This paper was developed at the request of the OECD Working Party of the Investment Committee to document efforts to date to define and measure green FDI and to investigate the practicability of various possible definitions, as well as to identify investment policy restrictions to green FDI. It does so by reviewing the literature and existing work on the contributions of FDI to the environment; by providing a two-part definition of green FDI; and by discussing various assumptions necessary to estimate the magnitude of 'green' FDI.
The deployment of eco-innovations in developing countries is a key driver of their contribution to efficiently addressing global environmental challenges. It is also a key driver of markets for eco-innovation and sustainable economic development. This report explores the barriers developing countries face in accessing markets for eco-innovation. It outlines the key considerations policy needs to address to overcome these barriers and discusses the extent to which selected existing policy mechanisms and organisation have achieved this. The key finding of the report is that the majority of existing policy mechanisms fails to recognise the critical importance of developing indigenous eco-innovation capabilities amongst developing country firms. Indigenous eco-innovation capabilities are essential to facilitating both the diffusion of existing ecoinnovations within developing countries and sustainable economic development based on the adoption, adaption and development of environmentally sound technologies that fit with the bespoke conditions faced by developing countries.
This DAC Reference Paper outlines key issues faced when designing Environmental Fiscal Reform (EFR). EFR refers to a range of taxation and pricing measures which can raise fiscal revenues while furthering environmental goals. The objective is to provide insights and “good practice” on how development co-operation agencies can help developing countries take advantage of EFR approaches in both their development and poverty reduction strategies.
Following a review of the instruments of EFR and related technical issues, this report focuses on the political economy and governance aspects of EFR. This includes an examination of the precondition for successful design and implementation, the various steps involved through the EFR Policy Cycle, the challenges faced at each stage, and the main stakeholders involved. The role of donors in supporting EFR processes is also outlined.
Subsequently, these issues are reviewed in relation to sectors of particular relevance for developing countries: forestry, fisheries, fossil fuel, electricity, drinking water and industrial pollution control.
Technological innovation can help realise environmental objectives in a less costly manner than would otherwise be the case. Thus, understanding the role that technological innovation can play in achieving environmental objectives is important for policy debates.
However, the relationship between environmental policy and technological innovation remains an area in which empirical evidence is scant. In an attempt to bridge this gap, the OECD has examined the relevant issues, using patent activity as a measure of technological innovation.
Three case studies have been undertaken: abatement technologies for wastewater effluent from pulp production, abatement of motor vehicle emissions, and development of renewable energy technologies. On the basis of patent data, the nature, extent, and causes of innovation in each of these areas have been explored. While a particular focus has been placed on the role of environmental policy in bringing about the innovation documented, it is recognised that other factors play a key role in inducing innovation that has positive environmental implications.
