The Economics of Green Growth

New indicators for sustainable societies

Shunsuke Managi

• Publisher: Routledge
• Year: 2015
• Print ISBN: 9781138817159
• eBook ISBN: 9781317596424
• Edition: 1
• Topic: Economics
• Subtopic: Sustainability in Business
• Index: Economics

The Economics of Green Growth investigates the possibility of creating an integrated indicator covering three pillars of sustainable development: economy, society and the environment. The excessive pursuit of economic efficiency has resulted in severe environmental problems such as climate change and biodiversity loss, and societal human issues such as inequality and disparity.

The book aims to change the direction of economic growth towards one which is more sustainable. It explores beyond the conventional indicator, the GDP that measures economic growth and human well-being. It also introduces new indicators relevant to sustainable development and a green economy and discusses the key issues for these indicators.

Part 1
Global issues and indicators

1
Green Economy and Green Growth in international trends of sustainability indicators

Chika Aoki-Suzuki

The necessity for an indicator which complements GDP (Gross Domestic Product) has been widely discussed by the international community. This matter has arisen due to the limits of GDP as a measurement of social and economic development, as well as to the change to the recognition of happiness. With this background, the development of an indicator system which covers a comprehensive area including sustainability and well-being has been widely discussed internationally.

International organisations that have recently expanded their activities to develop a practical and structured indicator system for sustainability and well-being include OECD (Organisations for Economic Cooperation and Development) Green Growth indicators, UNEP (United Nations Environment Programme), Inclusive Wealth Index (IWI) and WAVES (Wealth Accounting and the Valuation of Ecosystem Services) by the World Bank. As a prerequisite of these activities, some countries have already accumulated experience of relevant indicator systems and their policy utilisation, such as natural capital accounting and material flow accounting, including the resource productivity indicator. In addition, a central framework for the System of Environmental-Economic Accounting (SEEA) was agreed upon by the United Nations (United Nations, 2014). And at Rio+20, the United Nations Conference on Sustainable Development (UNCSD) in 2012, discussions on Sustainable Development Goals (SDGs) began in the context of the post-2015 Development Agenda/Millennium Development Goals.

Green Economy/Growth is not only recognised as indicator development but is also widely recognised as an important item on the international policy agenda towards sustainability, especially after Rio+20, which highlighted a green economy in the context of sustainable development and poverty eradication. Various organisations have been working on the policy concept as well as indicators of Green Economy/Growth.

This chapter focuses on growing international activities on Green Economy/Growth, and mainly discusses the definitions and purposes by analysing terms used in the definitions. This is followed by an examination of the system of UNEP Green Economy/OECD Green Growth indicators which are major examples of Green Economy/Growth indicators.

1.1 International discussion of Green Economy/Growth

Major international organisations and international initiatives have been working on this issue, with UNCSD, UNEP Green Economy Initiative and European Environment Agency (EEA) looking at Green Economy, and OECD and United Nations Economic and Social Commission for the Asia and the Pacific (UNESCAP) focusing on Green Growth. However, such international recognition and proactive actions by international organisations do not equate to the existence of an internationally shared definition.

This section starts by examining the concept of Green Economy and Green Growth developed by various international organisations, followed by a comparative analysis of definitions of Green Economy/Green Growth, considering the difference between sustainability and sustainable development.

1.1.1 Concepts and definitions of Green Economy and Green Growth

There are many common items among the concepts and definitions of Green Economy and Green Growth developed by UNEP, OECD and EEA as described later and in Table 1.1. Examples of common items are (1) resource efficiency, low-carbon, ecosystem service and natural capital as components of Green Economy/Growth; (2) employment, economic development, social inclusiveness, poverty alleviation and happiness as objectives/goals of Green Economy/Growth.

a) UNEP

A report on Green Economy published by UNEP entitled “Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication” (UNEP, 2011a) comprises three parts: “Investing in natural capital”; “Investing in energy and resource efficiency” and “Supporting the transition to a global green economy”. The part on “Investing in natural capital” gives approaches for improving the quality and quantity of natural capital, mainly focusing on industries which are directly linked with natural capital, such as agriculture, fisheries and forestry. On the other hand, “Investing in energy and resource efficiency” focuses on efficient use of inputs from natural capital in economic systems (human-made capital), and mainly discusses industries such as renewable energy, manufacturing, waste, infrastructure, transportation, tourism and cities.

b) OECD

The main components of OECD Green Growth are the environmental and resource productivity of the economy, the natural asset base, the environmental dimension of quality of life and economic opportunities and policy responses

Table 1.1 Example of definitions of Green Economy/Growth

Green Economy	UNEP (2011a)	Green economy as one that results in “improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities”. In its simplest expression, a green economy is low-carbon, resource efficient, and socially inclusive. In a green economy, growth in income and employment are driven by public and private investments that reduce carbon emissions and pollution, enhance energy and resource efficiency, and prevent the loss of biodiversity and ecosystem services.
	EEA(EEA website)	Green economy is one that generates increasing prosperity while maintaining the natural systems that sustain us. (…) The objectives of a green economy are to meet our needs -for food, transport, energy and so on - in a sustainable and equitable way. (…) In balancing environmental, economic and social elements, the green economy concept evidently has much in common with the notion of sustainable development - albeit with a focus primarily on the environmental and economic aspects.
	UNCSD (2012)	Para 56. (…) In this regard, we consider green economy in the context of sustainable development and poverty eradication as one of the important tools available for achieving sustainable development and that it could provide options for policymaking but should not be a rigid set of rules. We emphasize that it should contribute to eradicating poverty as well as sustained economic growth, enhancing social inclusion, improving human welfare and creating opportunities for employment and decent work for all, while maintaining the healthy functioning of the Earth's ecosystems.
		Para 60. We acknowledge that green economy in the context of sustainable development and poverty eradication will enhance our ability to manage natural resources sustainably and with lower negative environmental impacts, increase resource efficiency and reduce waste.
		Para 61. We recognize that urgent action on unsustainable patterns of production and consumption where they occur remains fundamental in addressing environmental sustainability and promoting conservation and sustainable use of biodiversity and ecosystems, regeneration of natural resources and the promotion of sustained, inclusive and equitable globalgrowth.
Green Growth	OECD (2011a)	Green growth is about fostering economic growth and development while ensuring that the natural assets continue to provide the resources and environmental services on which our well-being relies. To do this it must catalyse investment and innovation which will underpin sustained growth and give rise to new economic opportunities.
	UNESCAP (2012)	Green growth is, in general terms, economic progress that fosters environmentally sustainable, low-carbon and socially inclusive development. By “recalibrating” the economy to synergise economic growth and environmental protection, green growth” strategies work to bring economic growth trajectories in better alignment with sustainable development objectives. Such strategies can help build a “green economy,” characterized by substantially increased investments in economic activities that build on and enhance the earth's natural capital, while reducing ecological scarcities and environmental risks - activities such as renewable energy, low-carbon transport, energy- and water-efficient buildings, sustainable agriculture and forest management and sustainable fisheries.

Source: Table compiled by author based on various sources

(Figure 1.1). More details are shown in section 1.2.2 “OECD Green Growth indicator”.

c) EEA

Green Economy of EEA consists of maintaining ecological resilience in the ecosystem (natural capital) and improving resource efficiency in the economy (manufactured and financial capital), as well as comprising a part of human well-being (social and human capital) (Figure 1.2).

1.1.2 Relationship between “Green Economy/Growth” and “sustainability/sustainable development”

Regardless of the commonness, the context of Green Economy/Growth slightly varies among the international organisations. To examine the definitions more deeply, the author aims to take the major terms used in concepts and definitions of Green Economy/Growth and to classify them into components, objectives and direction, as well as goals of Green Economy/Growth (Table 1.2).

This typology also can show that Green Economy/Growth contain the context of the three pillars of sustainable deve...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Figures
• Tables
• Notes on contributors
• Preface
• Introduction
• PART 1 Global issues and indicators
• PART 2 Improving sustainability and well-being indicators
• PART 3 Towards green growth: analysis and actions
• Conclusion
• Index