Intended to inform decision-makers in the public, private and third sectors, this policy paper finds that following a two degrees Celsius path requires radical action in both developed and developing countries and that the overall pace of change is ‘recklessly slow’. According to the authors, the transition to a low carbon and resource-efficient economy should be based on equitable access to sustainable development, as well as recognition that rich countries have a responsibility to support the transition of developing countries. This transition will involve breaking the link between growth and emissions, but not stop growth. The authors emphasise that accelerating the pace of change towards a low carbon, resource-efficient economy is both feasible and crucial, and that rapid transformative change is possible with the right incentives.
The authors criticise the rigidity of the processes under the United Nations Framework Convention on Climate Change (UNFCCC), as well as the behaviour and narrow-mindedness of the participants hindering progress. Additionally, they highlight the power that vested interests continue to have. Conclusions include the following:
The government as an entity is quite often the largest, single consumer of goods and services in developed as well as developing countries. Government procurement can be a powerful tool for positive environmental change by creating a market for environmental goods and services. At the same time, procurement policies will need to be designed and implemented in a manner that does not discriminate against trading partners. What sort of space is available in the context of existing trade-rules for governments to pursue proactive procurement policies for sustainable energy goods and services? Is there a need to review existing rules so as to enhance their effectiveness with regards to the objectives of strengthening markets for renewable energy? This paper, by Alan Herve and David Luff, sheds light on these questions and also explains how a possible Sustainable Energy Trade Agreement could spur reform while ensuring a level playing field in procurement markets for producers of sustainable energy goods and services worldwide.
"Ecosystem services" has become a catch-phrase for the complex connections between the natural environment and human well-being. This paper considers the impact of changes in the supply of ecosystem services, and programs to increase their supply, on near-term growth of gross domestic product. It focuses on the relationship between locally generated versus transboundary services and growth in developing countries, where the highest rates of ecosystem degradation tend to be found. There is a common perception that there is a tradeoff between environmental protection and economic growth, especially in the near term. This perception can make policymakers reluctant to support environmental protection. Where the environment is a source of economically important services, then environmental protection may stimulate growth of gross domestic product instead of reducing it. The paper considers evidence on the economic value of regulating services; the degree to which ecosystems actually supply some of the services they are commonly assumed to supply; and the near-term growth implications of restoring ecosystems, and reducing their loss.
ICTSD senior fellow and Professor Emeritus Thomas Brewer, addresses the issues associated with technology transfer used by firms, namely international direct investments, licensing, and trade in services and goods. The author makes a case for the creation of a new international institutional architecture built around a sustainable energy trade agreement (SETA), with a view to enhancing such transfer. The paper considers a wide range of related topics that need to be addressed in designing and negotiating a SETA, especially four key elements: subsidies, government procurement, standards and intellectual property rights.
The term 'green jobs' can refer to employment in a narrowly defined set of industries providing environmental services. But it is more useful for the policy-maker to focus on the broader issue of the employment consequences of policies to correct environmental externalities such as anthropogenic climate change. Most of the literature focuses on direct employment created, with more cursory treatment of indirect and induced job creation, especially that arising from macroeconomic effects of policies. The potential adverse impacts of green growth policies on labor productivity and the costs of employment tend to be overlooked. More attention also needs to be paid in this literature to how labor markets work in different types of economies. There may be wedges between the shadow wage and the actual wage, particularly in developing countries with segmented labor markets and after adverse aggregate demand shocks, warranting a bigger and longer-lasting boost to green projects with high labor content. In these circumstances, the transition to green growth and job creation can go hand in hand.
This paper explores existing patterns of green innovation and presents an overview of green innovation policies for developing countries. The key findings from the empirical analysis are: (1) frontier green innovations are concentrated in high-income countries, few in developing countries but growing; (2) the most technologically-sophisticated developing countries are emerging as significant innovators but limited to a few technology fields; (3) there is very little South-South collaboration; (4) there is potential for expanding green production and trade; and (5) there has been little base-of-pyramid green innovation to meet the needs of poor consumers, and it is too early to draw conclusions about its scalability.
This paper focuses on how developing countries can change the way they prepare for disasters so they are better equipped to sustain economic growth. It discusses the importance of considering the goals of key decision makers and the need to understand the perceptions, systematics biases, and heuristics used by the relevant interested parties (the affected public, private and public sector organizations, and nongovernmental organizations) in choosing between alternatives. The paper highlights the importance of undertaking benefit-cost analysis to evaluate disaster risk reduction measures, recognizing that decision makers might not make meaningful use of this policy tool given their behavioral biases and simplified heuristics. To address these issues, the authors propose green growth strategies that involve multi-year contracts coupled with short-term incentives that have a chance of being implemented. The strategies focus on the role of multi-year micro-insurance, long-term loans, and multi-year catastrophe bonds that reflect the institutional arrangements in the developing country.
This paper reviews the challenges and opportunities raised by international trade for developing countries considering a green growth strategy. A key concern is the effect of environmental policies on international competitiveness. For production-generated pollution, there is evidence that stringent environmental policy reduces some indicators of competitiveness, but the effect is small in most sectors. However, tightening up environmental standards is unlikely to reduce international competitiveness when pollution is generated by consumption. And where depletion of natural capital is a threat, effective environmental policy is an important component of a policy aimed at developing long-run international competitiveness. The effects of trade on environmental policy, the interaction between trade and technology transfer, and the interaction between trade and transboundary environmental problems are also reviewed. An emerging issue is the potential use of border taxes to curtail carbon leakage. The paper discusses some of the possible responses by developing countries.
This report examines how biodiversity co-benefits in REDD (Reducing Emissions from Deforestation and Forest Degradation) can be enhanced, both at the design and implementation level. It discusses potential biodiversity implications of different REDD design options that have been put forward in the international climate change negotiations and proceeds by examining how the creation of additional biodiversity-specific incentives could be used to complement a REDD mechanism, so as to target biodiversity benefits directly.