Green Economy

updated November 2016

Green economics is the antidote to our damaging obsession with GDP, the traditional measure of economic progress which fails to attribute any value to the depletion of environmental assets or the contribution of voluntary work. Whilst there is broad acceptance that green economics is fundamental to sustainable development, there is no consensus on how a green economy should be constructed.

The process of greening a traditional economic model is already familiar. Measures such as the transition to renewable energy or phasing out fossil fuel subsidies are increasingly linked to positive social benefits through net gains in employment. But this approach is insufficient to ensure that environmental degradation is recognised in national accounting.

To support the vision of integrating environmental costs into pricing regimes, the UN Environment Programme (UNEP) has sponsored The Economics of Ecosystems and Biodiversity (TEEB), a series of reports which estimate a monetary value for each of about 30 ecosystem services, including air quality, pollination and carbon sequestration.

Such valuations could inform tax and subsidy policies to strengthen rather than destroy nature, improve decision-making on the impact of infrastructure projects, and calibrate “payment for ecosystem services,” an increasingly popular method for compensating owners or custodians who preserve environmental assets.

If it were possible to go further and build such values into national accounting, the result might be regarded as a truly authentic green economy, delivering equitable improvement in living standards without eroding environmental assets.

Influential supporters of this approach, such as the OECD and World Bank, go further and enthuse about prospects of “green growth”, anxious perhaps to satisfy the human addiction to ever-rising standards of living.

Many scientists are sceptical that it can ever be possible to decouple economic growth from depletion of environmental resources. “Green growth” for them is therefore unsustainable. They also point out that valuation of ecosystem services cannot take account of the risks of species extinction or outright collapse of the system.

Nevertheless, the UN Secretary-General selected the green economy to be a core agenda item for the 2012 “Rio+20” UN conference on sustainable development, in anticipation that the topic would feature in early drafts of the Sustainable Development Goals.

In the event, the strongest opposition came from the world’s poorest countries. They are being encouraged to leapfrog traditional industrialization and become role models for green economics.

These countries fear that, as with past economic prescriptions, the rules of the green economy will be imposed on them by the tools of globalisation – unfair regulations and conditions for aid, trade, foreign investment and intellectual property rights. Above all, green economics is too vague on the central purpose of development – how to bridge the global divide between the rich and poor countries.

Although there is genuine interest in supplementing GDP accounting with new indicators of social and environmental well-being, the traditional GDP paradigm remains intact. The Agenda 2030 for Sustainable Development taking effect from 2016 is silent on the subject of green economics.

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Uncovering Pathways to an Inclusive Green Economy
The UN Environment Programme has promoted green economics over the last decade


Chee Yoke Ling, Co-Director of Third World Network explains why the poorest countries are concerned about the green economy
from Stockholm Resilience Centre

more SDGs briefings
What is Sustainable Development?
Teething Troubles for Sustainable Development
From MDGs to SDGs
Sustainable Development and GDP
Safe and Just Space for Humanity
Source material and useful links

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