expand energy access • Business development • Practical tools and materi- Enterprise Develop- in rural and peri-urban mar- services coupled with als have been developed, ment (AREED) kets of five African countries capital are offered to including the REED Toolkit (Mali, Senegal, Ghana, entrepreneurs, enabling www.areed.org Tanzania and Zambia). them to create energy • Capacity developed; US$ enterprises capable of 2 million invested in clean reaching the underserved energy enterprises in rural and peri-urban areas

185 • Policies supportive of clean energy enterprises developed and deployed in three countries

UNESCO Man and the Biosphere To set a scientific basis for • Identify and assess the • The World Network of Programme the improvement of the changes in the biosphere Biosphere Reserves cur- relationships between peo- rently consists of 564 sites http://www.unesco. ple and their environment • Study and compare the in 109 countries org/new/en/natural- globally. dynamic interrelationships sciences/environment/ between natural/near- ecological-sciences/ natural ecosystems and man-and-biosphere- socio-economic processes programme/ • Ensure basic human welfare and a livable environment

UNESCO Education for Sustain- An umbrella for different • Promote the exchange • New, revised teaching and able Development forms of education, ESD and transfer of knowledge learning materials on ESD (ESD) promotes efforts to rethink on environmental prob- made available educational programmes lems and solutions, and http://www.unesco.org/ and systems that currently to foster environmental • Developed ESD Teaching new/en/education/ed- support unsustainable education for sustainable and Learning for Sustain- resources/esd/decade- societies. ESD affects all development able Future Resource kits of-esd / components of education: for teachers legislation, policy, finance, curriculum, instruction, • A global network of more learning, assessment, etc than 9000 educational institutions in 180 countries

UNESCO Technical and Voca- Assist Member States in • Policy review Expert • TVET policy reviews (15 tional Education and integrating “employability meeting on ‘TVET for the to 20 countries in the Training (TVET) skills” to improve access to green society’ organized period 2010 to 2015) http://www.unesco. green jobs in 2010 org/new/en/education/ • International Framework themes/education- Supporting governments in • Draft Framework of Action of Action on Greening building-blocks/tvet the integration of Education for Greening TVET under TVET covering policy for Sustainable Develop- consultation under development UNESCO Strategy for ment into TVET Technical and Vocational Clearing house-related • Development of strategies • A resource centre on Education and Training actions and informing the to facilitate the transition TVET for sustainable http://unesdoc. global TVET debate of the workforce into new development. Knowl- unesco.org/images occupations through TVET edge sharing between /0018/1833/183317e.pdf UNESCO member states http://www.unevoc. • UNESCO-UNEVOC unesco.org/2.0.htmlno_ publications on TVET and cache=1&tx_drwiki_ sustainable development pi1[keyword]=stainable %20Development

UNESCO STI Policy Formulation To support developing • Country support and • UNESCO is working to http://www.unesco. countries in formulating their advice. The aim is to respond to the request org/new/en/natural- Science, Technology and develop national STI of 24 Least Developed sciences/science-tech- Innovation (STI) policies, policies for all those eg Countries to assist them nology/sti-policy/ and the reform of related African countries still with their national STI systems without one policies

APCTT of Asian and Pacific Cen- Assist the members and • Research and analysis • Technology Transfer ESCAP tre for the Transfer of associate members of of trends, conditions and Services for SMEs Technology (APCTT) ESCAP through strength- opportunities ening their capabilities • Technology Transfer and http://www.apctt.org/ to develop and manage • Advisory services Marketing Mechanisms national innovation systems; develop, transfer, adapt and • Dissemination of informa- • Search for Technology apply technology; improve tion and good practices Buyers/Sellers the terms of transfer of technology; and identify and • Networking and partnership promote the development with international organiza- and transfer of technologies tions and key stakeholders relevant to the region. • Training of national person- nel, particularly national scientists and policy analysts 186 UNITAR Capacity Development To support local authori- • Use of city-share • Thematic knowledge to Support Local Green ties in self -assessing and methodology to foster management of good Economy and Green developing capacities to knowledge-sharing across practices, lessons Growth Strategies promote the introduction local authorities through learned, and various of enabling environments south-south and triangular toolkits across regional http://www.unitar.org/ldp/ for green economies at cooperation local authorities and roster the local level, spur green of committed actions technology transfer, and plans per locality integrate greener production and consumption strategies within municipal planning.

UNWTO www.hotelenergysolu- Fostering innovation to • Provide an innovative miti- • The first phase of the tions.net fight climate change for the gation software and etoolkit project to elaborate the accommodation industry toolkit • Provide energy efficiency and renewable energy • Second phase will include technologies as solutions information systems and for investment language adaptation to small island developing • Help reduce energy countries, other regions consumption and carbon and areas including water footprint and waste

• Sensitize trade and consumers

UNWTO UN Steering Com- Assisting LDCs and other • Innovative framework • Reduce the poverty gap in mittee on Tourism for developping countries to on Delivering as One LDCs Development (SCTD) promote tourism for devel- for Tourism: Joint effort opment, including invest- on tourism by nine UN • Increase trade in services http://www2.unwto. ment in clean technologies entities (ILO, ITC, UNEP, (tourism) for LDCs org/en/event/ for energy and water UNDP, UNESCO, UNIDO; promoting-tourism-sus- UNCTAD, UNWTO,WTO • Increase sustainability and tainable-development- clean energy production and-poverty-reduction • Mobilize resources for tourism development

World Bank IFC Cleantech Invest- Promoting the growth of • Venture capital and • The program invested Group ment Program clean technology compa- private equity invest- US$ 30 million during its nies in developing countries ments in innovative clean first year of operation in [http://www.ifc.org/ technology companies in 2009 and is expected to ifcext/gict.nsf/Content/ developing countries invest US$ 200 million Cleantech] annually afterwards • Introducing to a network of IFC clients

• Follow-on debt financing to our portfolio companies

World Bank IFC Cleaner Production Achieve carbon emissions • Identify CP opportunities • Number of projects under- Group reductions by adopting in businesses taken: 32 [http://www.ifc.org/ cleaner production (CP) ifcext/climatechange. principles in businesses. • Provide advice, and • Potential Annual savings nsf/Content/Cleaner- refer businesses to an identified: US$ 26.8 million Production] international network of consultants • Potential Required capital investment: US$ 81.36 million • Help with financing CP audits • Average Payback period: three years • Loans for CP implementation projects to existing • Potential Annual reduction

clients on a fast-track in GHG: 231,553 tCO2e approval basis • Actual Investments approved: US$27.8 million

World Bank Clean Technology Fund Promotes scaled-up financ- • Providing public and private • It is expected that the Group (CTF) ing for demonstration, sector investments for dem- CTF will finance programs deployment and transfer of onstration of low carbon in 15 to 20 countries or [http://www.climatein- low-carbon technologies development and mitigation regions vestmentfunds.org/cif/ with significant potential for of GHG emissions node/2] 187 long-term greenhouse gas • Scaling-up development • Three investment plans emissions savings. through funding low carbon endorsed with a total programs and projects that funding envelope of over are embedded in national US$1 billion leveraging plans and strategies over US$10 billion

• Sharing experiences and lessons learned while responding to the challenges of climate change

World Bank Infodev Climate Establishing a global net- • Provide access to flexible Expected: Group Technology Program - work of CICs that support investment mechanisms Climate Innovation early-stage innovation in that support enterprises at • 30 networked CICs, Centers (CICs) climate technologies. varying levels of innovation and scale • 2,500 enterprises created, [http://www.infodev.org/ en/Topic.19.html] • Build innovation capacity • 240,000 jobs created, through the delivery of

advice, assistance and • 12m tons of CO2 mitigated educational products • 450MW in off-grid energy • Enable local and regional access collaboration that devel- ops and supports a coun- • Clean water access to try’s innovation ecosystem 15m homes

• Identify and unlocking • 750 technology partner- new opportunities through ships access to information and market intelligence • 12,000 training programmes delivered • Facilitate access to facilities that support rapid technology design, adaptation, proto-typing, testing and manufacture

World Bank Lighting Africa Promote the development of • Develop international prod- • Attracted new compa- Group a sustainable private sector uct Quality Assurance pro- nies the market: from 8 [http://www.lightingaf- market for both existing and gram to stimulate market products in 2008, today rica.org] innovative off-grid lighting demand and innovation to more than 70 products products and services for meet technical standards are available in Africa – a 2.5 million people who cur- growing number at prices rently rely on kerosene for • Provide companies with below US$ 25 lighting. market intelligence and business support services to • Developed quality testing enter African off-grid lighting methodology, 7 products markets and scale-up have passed so far

• Facilitate access to finance • In 2009, reached 500,000 for manufacturers, distribu- people with quality tors and consumers assured lighting products

• Address policy barriers such as import tariffs

WFP Cash transfers and Enable poor and food • Provide food and cash in • In 2010, WFP supported Food-for-assets pro- insecure rural communi- exchange for work and more than 22.5 million grammes ties to invest in sustainable training on vital commu- people in almost 10,000 land management, water nity infrastructure of the most food-insecure conservation and the con- communities in the world struction and rehabilitation through food-for-assets of community assets and programmes productive infrastructure, such as irrigation, terracing and reforestation.

WFP R4 – Rural Resilience Empower farmers and food- • A public private partner- • In its three of years Initiative insecure rural households ship of WFP and Oxfam of delivery this pilot, http://www.wfp.org/ with integrated risk man- America, supported by HARITA, has scaled disaster-risk-reduction agement tools to develop USAID and Swiss Re up from 200 enrolled long-term resilience. respectively building on the households in one village

188 Horn of Africa Risk Transfer in 2009 to over 13,000 for Adaptation (HARITA) enrolled households in 43 project in Ethiopia villages in 2011.

• Uses existing govern- • Over the next five years, ment-owned and -led Oxfam America and WFP productive safety nets as plan to scale up and a delivery mechanism to evaluate the R4 approach expand weather-index in four countries. based insurance and other financial services

• Farmers can purchase insurance through work on community assets

WFP Purchase for Progress Offer smallholder farmers • As the world’s largest • Since 2008, over 200 (P4P) initiative opportunities to access humanitarian agency, farmers' organizations agricultural markets, to WFP is a major buyer of contracted to sell food http://www.wfp.org/ become competitive players staple food. In 2010, WFP commodities to WFP purchase-progress in those markets and thus to bought US$1.25 billion improve their lives. Encour- worth of food – more • Over 65,000 farmers trained age other buyers of staple than 80 percent of this in in organization manage- commodities including Gov- developing countries ment, sustainable farming ernments and the private techniques, quality control & sector to also increasingly • Through P4P, WFP’s post harvest handling buy from smallholders. demand provides smallholder farmers with a • By 2013, at least half a greater incentive to invest million smallholder farm- in sustainable production ers will have increased their agricultural production and earnings

WFP Safe Access to Fuel Promote stoves that use • Assessment of fuel and • WFP launched SAFE and alternative Energy less fuel-wood (wood or cooking needs in emer- in Sudan’s North Darfur (SAFE) Initiative charcoal) and alternative gency and displacement region, Uganda, Haiti and energy such as briquettes settings Sri Lanka in 2010. The (made of organic waste) in SAFE programme has humanitarian settings for • Provision of fuel-efficient reached a million benefi- households and schools stoves and alternative ciaries in 2010-2011 and to protect and empower sources of fuel is planning to reach more women; enhance access to than 5 million beneficiar- food and education; con- • Investment in sustainable ies in the next few years serve the natural resource natural resources for fuel, base marginalized com- such as tree planting munities depend on; and reduce exposure to climate • Introduction of alternative related extreme weather livelihoods for women events; reduce health risks. engaged in firewood gath- ering or charcoal production

• Research on and introduction of adequate technologies

WIPO WIPO Green Sustainable Green Technol- • A partnership hub to • Lowering the barriers to ogy Marketplace support the accelerated green technology transfer, adaptation, adoption and adaptation and diffusion, deployment of environ- supporting developing mental technologies with country transitions appropriate supporting services

WIPO WIPO Patentscope and Programmes to provide • Web based tools to support • Lowering the barriers to Patent Landscapes access to technological access to knowledge which green technology diffu- knowledge in existing pat- supports innovation and sion, supporting develop- ent databases technology transfer (also ing country transitions offered through WIPO Technology and Innovation Support Centers)

189 WIPO SME Program Program to support the use • University-industry part- • Increased adaptation of Intellectual Property (IP) nerships around research and adoption of green by SMEs results and related to the technologies and capacity diffusion of technologies building of the innovation and the promotion of and SME infrastructure innovation through SMEs

WMO Global Framework for Strengthen the provision • Strengthened observa- • All sectors of society Climate Services and use of climate predic- tions, research and have user-friendly climate http://www.wmo.int/ tions, products and informa- information systems, as products that enable them pages/gfcs/index_ tion worldwide well as new interaction to plan ahead in the face en.html mechanisms for climate of changing climate condi- http://www.wmo.int/hlt- information users and tions gfcs/index_en.htm providers

Annex 2: UN programmes and initiatives supporting the social dimensions of a green economy

Implementing Title of Objective Modality of Support Agency/ the Programme/ Agencies Initiative

FAO Right to Food Implementation of Voluntary • Development of methods and instruments to Guidelines to support progressive assist stakeholders in the implementation of realization of the right to adequate the right to food and preparation of information food in the context of national food and training materials to raise awareness and security, adopted by FAO Council understanding by rights holders, duty bearers, 2004 civil society and the general public

• Support to initial national implementation of the right to food at national level

FAO Voluntary Guidelines International Agreement on • Voluntary guidelines to set out principles and on Responsible Responsible Governance of Tenure internationally accepted standards for responsi- Governance of Tenure of Land, Fisheries and Forests ble practices. Provides a framework that States of Land, Fisheries and intended to assist States, civil soci- can use when developing their own strategies, Forests ety and private sector in improving policies, legislation and programmes. the governance of tenure • Guidelines currently discussed in the framework of the Committee on World Food Security will be finalized in 2012

FAO, Globally Important International recognition, dynamic • Pilot sites in several countries where dynamic (with several Agricultural Heritage conservation and adaptive man- conservation management approaches are UN agencies) Systems (GIAHS) agement of Globally Important developed and implemented. Agricultural Heritage Systems and their agricultural biodiversity, knowl- • Support to national and local stakeholders in edge systems, food and livelihood the conservation and adaptive management of security and cultures throughout the systems and their components the world

FAO Dimitra Project Improvement of the visibility of rural • Dissemination of information and exchange of (Gender, rural women populations, women in particular so experiences through participatory information and development) that their respective interests are and communication better taken into consideration and they can fully participate in the rural • Networking of grassroots organizations and development of their communities strengthening of their capacities and of person- and countries nel of relevant ministries in field of information, communication, gender, advocacy and networking

ILO and FAO Food, Agriculture & Combating hunger and poverty by • Improvement, in a balanced, participatory and Decent Work promoting rural and agricultural equitable way, the main assets of the poor development strategies that are - their human, social, natural, physical and sustainable, gender sensitive and financial resources. equitable • Coordinated strategy to complement and enhance the work currently being carried out by each organization at international and national level on labour and agriculture and on rural 190 development and promotion of rural work ILO Green Jobs Assist countries in promoting green • Country-level support through technical coop- Programme jobs in accordance with the decent eration work agenda, in dialogue with workers, employers and labour • Policy coherence at global subregional, institutions national and local level

• Capacity building, research and information on green jobs for workers, employers and labour institutions

• Promoting dialogue and participation of the world of work actors in green economy policies

ITU-UNESCO Broadband Com- Demonstrate the value of • Compile best practices at the global level in the mission for Digital Information and Communication use of fast-speed Internet networks (broad- Development Technologies (ICTs) as a basic band) to promote the three pillars of sustain- green infrastructure to promote able development http://www.broadband- sustainable development and the commission.org/ acceleration of the Millennium • Provide policy advice to expand access to ICT Development Goals networks to all, in particular to underserved areas

• Establish a multi-stakeholder advocacy platform to mobilize resources and political will to further develop ICT applications and infrastructure for poverty eradication and a sustainable future

ITU Green ICT Application Develop innovative ICT applica- • Establish a multi-stakeholder network of devel- Challenge tions to promote the transition opers in the area of green ICTs towards a green economy, build • Promote research and application develop- http://www.itu.int/ITU-T/ capacity and address social and ment, with a focus on social and environmental climatechange/green- environmental issues issues ict/index.html • Mobilize resources for the implementation of applications and for sharing best practices with the global community

UNESCO Education for Sustain- ESD aims at changing the • Facilitate networking, linkages, exchange and able Development approach to education so that it interaction among stakeholders in ESD integrates the principles, values http://www.unesco.org/ and practices of sustainable • Foster an increased quality of teaching and learn- new/en/education/ed- development ing in education for sustainable development; resources/esd/decade- of-esd/ • Help countries make progress towards and attain the Millennium Development Goals through ESD efforts

• Provide countries with new opportunities to incorporate ESD into education reform efforts

UNESCO Technical, Vocational TVET helps learners acquire skills, • Provide upstream policy advice and develop Education and Training knowledge and attitudes needed capacity at the country level (TVET) to develop professional careers and enter the world of work as well • Facilitate conceptual clarification and improve http://www.unesco. as active citizenship and lifelong the monitoring of TVET org/new/en/education/ learning. themes/education- • Clearing house and coordinator of the global building-blocks/tvet/ TVET debate

UNESCO Science and Technol- Encourage the design of effective • Promoting change in science teaching ogy Education science and technology education approaches, contents and methods within the programmes by promoting gender- framework of the Science of Quality for All aim http://www.unesco. sensitive, socio-culturally and by re-enforcing national capacities for curricular org/new/en/education/ environmentally relevant policies design and development themes/strengthening- and curricula. education-systems/sci- • Facilitating research in order to improve Sci- ence-and-technology/ ence Teacher Education by upgrading the skills of science teacher trainer

• Strengthening networks of researchers and teachers in science for their continued professional growth and in order to contribute to improvement in science education 191 • Contribute to up-dating in-service teachers in general within the framework of the Science of Quality for All programme to make teaching methods more innovative

• Assisting Member States in developing quality science teacher education materials to improve the teaching of science

• Enhancing science education among stakeholders by encouraging the participation of NGOs, Unions and Science Teachers’ Associa- tions in activities for Sciences of Quality for All

UNESCO Cultural Industries for Strengthen the performance and poverty reduction and competitiveness of the creative sustainable develop- industries as a way of reducing ment poverty and promoting sustainable economic and social development. http://portal.unesco. org/culture/en/ev.php- URL_ID=35024&URL_ DO=DO_TOPIC&URL_ SECTION=201.html

http://portal.unesco. org/culture/en/ev.php- URL_ID=39091&URL_ DO=DO_TOPIC&URL_ SECTION=201.html

UNESCO The power of culture Integrate cultural approaches that • Promoting culture as a means of reducing pov- for development help to make poverty alleviation erty and hunger, strengthening local systems strategies highly relevant and more of food production, promoting universal primary http://unesdoc.unesco. effective at the local level in that education, promoting gender equality and org/ images/0018/001 they respond to local specificities. women’s empowerment, improving maternal 893/189382e.pdf health and combat HIV and other diseases, UNESCO Culture and Development promoting environmental sustainability, and Culture and develop- indicators initiative aims to establish promoting global partnerships ment a sound and coherent set of indicators that identifies and monitors • Culture and development indicators contribute http://www.unesco.org the complex relationships between to evidence based policy making /en/culture-and-devel- culture and development as well as opment-indicators/ the contribution of culture to development at a national level.

UNESCO UNESCO Model Cur- Assist Member States in the design ricula for Journalism of journalism education curricula. Education Empower trainers or/and trainees http://portal.unesco. with free resources, offer them org/ci/en/ev.php- a structured collaborative space URL_ID=24824&URL_ to share their training but also to DO=DO_TOPIC&URL_ promote and value the “open” train- SECTION=201.html ing materials, which are freely and openly accessible for trainers and UNESCO Open self-learners to use and re-use for Educational Resources non commercial purposes such as Platform teaching, learning and research.

http://opentrain- ing.unesco-ci. org/cgi-bin/page. cgi?d1&p=adaptlocalize

UN-Habitat Cities and Climate Enhance climate change mitigation • Sensitization and training workshops which Change Initiative and the preparedness of cities in build the capacity of youth in adaptation and developing countries, including mitigation, with particular emphasis on disaster http://www.unhabi- localizing and making national risk mitigation and entrepreneurship tat.org/categories. adaptation and mitigation strategies asp?catid=550 more gender responsive and includ- • Support to the formation of youth adaptation and ing more youth in related decision- mitigation groups which enables integration to making processes. city authorities’ climate change response plans

192 • Development of a toolkit for mainstreaming gender in climate change assessments

• Policy advice on mainstreaming climate change in local government gender policies

UN-Habitat Cities and Climate Provide universities with resources • An on-line facility allows specially-designed lec- Change Academy to better address climate change in ture sessions to be downloaded by universities urban planning education. http://www.unhabitat. • The complete package for each session contains org/content.asp?typ a lecture/power point presentation, supplemen- eid=19&catid=657& tary lecture notes, a reading list, case studies, cid=9317 suggestions for studio and seminar work

• Lecture sessions are combined to constitute a complete semester (or term) course, which forms one course module of a post-graduate (or graduate) degree

UN-Habitat and Hidden Cities: Unmask- Strengthen the response of the Global research that exposes the extent to which: WHO ing and Overcoming local, national and global health Health Inequities in communities to reduce health • The urban poor suffer disproportionately from a Urban Settings inequities in an increasingly urban- wide range of diseases and health problems ized world. http://www.hiddenci- • The inequalities in their social and living condi- ties.org tions cause this vulnerability

• Evidence-based information and tools to help municipal and health authorities tackle health inequities in their cities

UNITAR UN CC: Learn – One Support countries in developing a • Grant support for country-driven strategy devel- (with 30 UN UN Training Service strategic approach to strengthen opment processes through multi-sectoral and Agencies) Platform on Climate human resources and skills to multi-stakeholder collaboration Change advance green, low emission and climate resilient development. • One UN collaboration at the global level and in www.uncclearn.org pilot countries to support national processes

UNITAR E-Learning Course on Enhance the understanding of • Technology-based-learning with certain number (with UNEP) a Green Economy learners what is a green economy of fellowships provided to learners from devel- and related international and oping countries http://www.unitar.org/egp/ national policy concepts.

UNITAR Capacity Development Support local authorities in self • Use of city-share methodology to foster to Support Local Green -assessing and developing capaci- knowledge-sharing across local authorities Economy and Green ties to promote the introduction of through south-south and triangular cooperation Growth Strategies enabling environments for green economies at the local level, spur http://www.unitar.org/ldp/ green technology transfer, and integrate greener production and consumption strategies within municipal planning.

UNITAR Green Dreams Participatory youth research and • Coordination and funding support to scale (with government (“Meu sonho verde”) mapping of local “greening” priori- campaign across various regions under the and civil society Campaign ties among citizens to rank local CIFAL Network (local governments partnership partners) public priorities and match these platform for regional training centres) with national/local leadership’s investment in municipalities locally.

UNWTO UNWTO’s Capacity Improve capacities on indicators • A series of regional and national workshops Building Programme on application of government officials using a demonstration technique and participa- Indicators of Sustainability at the national and local level, and tory approach at pilot destinations for Tourism Destinations of the tourism private sector. http://sdt.unwto.org/en/ Mainstream sustainability in tour- • Promoting the use of sustainable tourism as content/indicators-sustain- ism policies and strategies. essential instruments for policymaking plan- ability-tourism-destinations Make optimal use of environmental ning and management process at destinations resources. • Major sustainability issues addressed range from the management of natural resources (waste, water, energy, etc.) to development control, satis- faction of tourist and host communities, preservation of cultural heritage, seasonality, economic leakages, and climate change 193 • Engagement of national and local stakeholders

• Facilitate the review and analysis of sustainable tourism policies and tools: principles and practice

UNWTO’s Sustainable Reducing poverty levels through • Within the framework of the ST-EP Initiative, a Tourism-Eliminating developing and promoting sustain- series of capacity-building and training activities Poverty (ST-EP) able forms of tourism. have been conducted in matters related to poverty Initiative Focuses on enhancing the alleviation through sustainable forms of tourism. Organization’s longstanding work to Since 2004, UNWTO has organized 24 ST-EP http://www.unwto.org/ encourage sustainable tourism with training seminars with the participation of over step/index.php activities that specifically alleviate 2000 professionals from the public sector, private poverty, delivering development sector and civil society and jobs to people living on less than a dollar a day. • One of the main objectives of the ST-EP initiative is to work with governments, NGOs, bilateral and multi-lateral organizations, businesses and the local communities to identify and support a wide range of projects which would clearly show a reduction in poverty through ST-EP tourism development. With support received from various donors, UNWTO is implementing a portfolio of 100 ST-EP projects, benefitting 33 developing countries in Africa, Asia, Latin America and the Middle East

UNWTO /SNV Manual Contributes to the understanding of • Outlines some practical steps that can be taken on Tourism and Poverty tourism as a tool for poverty allevia- in tourism destinations to shape and manage Alleviation – Practical tion and sustainable development. tourism in ways that deliver more benefits to Steps for Destinations disadvantaged individuals and communities http://sdt.unwto.org/en/ content/publications-1 • Proposes the establishment of a tourism strategy and action plan which embraces pro-poor concerns and actions and provides guidance on planning monitoring and evaluation

• Contains an indicative programme of training sessions, including hand-outs, using the material contained in the manual

UNWTO UN Steering Committee Assisting least developed countries • Reduce the poverty gap in LDCs on Tourism for develop- (LDCs) and other developing ment (SCTD): Innovative countries to implement tourism for • Increase trade in services (tourism) for LDCs framework on Delivering development, including tourism in as One for Tourism: Joint the AID for Trade agenda. • Increase sustainability and create jobs effort on tourism by nine UN entities (ILO, ITC, Mainstream sustainability in tour- UNEP, UNDP, UNESCO, ism policies and strategies UNIDO;UNCTAD, Mobilize resources for Tourism. UNWTO,WTO)

http://www2.unwto. org/en/event/ promoting-tourism-sustainable-development- and-poverty-reduction

WFP Social protection for Protect the most vulnerable from • Well-designed safety nets enable marginalized marginalized and food risks and empower communities to and food insecure people living in highly risk insecure communities. contribute and benefit from sustain- prone environments to invest in nutrition, health able economic growth. care and education, engage in sustainable Social safety nets and income generating activities, and contribute to public works/ food-for- Enhance rural community resil- sustainable and inclusive economic growth. WFP assets programmes to ience to food insecurity by creating reaches on average over 100 million people every enhance livelihoods employment and income opportuni- year in the most vulnerable and at risk areas of of food insecure com- ties and enabling them to invest in the world, including 22 million children in more munities land and water conservation, reha- than 60 countries who receive school meals bilitation productive infrastructure and disaster risk management. • In 2010, WFP supported more than 22.5 million people in almost 10,000 of the most food-insecure communities in the world, improving access to food and reducing risk through food-for-assets programmes that strengthen livelihoods by catalysing community-based processes 194 WFP Purchase for Progress Offer smallholder farmers oppor- • As the world’s largest humanitarian agency, WFP (P4P) initiative tunities to access agricultural is a major buyer of staple food. In 2010, WFP markets, to become competitive bought US$1.25 billion worth of food – more than http://www.wfp.org/ players in those markets and thus 80 percent of this in developing countries. purchase-progress to improve their lives. Encourage other buyers of staple commodities • Through P4P, WFP’s demand provides small- including Governments and the holder farmers with a greater incentive to invest private sector to also increasingly in sustainable production. buy from smallholders.

WHO Systematic review of Comprehensively map evidence • This initiative so far has covered: housing, health co-benefits of on co-benefits to health of green transport, household energy, agriculture and 'green' economic poli- economic development in key health facilities. It also proposes synergies cies in key sectors. economic sectors. and strategies for the "best buy" for health and sustainability, by sector www.who.int/hia/ green_economy/en/ index.html

WHO Health and Environ- Building capacity in countries in HIA helps identify: ment Impact Assess- Africa to do health impact assessment in new economic ment (HIA) of new mining and • potential external health co-benefits investments mineral extraction plans, in order to identify health risks and oppor- • different policy options tunities linked to proposed new investments. • improve the overall returns of investments

• support "win-win" scenarios.

WHO Heath Transport Develop global, harmonized • Indicators could be used to monitor, evaluate Indicators "indicators" to monitor and evaluate and improve green investments in sustainable progress on health and sustainabil- transport systems, particularly bus rapid transit, ity in key sectors. cycling and walking systems

WHO Guidelines for healthy Develop global "healthy housing" • Consider the environmental sustainability of and green sector guidelines. the housing stock, in terms of energy efficiency policies and the climate friendly and resilient structure of dwellings as integral to "health"

WHO Occupational health in Enable health systems to respond • Equip health systems, in particular through the context of green jobs to new and/or changing demands primary health care services, with the tools and from workers health of a green means to identify and address Occupational economy. Health risks affected by these new activities. For example, which might result from a growth in the number of workers in the agriculture sector, or because of the emergence of new threats to health emanating from new "green" technologies

• Enable more effective health systems responses with preventive (workplace settings based), curative and health (health facility based) promoting measures

WHO WHO / Global Initiative Develop adaptive mitigation in the • Technical support for the piloting, testing, and on clean household housing and household energy evaluation for scale up of low-carbon house- energy sectors. hold energy solutions in developing countries, including very efficient biomass stoves and potentially carbon neutral biogas, or other renewable fuels

• Development of indoor air quality guidelines in the household energy context of developing countries

• Tools for field evaluation and large population/ epidemiological quantification of health impacts of household energy systems

• Sustainability in water and sanitation systems (UN Water-WHO), district water resource planning, green health waste disposal, healthy use of grey water and dry latrines

195 WHO Greening the Health Addresses five key areas: energy • Health care waste disposal: WHO is eg co- Sector efficiency and renewable supply, partnering with the University in Tanzania in a climate friendly and resilient build- GEF-funded project to design and test a solar- ings, safe and energy efficient powered autoclave that would provide a green water supply and use, low-carbon alternative to incineration for health care solid procurement/transport and greener, waste sterilization/disposal. Conventional incin- safer use of chemicals. eration of health care waste not only generates

Provides technical support to coun- CO2 but releases dioxins and other air pollutants tries for rapid facility assessment; harmful to health and climate. Autoclaved waste, energy audit tools and guidance; on the other hand, can be safely buried without policies for carbon financing health risk of infectious pathogens reaching water sup- facility improvements; identification plies, ecosystems or human populations of combined health and economic benefits from specific greening • In the area of renewable energy for the health measures; advocacy and com- sector, and energy poverty, WHO is provid- munications platforms; and pilot ing technical and communications support for projects. the piloting, testing and evaluation of small, modular, PV solar "suitcases" to provide basic electricity to off-grid health care facilities. The pilot will also examine the specific impacts improved electricity supply has on health service delivery, particularly for maternal delivery (WHO /Liberian Biomedical Research Institute)

Annex 3: Select UN regional programmes and initiatives supporting “the green economy in the context of poverty eradication” as core theme of the UNCSD 2012

Implementing Title of Objective Modality of Support Agency/ the Programme/ Agencies Initiative

UNECA Committee on Food Provides policy guidance for UNECA • Meets biennially as a forum for the promotion Security and Sustain- subprogramme on Food Security and of cooperation, information exchange and able Development Sustainable Development. experience sharing in various fields of sustainable development

• Convenes Africa regional preparatory meetings for Rio+20

UNECA and African Ministerial Permanent Forum for African Minis- • Policy statements and reports, eg regional UNEP / AMCEN Conference on the ters of the Environment to discuss Environmental Outlook Report, MDG Report Environment (AMCEN) policy matters, incl support for - Green Economy NEPAD and African Union (AU). • AMCEN Decision on Green Economy in the in Africa Context of Africa (2011)

UNECA and AUC Joint Annual Meetings Annual ministerial dialogue on • Ministerial Declaration of 4th Joint Annual of AU Conference of development issues and related Meeting of AU Conference of Ministers of Ministers of Economy challenges in Africa. Economy and Finance and UNECA Conference and Finance and of African Ministers of Finance, Planning and UNECA Conference of Economic Development - expressed commit- Ministers of Finance, ment to Green Economy transition (2011). Planning and Economic Development • Economic Report on Africa 2011, with a section on the green economy in African context

UNECE Environmental Perfor- Monitor the environmental perfor- • Country reviews, with the third cycle of EPRs due mance Review (EPR) mance and progress in transition- to examine relevant policy and legal aspects of the Programme ing toward the green economy of green economy initiatives in the reviewed coun- ECE member countries in the Cau- tries. It will examine the role of economic and fiscal casus, Central Asia, and Eastern policies in promoting greener modes of consump- and South-Eastern Europe. tion and production. In the case of sectors with considerable potential for greening the economy, analysis will be extended to discuss how policies in the specific sectors are directed towards greening

• Joint Task Force on Environmental Indicators reviews indicators covered by the Guidelines for the Application of Environmental Indicators in Eastern Europe, the Caucasus and Central Asia 196 (the Indicator Guidelines) UNECE Energy Efficiency 21 Facilitate the transition to a more • Its Global Energy Efficiency project aims to Programme sustainable and secure energy create a systematic exchange of information future by improving energy effi- on capacity-building, policy reform and project ciency and conservation. financing in energy sector across all five UN regional commissions

UNECLAC The Millennium Develop- Systematic review of progress • Periodic comprehensive assessment that (lead, with collab- ment Goals (MDGs): A and gaps in the fulfillment of the addresses progress, gaps and previews strate- oration with up to Latin America and Carib- MDGs in Latin America and the gic guidelines and policy options for govern- 20 agencies) bean Perspective Caribbean. ments in the region for successful achievement of the MDGs

• Accompanied by in-depth reviews of each specific goal, its targets and indicators

UNECLAC Sustainable Develop- Systematic review of progress, • Diagnosis of the sustainable development (lead, with more ment in Latin America gaps, and strategic guidelines in situation, including progress and gaps of the than 20 agencies) and the Caribbean 20 the fulfillment of the commitments implementation over the last 20 years years after the Earth emanating from the UNCED (1992) Summit: progress, gaps in Latin America and the Carib- • Production of strategic guidelines to support and strategic guidelines bean. the deliberations on the green economy at the UNCSD

UNESCAP Green Growth Capacity Provide support to policy makers • More than 500 policy makers made aware (with UNEP, ILO, Development Pro- to design, develop and implement and trained through regional policy dialogues, UNPOG and non- gramme green growth policies and tools. training of trainers and national seminars to UN partners such understand, design, develop and apply green as KOICA, UK growth policies, strategies, roadmaps, and vari- Government) ous tools and mechanisms

• Training manuals and e-Learning tools developed, and On-line e-Learning Facility launched, green growth portal established since 2006

UNESCAP Low Carbon Green Provide support to government • Comprehensive set of policy options and guide- (with KOICA and Growth Roadmap officials in developing and imple- lines for implementation, and a roadmap how GGGI) menting policies and tools for low to develop and implement low carbon green carbon green growth. growth policies being prepared

UNESCAP Astana Green Bridge Facilitate establishment of a • Provide overall substantive and coordination (with UNECE, Initiative (AGBI): Europe- Europe-Asia-Pacific partnership support for the development of various ele- other UN Asia-Pacific Partnership that will outline the blueprints for a ments of the implementation mechanism of the Agencies and for Green Growth shift from the current conventional AGBI Government of development patterns to green Kazakhstan) growth.

UNESCWA Opportunities for Small Review of Business Opportunities • Diagnosis of the EGS market in ESCWA region and Medium-Sized for SMEs in main EGS Sectors Enterprises (SMEs) to assess the practical involve- • Production of the Report on SMEs in the Environmental ment and role of the private sector Goods and Services including target industries in the • Raise awareness of necessity for countries in (EGSs) Sector green economy. the region to produce Environmental Accounts and reliable databases

197 Abbreviations and Acronyms

ADB Asian Development Bank AfDB African Development Bank BWIs Bretton Woods Institutions CBD Convention on Biological Diversity CDM Clean Development Mechanism CEFPF Clean Energy Financing Partnership Facility

CO2 Carbon Dioxide CSIRO Commonwealth Scientific and Industrial Research Organisation DFI Development Finance Institution DPSIR Drivers – Pressure – State – Impact – Response EBRD European Bank for Reconstruction and Development EGSs Environmental Goods and Services EGSS Environmental Goods and Services Sector EIB European Investment Bank EIF European Investment Fund EMG Environment Management Group ENRM Environmental and Natural Resource Management ESD Education for Sustainable Development ESG Environmental, Social and Governance ESTs Environmentally Sound Technologies ETS Emissions Trading Scheme FAO Food and Agriculture Organization of the United Nations FI Finance Initiative GATT General Agreement on Tariffs and Trade GDP Gross Domestic Product GEF Global Environment Facility GGND Global Green New Deal GHG Greenhouse Gas GRI Global Reporting Initiative ICAO International Civil Aviation Organization ICT Information and Communication Technology IDB Inter-American Development Bank IEA International Energy Agency IFC International Finance Corporation IIASA International Institute for Applied Systems Analysis ILO International Labour Organization IMF International Monetary Fund IMO International Maritime Organization IPC International Patent Classification ISO International Organization for Standardization ITU International Telecommunication Union JPOI Johannesburg Plan of Implementation JPOI Johannesburg Plan of Implementation KfW Kreditanstalt für Wiederaufbau / German Development Bank

198 LAC Latin America and the Caribbean MDB Multilateral Development Bank MDGs Millennium Development Goals MEA Multilateral Environment Agreement NCAR National Center for Atmospheric Research NGO Non-governmental Organization OECD Organisation for Economic Co-operation and Development PA Protected Area PECC Special Program for Climate Change (SPCC – PECC) PFM Public Financing Mechanism PNNL Pacific Northwest National Laboratory POP Persistent Organic Pollutant PRI Principles for Responsible Investment RDI Research, Development and Innovation REDD Reducing Emissions from Deforestation and forest Degradation SCC Social Cost of Carbon SCM WTO Agreement on Subsidies and Countervailing Measures Agreement SCP Sustainable Consumption and Production SEEA United Nations System of Environmental-Economic Accounting SEI Sustainable Energy Initiative SMEs Small and Medium-sized Enterprises SNA System of National Accounts TBT Technical Barriers to Trade UNCCD United Nations Convention to Combat Desertification UNCSD United Nations Conference on Sustainable Development UNCT United Nations Country Team UNCTAD United Nations Conference on Trade and Development UNDG United Nations Development Group UNDP United Nations Development Programme UNECE United Nations Economic Commission for Europe UN-ECLAC United Nations Economic Commission for Latin America and the Caribbean UNEP United Nations Environment Programme UN-ESCAP United Nations Economic Commission for Asia and Pacific UNESCO United Nations Educational, Scientific and Cultural Organization UNFCCC United Nations Framework Convention on Climate Change UN-HABITAT United Nations Human Settlements Programme UNIDO United Nations Industrial Development Organization UNWTO United Nations World Tourism Organization WAVES Wealth Accounting and Valuation of Ecosystems WHO World Health Organization WIPO World Intellectual Property Organization WMO World Meteorological Organization WSSD World Summit on Sustainable Development WTO World Trade Organization

199 Acknowledgements

UN Entities Authors Contributors

Food and Agriculture Organization (FAO) Stéphane Jost, Alexander Müller, Noemi Nemes, Nadia Scialabba

International Atomic Energy Agency (IAEA) Maria Betti, Christopher Kavanagh

International Civil Aviation Organization Lorenzo Gavilli (ICAO)

International Labour Organization (ILO) Ana Bélen Sanchez Marek Harsdorff, Kees van der Ree

International maritime Organization (IMO) Karin Sjölin Frudd

International Monetary Fund (IMF) Ruud De Mooij Benedict J. Clements, Elliott C. Harris

International Telecommunication Union Cristina Bueti, Jose Maria Diaz Batanero, (ITU) Gary Fowlie, Vadim Nozdrin, Beatrice Pluchon, Anna Tzanaki

International Trade Centre (ITC) Alexander Kasterine

Secretariat of the Basel Convention Matthias Kern

Secretariat of the Convention on Biological Markus Lehmann Diversity (CBD)

Secretariat of the Convention on Juan Carlos Vasquez, Marceil Yeater International Trade in Endangered Species of Wild Fauna and Flora (CITES)

Secretariat of the United Nations Chief Yasin Samatar Executives Board (CEB)

Secretary of the Intergovernmental Panel Renate Christ on Climate Change (IPCC)

The United Nations Relief and Works Robert Stryk Agency for Palestine Refugees in the Near East

United Nations Children’s Fund (UNICEF) Rhea Saab

United Nations Conference on Trade and Robert Hamwey Lucas Assuncao, Sophia Twarog Development (UNCTAD)

United Nations Convention to Combat Sergio Zelaya Desertification (UNCCD)

United Nations Department of Economic David O’Connor, Marianne Schaper Alessandra Alfieri, Tariq Banuri and Social Affairs, Division for Sustainable Development (UNDESA/DSD)

United Nations Development Programme Usman Iftikhar, Anne Marie Sloth Dima Al-Khatib, George Bouma, (UNDP) Carlsen, Maude Veyret-Picot Seon-Mi Choi, Cristina Colon, Ngone Diop, Yannick Glemarec, Leo Horn- Phathanothai, Nicole Igloi, Selim Jahan, Pradeep Kurukulasuriya, Shantanu Mukherjee, Maria Nyholm, Eric Patrick, Paul Steele, Veerle Vandeweerd, Yanchun Zhang

United Nations Economic and Social Aneta Slaveykova Nikolova Commission for Asia and Pacific (ESCAP)

United Nations Economic and Social Fidele Byiringiro, Roula Majdalani, Commission for West Asia (ESCWA) Riccardo Mesiano

United Nations Economic Commission for Josue Dione Africa (UNECA)

200 United Nations Economic Commission for Laura Altinger Europe (UNECE)

United Nations Economic Commission for Hugo Altamonte, Omar Bello, Latin America and the Caribbean (ECLAC) Sebastian Herreros, Ricardo Jordan, Marcelo Lefleur, Carlos de Miguel, Heather Page, Joseluis Samaniego, Marcia Tavares

United Nations Educational, Scientific and Clare Stark Matthias Eck,Caroline Siebold Cultural Organization (UNESCO)

United Nations Environment Programme Paul Clements-Hunt, Derek Eaton, Ivar Baste, J. Christophe Bouvier, (UNEP) Marenglen Gjonaj, Moustapha Kamal Hossein Fadaei, Aniket Ghai, Gueye, Cornis van der Lugt, Arab Holballah, Sylvie Lemmet, Desta Mebratu, Fulai Sheng Asad Naqvi, Benjamin Simmons, Guido Sonnemann, Steven Stone

United Nations Framework Convention on Yolando Velasco Climate Change (UNFCCC)

United Nations Global Compact Carrie A. Hall, Georg Kell

United Nations Human Settlements Andrew Rudd Programme (UN-HABITAT)

United Nations Industrial Development George Assaf, Rene van Berkel, Organization (UNIDO) Ralf Bredel, Giuseppe De Simone, Hedda Femundsenden, Sam Hobohm, Heinz Leuenberger, Eun Mee Lee, Marina Ploutakhina

United Nations Institute for Training and Achim Halpaap Research (UNITAR)

United Nations Population Fund (UNFPA) Michael Herrmann

United Nations Regional Commissions Srinivas Tata

World Bank Marianne Fay, Ari Huhtala Yuvan Beejadhur, Glenn-Marie Lange, Robin Mearns, Helena Naber, Jean-Louis Racine, Mike Toman, David Treguer

World Food Programme (WFP) Carlo Scaramella, Catherine Zanev

World Health Organization (WHO) Elaine Ruth Fletcher, Marina Maiero Diarmid Campbell-Lendrum, Carlos Dora

World Intellectual Property Rights Joe Bradley Organization (WIPO)

World Meteorological Organization (WMO) Christian Blondin

World Tourism Organization (UNWTO) Luigi Cabrini,Sofía Gutiérrez, Marcel Leijzer,Samiti Siv

World Trade Organization (WTO) Vivien Liu-Chan Wai Chun, Patrick Rata

Non-UN Entities

Inter-American development Bank (IDB) Carlos Ludena

Organization for Economic Co-operation Nils-Axel Braathen, Nathalie Girouard, and Development (OECD) Elianna Konialis, Helen Mountford

Zoï Environment Network Carolyne Daniel, Geoff Hughes, Otto Simonett

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Green Economy – This report is the result of a collective effort by more than forty UN entities, the Bretton Woods Institutions and other inter-governmental bodies. It offers a shared understanding of green economy as an approach to sustainable development and poverty eradication. It highlights the importance of investment in not only the green transformation of our economic structures but also the construction of an inclusive and equitable society. The policy advice in the report covering financing, full cost pricing, regulatory instruments, sustainable trade and green markets, innovation and technology, and indicators of transformation should be of interest to anyone seeking practical solutions to the multiple challenges facing humanity today.

UN system contributors: (FAO), (IAEA), (ICAO), (ILO), (IMO), (IMF), (ITU), (ITC), Secretariat of the Basel Convention, (CBD), (CITES), (CEB), (IPCC), The United Nations Relief and Works Agency for Palestine Refugees in the Near East, (UNICEF), (UNCTAD), (UNCCD), (UNDESA/DSD), (UNDP), (ESCAP), (ESCWA), (UNECA), (UNECE), (ECLAC), (UNESCO), (UNEP), (UNFCCC), United Nations Global Compact, (UN-HABITAT), (UNIDO), (UNITAR), (UNFPA), United Nations Regional Commissions, World Bank Group, (WFP), (WHO), (WIPO), (WMO), (UNWTO), (WTO).

The Environment Management Group (EMG) is a United Nations (UN) System-wide coordination body. It furthers inter-agency Cooperation in support of the implementation of the international environmental and human settlement agenda. Its Membership consists of the specialized agencies, programmes and organs of the United Nations including the secretariats of the Multilateral Environmental Agreements. It is chaired by the Executive Director of United Nations Environment Programme (UNEP) and supported by a secretariat provided by UNEP. More UNITED NATIONS information on the EMG can be found at www.unemg.org.