Manual Towards Green Growth: Monitoring Progress. OECD Indicators (OECD Green Growth Studies)

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Table of contents

They can unlock new growth engines by: Green growth means fostering economic growth and development while ensuring that 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. Rather, it provides a practical and flexible approach for achieving concrete, measurable progress across its economic and environmental pillars, while taking full account of the social consequences of greening the growth dynamic of economies.

The focus of green growth strategies is ensuring that natural assets can deliver their full economic potential 8. I Boosting investor confidence through greater predictability in how governments deal with major environmental issues. I Opening up new markets by stimulating demand for green goods, services and technologies. I Contributing to fiscal consolidation by mobilising revenues through green taxes and through the elimination of environmentally harmful subsidies.

These measures can also help to generate or free up resources for anti-poverty programmes in such areas as water supply and sanitation, or other pro-poor investments. I Reducing risks of negative shocks to growth due to resource bottlenecks, as well as damaging and potentially irreversible environmental impacts. In May , the OECD delivered its Green Growth Strategy to Heads of State and Ministers from over forty countries, who welcomed it as a useful tool for expanding economic growth and job creation through more sustainable use of natural resources, efficiencies in the use of energy, and valuation of ecosystem services.

The Strategy responds to a request from Ministers of the 34 countries who signed the Green Growth Declaration in , committing to strengthen their efforts to pursue green growth strategies as part of their response to the economic crisis and beyond. They will need to carefully consider how to manage any potential trade-offs and best exploit the synergies between green growth and poverty reduction.

The latter include, for example, bringing more efficient infrastructure to people e. Given the centrality of natural assets in low-income countries, green growth policies can reduce vulnerability to environmental risks and increase the livelihood security of the poor. Green growth strategies also recognise that focusing on GDP as the main measure of economic progress generally overlooks the contribution of natural assets to wealth, health and well-being.

The OECD is working to identify the policy mixes and measurement tools that countries in different situations can adopt to implement green growth in a way that contributes to poverty eradication, employment opportunities, and a strong and sustainable economy. Greening the growth path of an economy depends on policy and institutional settings, level of development, social structures, resource endowments and particular environmental pressure points.

Advanced, emerging, and developing countries will face different challenges and opportunities. The OECD report on Green Growth and Developing Countries forthcoming aims to identify promising areas in which green growth objectives could be achieved and the policies, regulations, technology transfer, financing and new market and innovation opportunities that could help to deliver them. It reviews key barriers and includes options for a policy framework and a set of criteria that developing countries could consider in their efforts towards green growth policy making.

Work will also commence on how progress could be assessed. The report is being developed based on a consultative process with developing countries. It aims to provide a platform for developing country partners to indicate their interest in collaborating with the OECD to shape a green growth agenda that is feasible and relevant for them and addresses the aspirations of their citizens. It helps to identify the most appropriate policy mix for advancing more sustainable and inclusive growth. A number of criteria to help guide the design of policy strategies are proposed, such as: cost-effectiveness, adoption and compliance incentives, and ability to cope with uncertainty and provide a clear and credible signal to investors.

Other important criteria include effectiveness in stimulating innovation and the diffusion of green technologies, and the extent to which instruments can be designed and implemented in a way that facilitates international co-ordination. Governance issues are also an important consideration in policy design and implementation. Difficulties in monitoring environmental performance and compliance, collecting green taxes, adapting new technologies or setting up new markets may influence the choice of policy instruments in countries with large informal economies and where there is weak institutional or human capacity.

Distributional effects will play an equally important role in policy development, including for the protection of poor households from any adverse effects of policy reforms. Successful strategies will likely draw on the key elements identified in this section. For example, pricing can be an effective way of allocating water, particularly where it is scarce, and for encouraging more sustainable consumption. Appropriate water tariffs can generate the essential finance needed to help cover the costs of water infrastructure, essential to ensuring continued and expanded access to water supply and sanitation services for all.

Interest in PES has been increasing rapidly over the past decade, with more than programmes being implemented worldwide to date.


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Estimating the monetary value of the services provided by ecosystems and biodiversity can make their benefits more visible, and can lead to better, more cost-effective decisions. Creating markets and incentives to capture these values are an important element of the green growth toolkit, for example through payments for ecosystem services PES for forests and watersheds, tradable water rights, or through the use of eco-labelling certification schemes.

OECD policy analysis focuses on the economic valuation of biodiversity and ecosystem services, and the use of economic incentives and market-based instruments to promote the conservation and sustainable use of biodiversity and Through these, the OECD is providing guidance tailored to the needs of individual countries. The OECD Economic Surveys systematically assess how environmental and growth policy recommendations interact, including in areas such as taxation, innovation, infrastructure, energy, agriculture and product market regulation. It will start to highlight policy opportunities that can strengthen growth, improve environmental outcomes and identify possible trade-offs.

In response to country demand, the OECD Investment Policy Reviews now seek to help countries improve domestic conditions for investment in support of green growth objectives. Recent reviews include Russia and Peru. The OECD Green Cities programme assesses the impact of urban green growth and sustainability policies on urban and national economic performance and environmental quality in different geographical, economic and national regulatory contexts.

Pricing mechanisms tend to minimise the costs of achieving a given environmental objective and provide incentives for further efficiency gains and innovation, encouraging more sustainable production and consumption patterns. Better pricing of Finding out more www. Pricing instruments can also generate additional fiscal revenues to ease tight government budgets and help finance critical priorities such as health, education, or infrastructure development. A number of countries have embarked on green tax reforms, often using the revenues raised to reduce taxes on labour which could help boost employment and encourage green growth.

The report provides insights and examples of good practice on using environmental taxation and pricing measures in country development and poverty reduction strategies. It also looks at the political economy of environmental fiscal reform and the role of donors in supporting the reform process.

How Do You Measure Green Growth? World Bank & Partners Are Working on Indicators

Meanwhile, the revenue from taxes on energy, the most widespread form of environmentally related tax, has tended to decline as a share of GDP, partly because growing global energy demand has pushed up pre-tax prices and encouraged increased fuel efficiency — showing the impact of economic incentives. Royalties and tax revenues from oil and gas extraction are not included. Subsidies to fossil fuels, for example, encourage pollution and constrain the ability of governments to engage in programmes that help improve long term growth prospects such as improved health and education.

There is significant scope for reducing the heavy burden that these subsidies place on government budgets, while also better targeting support to those who most need it. Governments and taxpayers spent about half a trillion USD in supporting the production and consumption of fossil fuels. Those measures had an overall value of about USD billion a year between and Fossil fuel subsidies encourage the wasteful use of energy, contribute to price volatility by blurring market signals and act to lower the costcompetitiveness of renewable energy sources and energy-efficient technologies.

Moreover, they often fail to meet their stated objectives of alleviating poverty or promoting economic development. OECD analysis suggests that most countries or regions would record real income gains following unilateral removal of their subsidies to fossil fuel consumption, as a result of a more efficient allocation of resources across sectors.

Scarce government resources would be freed up for other priorities, such as protecting vulnerable households, stimulating employment creation, or helping to address climate change at home or in developing countries. Many countries are now pursuing reforms, though formidable economic, political and social hurdles will need to be overcome to realise lasting gains. The Inventory will be updated regularly and expanded over time to cover more countries and more support mechanisms. In the case of agriculture and fisheries, some support measures to these sectors may hamper the allocation of scarce resources to more productive activities, and increase the pressures on the environment, for instance through elevated GHG emissions, nutrient loading, rates of resource depletion and pressures on land and water resources.

Not all forms of agricultural support are environmentally harmful, however, and some support measures are linked to the achievement of specific environmental objectives. OECD work shows that the share of agricultural support that is linked to commodity production has decreased e. Targeting policies to specific objectives is likely to achieve greater economic efficiency and better environmental performance. Further work is underway in the OECD to deepen understanding of the linkages between agricultural policies, support and green growth.

Finding out more Decoupling agricultural support: www. Data for are provisional. Removing barriers to new and young firms is particularly important, as these firms tend to be more responsive to new technological or commercial opportunities. Providing effective protection and enforcement of intellectual property rights IPR is essential to encourage the development and diffusion of technologies and to facilitate foreign direct investment and licensing. Innovation also leads to new ideas, new entrepreneurs and business models, contributing to the establishment of new markets and eventually to the creation of new jobs.

The drivers of green innovation differ across countries. Advanced and emerging economies can often mobilise foreign direct investment, trade and human capital to build their technological and innovation capacity. However, in many developing countries, innovation takes place in small firms or in the informal economy, with less capacity to seek and absorb knowledge. Policy frameworks to foster green innovation should be adjusted to national circumstances, including the economic structure, existing capabilities to innovate, and the institutions in place.

Green innovation thrives under the same conditions as overall innovation, as the fundamental drivers and barriers are similar. Price signals enhance efficiency in allocating resources by strengthening markets for green innovation, and will lower the costs of addressing environmental challenges. But price signals are not sufficient, particularly if breakthrough technologies are to be developed and diffused throughout the economy.

Temporary support for the development and commercialisation of green technologies will be needed in certain cases as well as public and private investment in relevant research, including in emerging and developing economies that will need to adapt existing technologies to their own local context. Strengthening markets for green innovation is also important, for example through well-designed public procurement standards and regulation. Recent OECD work suggests that there are significant differences between the effects of different policy measures depending on the level of technological development, so having the appropriate mix of policy instruments is important.

For example, when a technology is still far from being competitive, relative prices are less important than ambitious performance standards, or significant public support for research. More generally, characteristics of the policy framework for green growth like stringency, predictability and flexibility are key for encouraging innovation and technology transfer.

Entrepreneurs and policy-makers are increasingly looking at innovation as key to improving environmental performance and achieving sustainable targets. Innovation is also essential to improve existing products and to develop more sustainable tourism products and experiences. As competition between alternative technological trajectories is key, there is a risk that governments will attempt to pick winners. One way to avoid this is to support general infrastructure or basic conditions for a wide range of alternative technologies, e.

Good policy design is essential for any support, e. Support for commercialisation should be temporary and accompanied by clear sunset clauses and transparent phase-out schedules. The challenge for labour market and skill policies is to maximise the benefits for workers and help assure a fair sharing of adjustment costs, while also supporting broader green growth policies e. The three main policy priorities are: I support a smooth reallocation of workers from declining to growing firms, while reducing the adjustment costs borne by displaced workers I support eco-innovation and the diffusion of green technologies by strengthening initial education and vocational training, and ensuring that overly-strict product market regulations are not blunting the incentive to innovate I reform tax and benefit systems for workers to make sure that cost pressures generated by environmental policies do not become a barrier to employment.

There is also need for greenspecific labour market and skill policies, including top-up training for mid-career workers who need to adapt to greener ways of working. The challenges that emerge are: detecting how green growth is changing labour demand and jobs skill requirements, co-ordinating labour market and skill policies with environmental policy, and ensuring that both men and women are equally well-prepared for the shift to a greener economy and that they both benefit from new jobs and entrepreneurial opportunities.

Gender differences in these subject choices are even more distinct in vocational training programmes. If green content is introduced only in science and engineering oriented vocational programmes, a large proportion of women will not benefit from the training and miss the opportunity to acquire the necessary skills for new green jobs. Moreover, women are more likely to recycle, buy organic food and eco-labelled products and they place a higher value on energy-efficient transport than men.

From the demand side, an OECD survey of small and medium-sized enterprises indicates that firms are often not sufficiently aware of the need for green skills for the future, and their investment in green training or green knowledgeintensive activities is often limited, as is their awareness of the impact of regulations on their industry. These modelling results also indicate small net impacts on total employment, but other studies suggest bigger gains if the right policies are in place.

These studies also show that green growth could be a powerful losses, but that the costs rise significantly when workers in declining sectors become unemployable elsewhere due to an incapacity to change and lack of flexibility in labour markets. One way to combine environmental policy with weapon to help developing economies in their fight against underemployment. The key is mobility, with workers able to move easily from sectors where employment would drop, notably fossil-fuel industries, to sectors such as renewable measures to help workers take advantage of new opportunities would be use revenues from carbon taxes to reduce taxes on labour income.

Countries exporting fossil-based energies would be most affected. In addition, infrastructure projects are particularly vulnerable to climate change, due to long operational life times. In developing countries, where a major part of the infrastructure required for development is still to be built, there is an opportunity to leap-frog by introducing greener and more efficient infrastructure.

In developed countries, the challenge is more about renovation and upgrading outdated infrastructure. Major shifts in long-term investments will be required to transform energy, transport, water and building infrastructure to become resource- and energyefficient and increase the use of renewable energy.

Green Growth, Green Economy and Sustainable Development: Terminological and Relational Discourse

While private investment in clean energy is rising quickly, domestic and international private investment in green infrastructure is still seriously constrained by market failures and by activity- and sector-specific investment barriers. How can governments encourage private investments? Governments can aid the transition by using public funds to mitigate financial risk, unlock private investment, promote learning, and build institutional and human capacity to bring about transformative change, while developing a coherent green investment policy framework for long term financial viability.

The OECD is working to develop an integrated policy framework that can help achieve the common goal of low-carbon, climate resilient LCR development and greener growth. Other OECD work aims to establish what policy signals are required to give institutional investors the confidence to invest in this space, and to determine the most efficient financing tools for leveraging private sector financing, as well as how to track both public and private sector climate change finance.

In response, governments are introducing measures to encourage people to consider the environmental effects of their purchasing decisions and practices. These include environmentallyrelated taxes, energy efficiency standards for homes, CO2 emissions labels for cars, and financial support to invest in solar panels. OECD surveys of more than 10 households across a number of countries, in the areas of energy, food, transport, waste and water, show that economic incentives encourage energy savings and investment in water-efficient equipment as well as waste generation and recycling levels.

Inclusive Green Growth: For the Future We Want ()

Initiatives to raise environmental awareness are crucial, as attitudes towards the environment drive water-saving behaviours, demand for energy-efficient appliances, and decisions to recycle and to consume organic food. Governments need to be able to integrate green growth objectives into broader economic policymaking and development planning. Developing such capacity is a key structural issue and applies as much to many OECD countries as it does to developing countries. This issue is not restricted to formal national level planning processes, such as national plans or poverty reduction strategies, but extends to public financial management especially the budget process , developing strategies for key economic sectors as well as how these feed through into sub-national development.

Finance and core economic ministries should take a leading role on core economic policies for green growth that engage central planning, finance and sectoral ministries as well as environment agencies in their formulation. The role and capacity of non-governmental actors in the private sector and civil society will also be important. Valuing environmental assets and services in national and corporate accounts can encourage the development of policies to safeguard their value. The low level of infrastructure in most developing countries provides an opportunity to leapfrog to modern, efficient technologies, but it also requires sufficient technical capacity and a supportive policy environment.

High levels of employment in informal sectors poses challenges for successfully implementing environmental standards, and requires stakeholders to have the capacity to develop and implement appropriate measures. Effective, inclusive and equitable governance is essential. Governance processes and mechanisms for greening development should respond to the needs and interests of marginalised groups. Women play a fundamental role in poverty reduction, decreasing child malnutrition and increasing agricultural production. Discriminatory attitudes and practices regarding the role of women in society are significant barriers to their control over resources and thus food production.

For example, OECD work using the Social Institutions and Gender Index shows that in countries where women have few or no rights to access land, the levels of child malnutrition are also higher. Experimentation and learning at the local level can provide essential experience and lead to bottom-up diffusion of approaches between cities and regions as well as influence national and even international levels of actions.

Coordinating governance issues can help achieve the most cost-effective option in attaining green growth, including in the areas of green investment and innovation. But growing urbanisation increases pressures on the environment.

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The expansion of cities without sufficient spatial planning or adequate investment in housing and other 24 essential infrastructure can create substandard living conditions, through severe air and water pollution as well as the accumulation and inappropriate disposal of household and industrial waste. Without new policies, the health impacts of urban air pollution will continue to worsen by , and it is expected to become the top environmental cause of premature mortality worldwide.

OECD work on cities and green growth shows that urban policies, such as increasing density, congestion charges and property tax reforms, can contribute to reducing environmental pressures while supporting economic growth in the long term. But developing green growth strategies at the city scale is not an easy task.

Key challenges include how to ensure integration and co-ordination between local and national initiatives and making these efforts broader, more systematic and long-term. Now more than ever, funding is another key issue as cities face demands of employment generation and service provision with fewer resources. Between and , overall investment in renewable technologies has been estimated at approximately USD 1 trillion. Due to the availability of both space and renewable sources of energy, rural regions attract a large share of this investment. OECD case studies suggest that renewable energy deployment can positively affect the development path of rural areas.

For instance, royalties and taxes paid by developers to local communities help them to improve the delivery of key services. New resources can be used to build schools, senior residences, or increase broadband access in sparsely populated areas. Renewable energy installations can also create employment opportunities in maintenance and operation activities and can spur self-employment and entrepreneurship. However, national and regional renewable energy policies with very ambitious targets and high incentives for renewable energy production have often caused distortions, triggering rent-seeking behaviours, and creating competition between installations and agriculture and tourism for land use or landscape amenities.

As a result, many local communities have started opposing further deployment. Potential links with rural industries such as forestry or manufacturing are not developed due to the lack of an integrated approach to renewable energy deployment.

Reducing the use of spatially blind incentives set at the central level, and taking into account the characteristics and specific needs of hosting economies could help to transform the large investment in an opportunity for economic development. Environmental issues of international or global concern can benefit from international policy coordination which extends beyond joint commitment to emission reductions.

OECD work shows that not all international green technology transfer and knowledge diffusion takes place within advanced economies. In recent years, emerging and developing economies have become important destinations and sources for international transfer of environmental and climate change mitigation technologies.

However, there is significant potential for further expansion in North-South and South-South diffusion of environmental technologies and knowledge. Actions by developing countries to put in place policies that constrain emissions will be critical for encouraging greater international diffusion of green technologies. More general factors such as lack of financial resources, openness to trade and foreign direct investment, the rule of law and the quality of the IPR system also help to explain why technology diffusion tends to be concentrated in developed countries.

However, the most important factor is unquestionably domestic innovative or absorptive capacity. The higher the level of domestic human capital, the greater the diffusion and adoption of technologies available on international markets. One important way to increase domestic innovation capacity is through international research collaboration. You can change your ad preferences anytime. Presentation by the OECD.

OECD Indicators

Upcoming SlideShare. Like this presentation? Why not share! What is Green and Inclusive Growth? Embed Size px. Start on. Show related SlideShares at end. WordPress Shortcode. Published in: Environment. Full Name Comment goes here. Are you sure you want to Yes No. Be the first to like this. No Downloads. Views Total views. Actions Shares. Embeds 0 No embeds. No notes for slide. Presentation by the OECD 1. The green growth strategy 2 3.

New ways of producing and consuming things, and even redefine what we mean by progress and how we measure it Need for Green Growth 4. 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. Green growth can open new sources of growth 7. Green growth can also reduce the risk to growth 8. Monitoring progress: Measurement framework and indicators 12 More resource efficient?