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Pavan Sukhdev
McKluskey Fellow 2011, Yale University
Founder-CEO, GIST Advisory
Towards a Green Economy
Bogota, 29th February
“A Green Economy is defined as one that results in improved human well-being and social equity, whilst significantly reducing environmental risks and ecological scarcities.”
Green Economy and Sustainable Development: Green Economy is the best economic vehicle to achieve sustainable development goals.
Source: UNEP Green Economy Initiative
Green Economy : Definition
“A Green Economy is defined as one that results in improved human well-being and social equity, whilst significantly reducing environmental risks and ecological scarcities.”
Growth in per-capita inclusive wealth
Growth in Comprehensive wealth
Arrow, Dasgupta, Maler
Stiglitz - Sen – Fitoussi
“Environmentally friendly GDP Growth” of UNESCAP 2005 & “Green Growth” models
Dasgupta
Stiglitz
Green Economy and Sustainable Development: Green Economy is the best economic vehicle to achieve sustainable development goals.
Source: UNEP Green Economy Initiative
Green Economy : Definition
“A Green Economy is defined as one that results in improved human well-being and social equity, whilst significantly reducing environmental risks and ecological scarcities.”
Source: UNEP Green Economy Initiative
Green Economy / “Green
Growth”
From GGKP, Mexico City, Jan 2012 :- “Green Growth is about making growth processes (a) resource-efficient, (b) cleaner and (c) more resilient without necessarily slowing them.” (Geoff Heal) “Green Growth is when economic growth and environmental gain are complements not substitutes” (Richard Morgenstern)
Developing nations actively promoting green economy Barbados National Strategic Plan, 2006-2025
Brazil (State of Sao Paulo) Green Economy plan
Cambodia Green Economy Roadmap, 2009
China investing US$ 468 bn. to green key sectors in its 12th five-year plan (2011-2015) vs US$ 211 bn. in the last plan
Indonesia (Province of Kalimantan Tengah) Green Economy Taskforce, 2012, and National Planning to “Green” Economic Corridors
Malaysia (State of Sabah) Development Corridor Plan, 2008-25
Mexico to launch “Green Economy Scoping Study”
South Africa National Green Economy Plan
South Korea from Green New Deal (2008) to “5YGGP” (2009-2013)
Green Economy Initiatives
Source: UNEP Green Economy Initiative
UNEP is supporting initiatives in over 20 countries Africa as a Focus Region : Ghana, Egypt, Mali, Burkina Faso, Rwanda,
Senegal, South Africa, Africa Regional (UNU-INRA)
Emerging Europe : Armenia, Azerbaijan, Moldova, Montenegro, Serbia, Regional (UNECE)
Green Economy Initiatives
Source: UNEP Green Economy Initiative
UNEP – GREEN ECONOMY INITIATIVE UNEP – GREEN ECONOMY INITIATIVE
Source: United Nations Human Development Index
Meeting the dual goals of sustainability – High human development and low ecological impact
Source: WWF Living Planet Report 2006
Green Economy: Two Pathways
UNEP – GREEN ECONOMY INITIATIVE
FOCUS • Design and drive
transformation in key sectors critical / highly material for “greening” the global economy
STRATEGY • Establish “Enabling Conditions”
(regulations, subsidies, taxes and related reforms)
• Promote public and private investment
KEY SECTORS • Agriculture, Freshwater, Forests, Fisheries, Energy,
Transportation, Manufacturing, Waste, Buildings, Cities, Tourism
SCENARIO ANALYSIS • “T-21” model, includes Natural Capital , to forecast outcomes
on Capital stock, GDP growth, Employment
UNEP’s Green Economy Report
Source: UNEP Green Economy Initiative
UNEP – GREEN ECONOMY INITIATIVE
• Green farming practices have increased yields, especially on small farms, between 79 % (Pretty et al, 2006) and 180 %.
• 10 percent increase in farm yields -> 7 % reduction in poverty in Africa, more than 5 % in Asia
• Approximately 2.6 billion people rely on agricultural production systems for their livelihood. (FAO, 2009)
• 525 million small farms world wide, 404 million less than two hectares of land (Nagayets, 2005), Small farms cultivate 60 % of arable land (Herren et al. 2010)
An increase in overall GDP coming from agricultural labor productivity is on average 2.5 times more effective in raising the incomes of the poorest quintile in developing countries than an equivalent increase in GDP coming from non-agricultural labor productivity.
Agriculture : Importance of Small Farms
UNEP – GREEN ECONOMY INITIATIVE
GDP growth (%)
Green Economy: over time,
achieves higher growth rates
Source: T-21 Model, UNEP Green Economy Report
Economic Benefits
Industry/ Highly profitable
Household/ save fuel costs (342 – 3321 yuan)
Environmental Benefits
Reduce fossil fuel consumption
Save 348,000 t SCE of fossil energy/ year
Social Benefits
Reduce risk of CO poisoning, Rheumatoid
arthritis
600,000 employed
China is world’s largest market for Solar Water Heaters • 2/3rd of global capacity
• 10% of population • 4o mil SWH systems
Implementation Plan on Promoting Solar Thermal
Utilization in 2007 (under 11th Five-Year Plan for New and
Renewable Energy)
1. Solar Heaters in China
Source: UNEP Green Economy Initiative (Developing Countries Success Stories)
15 MW(2008)
35 MW
Observed Impacts
Mumias Sugar Company + ten-year power purchase agreement
@US Cents 6/kWh
“TRIPLE WIN”
Reducing fuel dependence
Coping with fuel scarcity and price
Enhancing competitiveness (5-6m factories)
Environmental Integrity
Enhancing energy security (500MW)
Job Creation (200,000 farmers)
Expected Benefits
• Facilitate resource mobilization
• Reduce transaction costs
• Encourage private investors
FTI Policy
Access to Grid
Long-term Power
Purchase
Set Price per kWh
Mandatory Use
FTI Aspects
Source: UNEP Green Economy Initiative (Developing Countries Success Stories)
2. Feed-in Tariffs in Kenya
185,000 ha, 45,000 farmers (2004)
60%/ 359% increase
296,203 ha/ 206,803 farmers (2008)
OA Growth in Uganda
US$ 22.8 mil (2007/8) US$ 6.2 mil (2004/5) US$ 3.7 mil (2003/4)
OA Exports in Uganda
Environmental Impact
48-68% lower carbon emissions Carbon Sequestration
Low fertilizer use
Business Opportunity
Organic food & drink market 97% revenue in OECD countries 80% producers in developing countries
Source: UNEP Green Economy Initiative (Developing Countries Success Stories)
3. Organic Agriculture in Uganda
Policy to transform city and industry
Flood control -> turned vulnerable areas
into parks
Park with buses and bicycle paths (ecological asset +
green infrastructure)
Curitiba Industrial City (CIC) 700 companies, 50,000 direct
jobs, 150,000 indirect jobs
Population increase in a sustainable way
361,000 (1960) – 1,797,000 (2007)
Transport Planning
City Management
Urban Planning
Economic Benefits
Per capita loss from severe congestion 6.7-11 times less
than other cities
Annual fuel losses (per capita) 4.3-13 times less than others
Fuel usage 30 percent lower than other cities
Source: UNEP Green Economy Initiative (Developing Countries Success Stories)
4. Sustainable Urban Planning in Brazil
5. Rural Ecological Infrastructure in India
National Rural Employment Guarantee Act 2005 (NREGA)
Objectives Guarantee wage and employment; Strengthen rural natural resource management Strategy Labor-intensive implementation in 615 rural districts
Ecosystem Initiatives under NREGA Financing for rural works addressing causes of drought, deforestation and soil erosion
Key Benefits and Impacts Improved rural livelihoods &inclusive growth -Work for 30 mln. families per year - Wage increases of 25 % in 3 years
Improved rural ecological infrastructure - 850,000 water conservation works completed from 2006-08 - Estimated 5 mln. liters of water conserved (in Uttar Pradesh,) - Increased crop yields and ground water replenishment (in Andhra Pradesh)
Source: UNEP Green Economy Initiative (Developing Countries Success Stories)
1.9% rate of forest decrease 1.35% annual increase
1990s: Before community forestry
2000-05: With community forestry
Source: UNEP Green Economy Initiative (Developing Countries Success Stories)
6. Forest Management in Nepal
Community Forest User Groups (CFUGs) manage 25% of forest area
Develop their
own
operational
plans
Set
harvesting
rules
Set rates for
products
Decide
surplus
income
distribution
Economic Benefits
Environmental Benefits
Social Benefits
Employment & income for local users
Increased forest area &
density
Community acceptance &
goodwill
Enhanced soil & water
management
Sustainable wood fuel
sources
Quito, Ecuador gets 80% of its water supply from two
ecological reserves
Water users contribute to Trust Fund for Protection of Water
(FONAG)
FONAG finances critical ecosystem services for key
hydrological functions
Results 65,000 ha of watersheds in improved management Upstream farmers and local communities benefit 1800 people receive economic benefits from conservation
Source: UNEP Green Economy Initiative (Developing Countries Success Stories)
7. Ecosystem Services in Ecuador
Source: UNEP Green Economy Initiative (Developing Countries Success Stories)
8. Solar Energy in Tunisia
Solution: Development & use of renewable energy
Challenge: Reduce Tunisia’s oil dependency
National Solar Energy Plan Increase share of RE sources from below 1% to 4.3% by 2014 Tunisian Solar Programme (PROSOL) for solar water heating systems - Financial and fiscal support -Reduced interest rates, VAT and customs duty benefits -20% subsidy on purchase & installation
- 50,000 Tunisian families benefit - 214,000 tonnes of cumulative CO2 emissions avoided -$1.1 billion energy savings, relative to $200 million investment in clean energy infrastructure
By 2016, - expected energy savings of 22% - reduction of 1.3 million tonnes per year in CO2 emissions
Future Benefits
Current Benefits
22
Pro-growth
Pro-job
Pro-poor
7% (2014)
6.5% (2012)
11% (2012)
Pro-green 26%-41% (2020)
+
Indonesia’s development goals
Source: UKP4
Key Opportunities
Dynamic economy: 5% annualized growth for 2001-10
Bright growth outlook supported by buoyant commodity markets, investor interest and improving macro parameters
Favourable demographics: Half the population is below 30, growing middle class with rising incomes and consumption
Key Challenges
Infrastructure: transport infrastructure in poor condition, telecom and energy infrastructure also a concern
Rigid labor markets and large, inefficient informal sector
Poverty reduction: 1/5th of population still in poverty
Opportunities and Challenges
Source: World Bank, Deutsche Bank
Objectives Investments
Economic Growth
Social Equity
Environmental Health
Tertiary Sectors
- Healthcare - Tourism - Education - Recreation - Cities
- Public Education
- National Health - A.B.S. - Microfinance
- Eco-Tourism - Waste Mngmt. - Public Transport
Secondary Sectors
- Manufacturing - Construction - Power
- Cottage Industry - Renewable Energy - Energy Efficiency - Materials
Efficiency
Primary Sectors
- Agriculture - Timber - Pelagic Fishing - Mining
- Small Farms - Artisanal Fishing - Silvipasture
- Sust. Forestry - REDD+
Master Plan Structure for
“Green Development”
Denpasar
Mataram
Jakarta
Medan
Pekanbaru
Jambi
Lampung
Semarang
Banjarmasin
Palangkaraya
Pontianak
Makassar
Manado
Kendari
Gorontalo Manokwari
Jayapura
1
2
3 4
Serang
Mamuju
IMT-GT
BIMP-EAGA
Surabaya
Merauke
Kupang
Samarinda Sofifi
Wamena
Sorong
Ambon
Palu
Banda Aceh
Padang
Bengkulu
Jogjakarta
Palembang
Tj. Pinang
Pkl. Pinang
6
5
Land-based Products
and Energy Mining and Energy Agriculture, Farming,
and Fisheries
Natural and Human
Resources Tourism and Food
Security
Industry and Service
Indonesia’s Master Plan for
Economic Corridors (MP3EI)
Source: MP3EI, UKP4
Kalimantan : Key Questions…
• What will drive Economic Growth locally ?
• What will reduce rural Poverty ?
• What will reduce urban Poverty ?
• What will secure & create local Jobs ?
• What will maintain local environmental health ?
Objectives Investments
Economic Growth
Social Equity
Environmental Health
Tertiary Sectors
- Healthcare - Tourism - Education - Recreation - Cities
- Public Education
- National Health - A.B.S. - Microfinance
- Eco-Tourism - Waste Mngmt. - Public Transport
Secondary Sectors
- Manufacturing - Construction - Power
- Cottage Industry - Renewable Energy - Energy Efficiency - Materials
Efficiency
Primary Sectors
- Agriculture - Timber - Pelagic Fishing - Mining
- Small Farms - Artisanal Fishing - Silvipasture
- Sust. Forestry - REDD+
Master Plan Structure for
“Green Development”
Objectives Investments
Economic Growth
Social Equity
Environmental Health
Tertiary Sectors
- Healthcare - Tourism - Education - Recreation - Cities
- Public Education
- National Health - A.B.S. - Microfinance
- Eco-Tourism - Waste Mngmt. - Public Transport
Secondary Sectors
- Manufacturing - Construction - Power
- Cottage Industry - Renewable Energy - Energy Efficiency - Materials
Efficiency
Primary Sectors
- Agriculture - Timber - Pelagic Fishing - Mining
- Small Farms - Artisanal Fishing - Silvipasture
- Sust. Forestry - REDD+
Master Plan Structure for
“Green Development”
Amazonas state has the lowest population density in Brazil
But, Manaus is among the top 10 cities in the country
Source: Encyclopaedia Britannica
Green Economy Case Study:
Amazonas, Brazil
Green Economy Case Study:
Amazonas, Brazil
Reasons for Amazonas’ Rapid Growth
1. Increased Clustering & Urbanization
- 78% ‘cities’ population
Manaus City Population, 1991-2010 (millions)
Source: Wolfram Alpha
Source: IBGE Brazil
0%
20%
40%
60%
80%
2003 2004 2005 2006 2007 2008
Industry Services
Green Economy Case Study:
Amazonas, Brazil
Reasons for Amazonas’ Rapid Growth
2. Focus on Services
- For Manaus, services were 52.7% of output in 2008 (versus 26.3% in 2003)
- Industry share fell from 73.3% to 47.1% in the same period
Amazonas and Manaus: Key Economic Drivers Industrial Pole of Manaus (PIM) Free trade zone: No import/export taxes Decreasing role of timber, agriculture and livestock Creates sustainable development model, harmonizing economic growth, job creation and forest conservation Key Industries: Brewing, shipbuilding, chemicals, electronics equipment, petroleum refining and tourism Principal exports: electrical equipment, petroleum, chemicals,
forest products
Source: Encyclopaedia Britannica
Green Economy Case Study:
Amazonas, Brazil
Kalimantan: Low urbanisation and
few large cities
Source: Statistics Indonesia
PROVINCE POPULATION (2010) % IN CITIES
West Kalimantan 4,393,239 25.1
Central Kalimantan 2,202,599 27.5
South Kalimantan 3,626,119 36.3
East Kalimantan 3,550,586 57.6
CITIES PROVINCE POPULATION ANNUALISED
% GROWTH 1990 2000 2011 (Est.)
Palangkaraya Central Kalimantan 99,693 148,197 221,122 3.70
Balikpapan East Kalimantan 334,851 396,909 464,499 1.44
Samarinda East Kalimantan 334,851 346,959 349,238 0.06
Pontianak West Kalimantan 387,441 432,732 475,272 0.86
Banjarmasin South Kalimantan 443,104 527,724 619,570 1.47
Sampit Central Kalimantan 76,821
Tarakan East Kalimantan 75,508 89,161 104,282 1.43
Singkawang West Kalimantan 79,260 94,009 110,331 1.47
Martapura South Kalimantan 140,508
TIER 1 CITIES PROVINCE MAJOR INDUSTRIES
Palangkaraya Central Kalimantan Household industries (wood carving, plaiting,
weaving and beadwork)
Balikpapan East Kalimantan Oil refining, trading of timber, mining &
petroleum products
Samarinda East Kalimantan Timber and logging
Pontianak West Kalimantan Shipbuilding, trading of agricultural products
Banjarmasin South Kalimantan Processing industries (plywood, rattan and
rubber manufacturing)
TIER 2 CITIES PROVINCE MAJOR INDUSTRIES
Sampit Central Kalimantan Timber processing and shipping
Tarakan East Kalimantan
Major port and trading centre for fisheries, forest products and domestic goods
Singkawang West Kalimantan Ceramics, tourism (former gold mining town)
Martapura South Kalimantan Domestic seaport, diamond cutting
Kalimantan: Key industries in
urban areas
Source: United Nations, Tourism Indonesia
Potential “green economy” opportunities for Kalimantan
• REDD+: Average payments estimated at about 2.5% of GDP (or $750 mln) between 2011 and 2030 under GE scenarios
• REDD+ with biodiversity premium around species (for eg. orangutans)
• Sustainable forestry and resource extraction: 25% increase in NTFP income for rural communities by 2030 under GE scenarios
• Ecotourism: Estimated to double by 2030 under GE scenarios
• Sustainable oil palm: Under GE-Sustainable Palm Oil REDD scenario, growth is superior to a BAU approach
• Investments into peat lands and mangrove conservation, with opportunities for PES and climate change adaptation
• Ecologically friendly and sustainable agriculture focused on smallholdings and subsistence farmers
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