Topic: economics

Influence of Coastal Economic Valuations in the Caribbean: Enabling Conditions and Lessons Learned

Sarah Parsons — Mon, 10 Dec 2012 13:55:24 -0500

Executive Summary

Across the Caribbean, national economies are heavily dependent on coastal ecosystem services. Coral reefs, mangroves, and other coastal ecosystems provide fish habitat, attract tourists, and protect shorelines from storm damage. However, coastal habitats continue to degrade due to local and global pressures. For example, more than 75 percent of the Caribbean’s coral reefs are currently threatened by human activities. These threats to coastal ecosystems stem from both a lack of awareness of the benefits these ecosystems provide and the costs of insufficient protection, and a lack of political will to protect and sustainably manage these ecosystems. Many of the activities that damage coastal ecosystems arise from shortsighted and poorly informed decisions that fail to take long-term ecosystem values and the full range of benefits from coastal ecosystem services into account.

Economic valuation can contribute to better informed and more holistic decision making about resource use and identify opportunities for effective conservation. Over the past 30 years, the economic valuation literature on the Caribbean’s coastal and ocean resources has increased substantially. More than 200 coastal economic valuation studies of the monetary value of marine ecosystem goods and services in the Caribbean currently exist. However, despite this wealth of valuation studies and estimates, it is not clear whether these efforts have had a meaningful impact on policy or decision making concerning the management and use of these valuable natural resources; to date, there has been no assessment to address this critical question. It is also not immediately clear why some valuations have been more influential than others.

To get a more complete picture of the influence of past coastal valuations in the Caribbean, and to identify the key “enabling conditions” for valuations to influence policy, management, or investment decisions, the World Resources Institute (WRI) and the Marine Ecosystem Services Partnership (MESP) conducted semi-structured interviews with more than thirty marine conservation and valuation experts. Several of these interviews took place in the five countries where WRI had conducted coastal valuations. WRI also reviewed past valuation studies in the Caribbean that informants identified as influential. The findings of this review are based on expert opinion and documented cases of influence. Given the large number of total valuations and the difficulty of tracking influence, this review is not exhaustive. This paper identifies a number of variables that likely influence policy, management, and investment outcomes; however, it does not identify the extent to which each variable contributes to influence. We encourage future research on this topic.

Overall, we found that although valuation studies have helped raise awareness about the economic importance of coastal ecosystems in the Caribbean, few have actually had a positive influence on conservation and management- oriented policy, legislation, or investment in the region. We identified only 13 valuation studies that have influenced policy. For example, valuation helped to convince the government of St. Maarten to establish the country’s first national marine park, and the government of Belize to legally ban bottom trawling. Still, these success stories highlight the potential for economic valuation to have influence. We were able to draw out key contextual, procedural, and methodological conditions that likely led to success.

The elements increasing the likelihood of policy influence included:

a clear policy question;
local demand for valuation;
strong local partnerships and stakeholder engagement;
good governance with high transparency;
opportunities for revenue-raising;
effective communications and access to decision makers and/or media; and
a clear presentation of methods, assumptions, and limitations.

This analysis suggests that getting the methodology right—a principal concern of economists—is only part of the equation. Valuation practitioners who aspire to achieve impact must also consider wider contextual and procedural factors (such as governance and stakeholder engagement) when assessing the likelihood that their valuation will be influential. Furthermore, absolute accuracy is not always essential, as many stakeholders use valuation results as a ballpark figure to guide decision making. For this reason, valuation should be done on a scale appropriate to the policy question, minimizing costs as far as possible. More precise valuation may be necessary for questions relating to fees and taxes. In all cases, clear presentation of methods, assumptions, and limitations is critical in order to address critiques and legitimize results.

In the Caribbean, interest in ecosystem valuation to inform smart choices about coastal resource conservation and management and associated land use continues to grow. However, based on the results of this analysis, it is clear that valuation practitioners need to do much more to ensure that valuation studies have greater influence. In order to achieve more meaningful impacts, greater effort is necessary to strategically choose, design, and execute valuation studies; communicate valuation results to target audiences; and share successes and failures of influence with other practitioners. We conclude with next steps for building on this analysis, including:

Conduct further consultations with experts and decision makers in the Caribbean and beyond to enlarge the catalog of valuation success stories, and explore additional opportunities for qualitative and quantitative analysis of trends and causality.
Develop standardized approaches to monitor and evaluate the influence of coastal valuations.
Research the “return on investment” of economic valuation for coastal conservation and management in relation to other conservation tools.

The results of this review will inform WRI and our partners’ efforts to produce a standardized framework for economic valuation of coastal ecosystems in the Caribbean. A standardized valuation framework would help produce comparable and credible values across the Caribbean, legitimizing their use among decision makers and increasing their uptake. Drawing from this review, the framework will also contain advice on how to make future economic valuations as influential as possible, so they can realize their potential to catalyze positive changes in policy, management, and investment—helping both to restore the productivity and increase the economic contributions of coastal resources, while safeguarding the Caribbean’s valuable coastal and marine resources for future generations.

Rio+20: Uma oportunidade para acelerar a transição para a economia verde e tirar milhões de pessoas da pobreza

James Anderson — Thu, 14 Jun 2012 11:34:29 -0400

O novo relatório apresenta políticas-chave e constrói os alicerces para aumentar a prosperidade, reduzir a pobreza e apoiar a sustentabilidade ambiental.

Read text in English here

Uma transição à economia verde poderia retirar milhões de pessoas da pobreza e mudar o sustento de muitas das 1,3 bilhões de pessoas que ganham apenas USD 1,25 por dia no mundo inteiro, mas somente quando a transição tiver como base políticas fortes e investimentos dos setores público e privado.

Estes foram os resultados de um novo relatório, Construindo uma Economia Verde Inclusiva para Todos, lançado hoje na reunião de cúpula da Rio+20 pela Parceria Pobreza e Ambiente (PEP, da sigla em inglês) - uma rede bilateral de agências de suporte, bancos de desenvolvimento, agências da ONU e ONGs internacionais. O relatório aponta que muitos países em desenvolvimento e países menos desenvolvidos já estão buscando fazer uma transição para economias de baixa emissão de carbono e que sejam eficientes em seu uso de recursos.

De acordo com o relatório, o aumento significativo dos exemplos atuais postos em prática da economia verde, especialmente nos países em desenvolvimento, tem o potencial de gerar resultados tripartidos: um crescimento econômico criador de empregos, sustentabilidade ambiental e inclusão social.

Porém, os investimentos específicos e as reformas na governança são necessários para superar as barreiras atuais que previnem que muitas comunidades carentes se beneficiem de uma economia verde.

Read Building an Inclusive Green Economy for All

O novo relatório demonstra que muitos dos Países Menos Desenvolvidos, assim como muitas regiões pobres dos países com renda média, na verdade possuem alto grau de recursos naturais, que os permitem construir uma economia verde que possa reduzir a pobreza de uma forma sustentável.

“Muitos dos países menos desenvolvidos e dos países em desenvolvimento e das comunidades estão aproveitando a oportunidade para aproximar economia e ecologia para que possam gerar resultados sociais transformacionais”, diz Achin Steiner, Subsecretário Geral e Diretor Executivo do Programa das Nações Unidas para o Ambiente (PNUMA), um membro da PEP, no lançamento do relatório no Rio de Janeiro.

“O desafio para os líderes mundiais se reunindo aqui na Rio+20 é gerar e dar apoio às políticas possibilitadoras e aos pacotes catalisadores financeiros e de proteção social de forma que possa apressar estas ambições e aumentá-las exponencialmente.”

O relatório discute que um grande número de países menos desenvolvidos e das regiões pobres dos países com renda média, na verdade possuem alto grau de recursos naturais, os quais são necessários para dar sustentação à transição a economia verde como uma passagem em direção ao desenvolvimento sustentável.

“Ao abraçar uma economia verde inclusiva, os líderes na Rio têm uma oportunidade rara de melhorar as vidas de milhões de pessoas e abrir as portas a uma nova era de sustentabilidade”, diz Manish Bapna, Presidente em exercício do Instituto de Recursos Mundiais, que coordenou o estudo.

“A mudança para uma economia verde inclusiva não acontecerá por si própria. São necessárias políticas governamentais inteligentes e uma liderança forte. Este relatório apresenta uma visão ousada para uma economia verde que pode lidar com a pobreza e a desigualdade, e mais importante ele oferece alicerces práticos e concretos para a realização dessa transição.”

O relatório cita muitos exemplos fortes de países em desenvolvimento que estão mudando para uma economia verde de forma bem-sucedida. Por exemplo:

A Etiópia está desenvolvendo seis projetos de energia eólica e um projeto geotérmico, os quais aumentarão a capacidade do país em mais de 1.000 megawatts.
A Mongólia atualmente está construindo seu primeiro parque eólico de 50 megawatt, e este deve gerar um valor estimado de 5% da energia necessária pelo país, enquanto que vai reduzir a poluição do ar, que está relacionada com a geração de energia causada pela queima de carvão. A Mongólia tem o potencial de agir como uma “super rede” na região, fornecendo energia limpa para os países vizinhos.
No Uganda, a promoção da agricultura orgânica está ajudando dezenas de milhares de fazendeiros a ganharem até 300% a mais nas produções certificadas de abacaxi, gengibre, baunilha e outros produtos para exportação. Mundialmente, o mercado para os produtos orgânicos triplicou desde 2000.

A nível internacional, o desenvolvimento da Redução de Emissões por Desmatamento e Degradação de Florestas(REED ou REED+ das siglas em inglês), também oferece o potencial para a erradicação da pobreza, se acompanhada por salvaguardas sociais rigorosas, especialmente para a população indígena local. Por exemplo, a Noruega investiu USD 1 milhão na REED na Indonésia, o que gerou um ano de moratória na derrubada de árvores em Kalimantan, o que tem o potencial de salvaguardar 45% das florestas da província, ao passo que fornece novas oportunidades de sustento e renda para a população local.

Muitos países de renda baixa ou média são ricos em recursos para ecoturismo, um setor que tem a projeção de gerar uma receita de USD 240 bilhões em 2012. Uma grande parte desse crescimento se encontra nos países em desenvolvimento tão variados como Botsuana, Belize, Brasil, Costa Rica, Gabão, Quênia e Nepal.

Os países menos desenvolvidos, com a infraestrutura menos desenvolvida, especialmente nas áreas urbanas, podem se beneficiar da economia verde inclusiva com as políticas possibilitadoras corretas e investimentos internacionais específicos em áreas de eficiência energética e tecnologias limpas para os modernos sistemas de transporte público.

Tais esforços também servem para aumentar a criação de empregos decentes verdes. Em Lagos, na Nigéria, as parcerias públicas e privadas voltadas à melhoria da infraestrutura da cidade, reduzem o congestionamento, melhoram as condições nas favelas e ajudam a criar cerca de 4.000 empregos, relacionados ao meio ambiente, para a comunidade jovem desempregada.

Com relação à saúde, os fatores de riscos ambientais são as causas de cerca de um quinto de todas as doenças nos países em desenvolvimento, e correspondem a uma grande proporção das mortes infantis.

Muitos investimentos na economia verde têm o potencial para fornecer benefícios significativos para a saúde humana. Por exemplo, o apoio aos combustíveis e veículos limpos diminuirá as emissões de gases do efeito estufa e reduzirá as doenças respiratórias. Da mesma forma, o investimento em uma energia mais limpa para o uso doméstico nos países em desenvolvimento, tais como através de fogões mais eficientes, pode reduzir a dependência da madeira como combustível e lidar com o desmatamento e ainda limitar a exposição à poluição interna do ar.

O relatório enfoca que o setor privado, incluindo as grandes multinacionais e pequenas e médias empresas, junto com as organizações não governamentais têm também um papel-chave como possibilitadores.

Por exemplo:

A Unilever está trabalhando na África Ocidental com 10.500 pequenos fazendeiros para promover as árvores allanblackia, que produz sementes ricas em óleo que é usado em margarinas sob as marcas Flora e Bercel.
No Brasil, a empresa de cosméticos Natura criou parcerias com 26 comunidades para fornecer novos cosméticos, fragrâncias e outros produtos sob um programa de compartilhamento de benefícios, que apoia os princípios do PNUMA relacionados à Convenção sobre Diversidade Biológica.
Jain, um sistema de irrigação localizado na Índia, fabrica sistemas de irrigação baseados no gotejamento e na aspersão, enquanto gera mercados para os produtos dos fazendeiros. Fazendeiros em partes da Índia tiveram um aumento de renda líquida de USD 100 para USD 1.000 por hectare como resultado da adoção de tais sistemas e também reduziram o consumo de água e os impactos ambientais.

“Existe uma grande evidência de que a transição para uma economia verde com baixa emissão de carbono e que seja eficiente em seu uso de recursos pode beneficiar muito a comunidade carente e ao mesmo tempo ajudar a preservar os serviços ecossistêmicos vitais”, disse Johan Kuylenstierna, Diretor Executivo do Instituto Ambiental de Estocolmo, membro PEP e co-autor do relatório.

“O desafio para a Rio+20 é criar compromissos fortes que assegurarão que a economia verde possa crescer e dar frutos, com o apoio dos setores público e privado. Também precisamos adotar políticas para proteger os vulneraveis enquanto as economias dos países fazem a transição, e assegurar que os benefícios da economia verde sejam distribuídos de uma forma justa e igualitária”.

“Na região da Ásia-Pacífico, o investimento paralelo na infraestrutura sustentável inclusiva e no gerenciamento sustentável dos ecossistemas críticos para o desenvolvimento econômico futuro pode causar um impacto enorme no bem-estar da população carente - tanto nas zonas urbana e rural”, disse Bindu N. Lohani, Vice-presidente da Gestão de Conhecimento e Desenvolvimento Sustentável do Bando de Desenvolvimento Asiático.

“As instituições regionais devem galvanizar os esforços governamentais para criar as políticas possibilitadoras certas e canalizar os recursos financeiros para um crescimento verde inclusivo, um tipo de crescimento que beneficia os países em desenvolvimento e os membros carentes das suas populações.”

O relatório apela para que os delegados na reunião de cúpula da Rio+20 considerem os “cinco fatores críticos para a construção dos alicerces em direção a economia verde inclusiva”. Estes podem maximizar os benefícios da economia verde para a população carente e promover uma agenda política compartilhada entre os governos dos países em desenvolvimento, os parceiros nos países desenvolvidos e outras partes interessadas.

Políticas sociais econômicas nacionais: Políticas fiscais, regimes tributários e políticas verdes de proteção social e programas que possam fortalecer a transição dos carentes;
Direitos e capacitações locais: Garantir que a população carente tenha direitos e posse sobre os seus recursos naturais, apoiados por meios e incentivos para gerenciar de forma sustentável e gerar benefícios para si próprios;
Mercados verdes inclusivos: São necessários novos modelos de negócios para construir e expandir o acesso da comunidade carente aos mercados inclusivos e redes de fornecimento para os produtos e serviços verdes, junto com o acesso ao microcrédito e serviços de desenvolvimento de negócios para empresas de pequeno e médio porte;
Políticas e suporte a uma harmonização internacional: Os países com maior renda precisam fornecer ajuda coerente, comércio e outras políticas de suporte para possibilitar que os países de baixa renda possam ser bem-sucedidos na transição para a economia verde, e;
Novos parâmetros para medir progresso: Ir além da limitação do PIB, para um indicador mais abrangente de progresso socioeconômico, social, ambiental e de bem-estar humano: esta é uma questão-chave na mesa de discussão da Rio+20.

Nota as editores:

Construindo uma Economia Verde Inclusiva para Todos: Oportunidades e Desafios para Superarmos a Pobreza e Desigualdade será lançado às 13:00 no dia 14 de junho na Sala de Imprensa no Rio Centro.

O relatório completo está disponível no site www.povertyenvironment.net/pep

A publicação foi elaborada pela equipe do Bando de Desenvolvimento Asiático, AusAid Austrália, Ministério dos Assuntos Exteriores da Finlandia, Agência para Cooperação Internacional, Alemanha (GIZ da sigla em alemão), Instituto Internacional para o Meio ambiente e Desenvolvimento, a União Nacional para Conservação da natureza, a Organização para Cooperação e Desenvolvimento Econômico, Programa das Nações Unidas para o Desenvolvimento, Programa das Nações Unidas para o Meio Ambiente, Banco Mundial, Conselho Mundial de Negócios para o Desenvolvimento Sustentável e Instituto de Recursos Mundiais;

A publicação informativa do PNUMA sobre a economia verde e a redução da pobreza está disponível em: http://www.unep.org/greeneconomy/Portals/88/POVERTY_REDUCTIO...

Para maiores informações, por favor entre em contato:

Nick Nuttall, Porta-voz do PNUMA; Tel: +55 11 6593 8058 or +254 733 632755, e-mail: nick.nuttall@unep.org

Michael Oko, Diretor de Comunicações, Instituto de Recursos Mundiais, Tel + (202) 246-9269, e-mail: moko@wri.org

PRESS RELEASE: Rio+20: Opportunity to Fast Track Transition to Green Economy, Lift Millions Out of Poverty

James Anderson — Thu, 14 Jun 2012 10:23:35 -0400

New Report Presents Key Policies and Building Blocks to Unlock Prosperity, Reduce Poverty and Support Environmental Sustainability

Ver texto em Português

A transition to a green economy could lift millions of people out of poverty and transform the livelihoods of many of the 1.3 billion people earning just a US$1.25 a day around the world, but only when supported by strong policies and public- and private-sector investments.

These are the findings of a new report, Building an Inclusive Green Economy for All, launched today at the Rio+20 summit by the Poverty-Environment Partnership (PEP), a network of bilateral aid agencies, development banks, UN agencies and international NGOs. The report finds that many developing and least developed countries are already pursuing a transition towards low-carbon, resource efficient economies.

Scaling-up current examples of the green economy in action – particularly in developing countries - has the potential to deliver a ‘triple bottom line’ of job-creating economic growth, environmental sustainability and social inclusion, says the report.

But targeted investments and governance reforms are needed to overcome current barriers that are preventing many poor communities from fully benefiting from a green economy.

Read Building an Inclusive Green Economy for All

The new report finds that many Least Developed Countries, as well as many poor regions of middle income countries, are actually richly endowed with the natural resources that would allow them to build green economies that can sustainably reduce poverty.

“Many least developed and developing countries and communities are seizing the opportunity to bring economy and ecology together in order to generate transformational social outcomes,” said Achim Steiner, UN Under-Secretary General and Executive Director of the UN Environment Programme (UNEP), a PEP member, at the launch of the report in Rio de Janeiro.

“The challenge for world leaders meeting here at Rio+20 is to forge and to back the enabling policies, catalytic financing, and social protection packages in order to fast forward these ambitions and to take them to scale.”

The new report argues that large numbers of least developed countries and poor regions of middle income countries are actually richly endowed with the natural resources needed to underpin a green economy transition as a pathway towards realizing sustainable development.

“By embracing an inclusive green economy, leaders in Rio have a rare opportunity to improve the lives of millions of people and usher in a new era of sustainability,” said Manish Bapna, Acting President of the World Resources Institute, which co-ordinated the study.

“Shifting to an inclusive green economy will not happen on its own. It requires smart government policies and strong leadership. This report presents a bold vision for a green economy that can tackle poverty and inequality, and, importantly, it offers concrete and practical building blocks to make this transition.”

The report cites many strong examples of developing countries that are already successfully shifting to a green economy. For example:

Ethiopia is developing six wind energy projects and a geothermal project, which will increase the country’s capacity by over 1,000 megawatts.
Mongolia’s first 50 megawatt wind farm is currently under construction and is set to generate an estimated five per cent of the county’s electricity needs, while reducing air pollution linked with coal-fired generation. Mongolia has the potential to act as a “supergrid” in the region, supplying neighbouring countries with clean energy.
In Uganda, the promotion of organic agriculture is helping tens of thousands of farmers to earn up to 300 percent more from certified pineapple, ginger, vanilla and other exports. Globally, the market for organic food products has increased three-fold since 2000.

On the international level, the development of Reduced Emissions from Deforestation and Forest Degradation (REDD or REDD+) also offers potential for poverty eradication if accompanied by rigorous social safeguards especially for local and indigenous people. For example, in Indonesia, a US $1 billion REDD+ investment by Norway has led to a one year moratorium on logging in Kalimantan, has the potential to safeguard 45 per cent of the province’s forests, while providing new livelihood and income opportunities for local people.

Many low and middle-income countries are rich in resources for ecotourism; a sector that is projected to generate revenues of US $240 billion in 2012. Much of this growth is in developing countries as diverse as Botswana, Belize, Brazil, Costa Rica, Gabon, Kenya and Nepal.

Least developed countries with less developed infrastructure, particularly in urban areas, can benefit from an inclusive green economy with the right enabling policies and targeted international investments in areas from energy efficiency and clean technologies to modern public transportation systems.

Such efforts can also serve to boost the creation of decent, green jobs. In Lagos, Nigeria, public-private partnerships to improve the city’s infrastructure, reduce congestion and upgrade slums have helped create around 4,000 environment-related jobs among unemployed youth.

Regarding health, environmental risk factors are the cause of around one-fifth of the total disease burden in developing countries, and a large proportion of childhood deaths.

Many green economy investments have the potential to deliver significant benefits for human health. For example, supporting clean fuels and vehicles will lower greenhouse gas emissions, while also reducing respiratory diseases. Similarly, investing in cleaner energy for households in developing countries, such as through more efficient cookstoves, can reduce dependency on wood fuel and tackle deforestation, while limiting exposure to indoor air pollution.

The report underlines that the private sector, including large multinationals and small- and medium-sized enterprises, along with non-governmental organizations have a key enabling role too.

For example:

Unilever is working in West Africa with 10,500 small-scale farmers to promote allanblackia trees, which produce seeds rich in oil for use in spreads under the brand names Flora and Bercel
In Brazil, the cosmetics company Natura has forged partnerships with 26 communities to source new cosmetics, fragrances, and other products under a benefit sharing project that supports the principles of the UNEP-linked Convention on Biological Diversity
The Indian-based Jain Irrigation System makes drip and sprinkler irrigation systems while providing markets for farmers’ produce. Farmers in parts of India have seen net incomes rise by US $100 to $1,000 a hectare as a result of adopting such systems while also reducing water use and environmental impacts.

“There is strong evidence that a transition to a low-carbon, resource-efficient green economy could hugely benefit the poor while helping preserve vital ecosystem services,” said Johan Kuylenstierna, executive director of the Stockholm Environment Institute, a PEP member and co-author of the report.

“The challenge at Rio+20 is to make strong international commitments that will ensure the green economy can grow and flourish, with both public- and private-sector support. We also need to adopt policies to protect the vulnerable as their economies make this transition, and to ensure that the benefits of the green economy are fairly and equitably distributed.”

“In the Asia-Pacific region, the twin tracks of investing in sustainable inclusive infrastructure and the sustainable management of critical ecosystems to support future economic development can make a huge impact on the welfare of the poor – in both urban and rural settings,” said Bindu N. Lohani, Vice-President for Knowledge Management and Sustainable Development, Asian Development Bank.

“Regional institutions must galvanize efforts by governments to create the right enabling policies and channel financial resources into inclusive green growth - the kind of growth that benefits the developing countries and the poorer members of their populations.”

The report calls on delegates meeting for the Rio+20 Summit to consider “five critical building blocks” towards an inclusive green economy. These can maximize the benefits for the poor of a green economy, and foster a shared policy agenda between developing country governments, developed country partners and other stakeholders.

National Economic and Social Policies: Fiscal policies, tax regimes, and ‘green’ social protection policies and programmes can strengthen a pro-poor transition;
Local Rights and Capacities: Ensuring poor people have rights and tenure over their natural resources backed by the means and the incentives to sustainably manage and benefit from them;
Inclusive Green Markets: New business models are needed to build and expand the poor’s access to inclusive markets and supply chains for green products and services, together with access to micro-credit and business development services for small and medium-scale enterprises;
Harmonized International Policies and Support: Higher-income countries need to provide coherent aid, trade and other policies to enable low-income countries to succeed in a green economy transition; and
New Metrics for Measuring Progress: Going beyond the narrowness of GDP to a broader indicator of economic, social and environmental progress and human well-being: this is a key issue on the table at Rio+20.

Note to Editors:

Building An Inclusive Green Economy For All: Opportunities and Challenges for Overcoming Poverty and Inequality will be launched at 1pm on 14 June at the Press Centre at Rio Centro.

The full report is available on WRI’s site, or here: www.povertyenvironment.net/pep

A UNEP Briefing Paper on the green economy and poverty reduction is available at:

http://www.unep.org/greeneconomy/Portals/88/POVERTY_REDUCTION.pdf

The publication has been prepared by staff from Asian Development Bank, Australia (AusAid); Finland’s Ministry of Foreign Affairs; Germany’s GIZ; the International Institute for Environment and Development; the International Union for the Conservation of Nature; the Organization for Economic Cooperation and Development; the UN Development Programme; the UN Environment Programme; the World Bank; the World Business Council for Sustainable Development and the World Resources Institute.

UN Conference on Sustainable Development 2012 (Rio+20): http://www.uncsd2012.org/

For more information please contact:

Nick Nuttall, UNEP Spokesperson; Tel: +55 11 6593 8058 or +254 733 632755, E-mail: nick.nuttall@unep.org

Michael Oko, Media Director, World Resources Institute, Tel + (202) 246-9269; email: moko@wri.org

Listen: Author Paul Gilding Discusses "The Great Disruption" at WRI

Lauren Zelin — Mon, 02 May 2011 16:44:40 -0400

How the climate crisis will transform the global economy.

Last Friday, author Paul Gilding came to WRI to discuss his new book “The Great Disruption.” In it he argues that the coming global and economic crisis can pave the way for enormous positive change, at a scale comparable to the industrial revolution.

After the event, I sat down with Paul and asked him what the environmental community can do to respond to the coming economic upheaval, the good news about human resilience in the face of crisis, and what he means by the “end of shopping.”

Download (MP3, 1.9 Mb)

More information on “The Great Disruption”

Q&A: What is a "Green Economy?"

Manish Bapna — Tue, 05 Apr 2011 12:20:24 -0400

The global recession has brought new attention to chronic structural flaws in current economic models and assumptions. As economies struggle to recover, many are taking a closer look at the broad concept of a “Green Economy,” one that simultaneously promotes sustainability and economic growth What would this type of economy look like, and how could we get there? WRI Managing Director Manish Bapna responds to some of the most commonly-asked questions:

What is a Green Economy?

A Green Economy can be thought of as an alternative vision for growth and development; one that can generate growth and improvements in people’s lives in ways consistent with sustainable development. A Green Economy promotes a triple bottom line: sustaining and advancing economic, environmental and social well-being.

The prevailing economic growth model is focused on increasing GDP above all other goals. While this system has improved incomes and reduced poverty for hundreds of millions, it comes with significant and potentially irreversible social, environmental and economic costs. Poverty persists for as many as two and a half billion people, and the natural wealth of the planet is rapidly being drawn down. In a recent global assessment, approximately 60 percent of the world’s ecosystem services were found to be degraded or used unsustainably. The gap between the rich and poor is also increasing – between 1990 and 2005, income inequality (measured by the gap between the highest and lowest income earners) rose in more than two thirds of countries.

While the prevailing economic growth model focuses on increasing GDP above all other goals, a Green Economy promotes a triple bottom line: sustaining and advancing economic, environmental and social well-being. Photo credit: flickr/Yodel Anecdotal.

The persistence of poverty and degradation of the environment can be traced to a series of market and institutional failures that make the prevailing economic model far less effective than it otherwise would be in advancing sustainable development goals. These market and institutional failures are well known to economists, but little progress has been made to address them. For example, there are not sufficient mechanisms to ensure that polluters pay the full cost of their pollution. There are “missing markets” – meaning that markets do not systematically account for the inherent value of services provided by nature, like water filtration or coastal protection. A “market economy” alone cannot provide public goods, like efficient electricity grids, sanitation or public transportation. And economic policy is often shaped by those who wield power, with strong vested interests, and rarely captures the voice and perspectives of those most at risk.

A Green Economy attempts to remedy these problems through a variety of institutional reforms and regulatory, tax, and expenditure-based economic policies and tools.

What does a Green Economy look like?

The transition to a Green Economy has a long way to go, but several countries are demonstrating leadership by adopting national “green growth” or “low carbon” economic strategies. And there are many examples of successful, large-scale programs that increase growth or productivity and do so in a sustainable manner. For example:

The Republic of Korea has adopted a national strategy and a five-year plan for green growth for the period 2009–2013, allocating 2 per cent of its gross domestic product to investment in several green sectors such as renewable energy, energy efficiency, clean technology and water. The government has also launched the Global Green Growth Institute which aims to help countries (especially developing countries) develop green growth strategies.
In Mexico City, crippling congestion led to a major effort to promote Bus Rapid Transit (BRT), a sophisticated bus system that uses dedicated lanes on city streets. Significant public investment in the BRT has reduced commuting times and air pollution and improved access to public transit for those less able to afford private cars. This remarkable success is now being replicated in cities across Mexico and has led to investment from the federal government in urban public transit for the first time.
China now invests more than any other country in renewable energy. Its total installed wind capacity grew 64 percent in 2010. This growth is driven by a national policy that sees clean energy as a major market in the near future, and one in which China wants to gain a competitive edge.
Namibia is managing its natural resources to generate economic, social, and environmental benefits. Local communities across the country are granted the right to use and capitalize on the benefits of using wildlife and other natural resources within the boundaries of “communal conservancies.” With an economic incentive to sustainably manage these areas, food and employment is being provided for hundreds of thousands of Namibians in rural areas. More than half of the jobs are filled by women, and wildlife populations have increased.
Businesses are increasingly leading progress toward a Green Economy. For example, the carpet company Interface FLOR is improving its competitive positioning in this normally petroleum-intensive industry by focusing on how sustainability can enhance its business model. The company is working towards a closed loop system, meaning that its waste products are also its manufacturing inputs. Its company culture reinforces its goals – when employees know they are making a difference in the world, they tend to work harder and be better at their jobs, making the enterprise more productive. Interface’s CEO, Ray Anderson, has said “If we can do it, anyone can. And if anyone can, everyone can.”

More examples can be found in the recent United Nations Environment Programme’s report on the Green Economy.

How does Green Economy differ from previous efforts to promote sustainability – what is new?

In many ways, Green Economy objectives simply support those already articulated for the broader goal of sustainable development. But this new framing responds to two recent developments.

First, there is a deeper appreciation today by many governments, companies, civil society and the public that we are reaching planetary limits, not just in terms of greenhouse gas emissions but also in our use of water, land, forests and other natural resources. The environmental and social costs of our current economic model are becoming more and more apparent.

Past sustainability efforts have not focused sufficiently on fixing the failures of economic policies. But we now have a chance to tackle these challenging problems given the policy openings created by the response to the financial crisis.

Second, and perhaps even more important, the global recession has led to a reconsideration of key tenets of the current economic model – such as the primacy of growth and the belief in light-touch regulation. In openly questioning the strength of the status quo, many public- and private-sector leaders are seeking:

Policies and regulations that can identify and manage financial and other risks more effectively
New markets and industries that can create good, long-term jobs
Public support for innovation to position a country to compete in tomorrow’s markets

These developments point to the need for new sources of growth that are environmentally sustainable – for example, employment in high-growth sectors such as clean energy. Past sustainability efforts have not focused sufficiently on fixing the failures of economic policies such as pricing pollution. But we now have a chance to tackle these challenging problems given the policy openings created by the response to the financial crisis. A good example is Korea’s adoption of a national green growth strategy (described above).

Some see marrying sources of new growth with sustainability as the future. Why is China investing in wind? To win tomorrow’s markets, not necessarily to compete in today’s. As the late C. K. Prahalad – a visionary on corporate strategy ―was fond of saying, “we need to move from seeing sustainability as a cost or hindrance to realizing that it’s a key driver of innovation”.

What are some of the concerns and tensions with the concept of a Green Economy?

One question people ask is “can we afford this?” We’re still in the wake of the global financial crisis and many people perceive Green Economy solutions as expensive. The United States is asking itself whether it can afford to put a price on carbon today. Developing countries are concerned that transitioning to a Green Economy will hinder economic growth and the ability to reduce poverty.

Moreover, there will be short-term, nontrivial losses associated with changes in industry and market structure (e.g., a decline of the coal industry and related job losses.) Supporting those actors who will bear the brunt of the transition will be critical to building broad ownership for a Green Economy.

Some countries feel that they are lagging in green technology know-how and therefore will be at a competitive disadvantage in the race for future markets. Others feel that the Green Economy is a pretense for rich countries to erect “green” trade barriers on developing country exports. These are all legitimate concerns that deserve attention.

Ultimately, a hard-nosed economic analysis should inform decisions on what policies and investments to promote today. When the full costs and benefits over time are taken into account however, many Green Economy solutions will be seen as more attractive. Nevertheless, there will still be difficult choices and tradeoffs. For example, should India aggressively promote grid-connected, relatively expensive solar power when hundreds of millions in the country still have no access to electricity? And even where Green Economy solutions make economic sense, they may be politically challenging. The transition to a Green Economy will not be easy.

What are the challenges to a transition to a Green Economy, and what will make it possible?

The principal challenge is how we move towards an economic system that will benefit more people over the long run. Transitioning to a Green Economy will require a fundamental shift in thinking about growth and development, production of goods and services, and consumer habits. This transition will not happen solely because of better information on impacts, risks or good economic analysis; ultimately, it is about politics and changing the political economy of how big decisions are made.

The problem is vested interests. Those who benefit from the status quo are either overrepresented in or have greater access to institutions that manage natural resources and protect the environment. U.S. climate legislation, for example, was defeated in no small part by resistance from fossil-fuel based energy advocates.

The following steps would help create a more level policy-making playing field:

Increase public awareness and the case for change. Greater visibility on the need for this transition can motivate voters and consumers - not just because of the costs but also the economic benefits generated by a Green Economy, such as new jobs and new markets. People will not adopt policies because they are green. They will do so when they believe it is in their interest.
Promote new indicators that complement GDP. Planning agencies and finance ministries should adopt a more diverse and representative set of economic indicators that focus less exclusively on growth and track the pace and progress of development.
Open up government decision-making processes to the public and civil society. This would help ensure policies are accountable to the public and not to vested and well-connected interests.
Identify and take advantage of political leadership when available as this will be crucial in order to limit the undue influence of “dirty” economic holdouts.

Timing is everything when it comes to big policy reforms. Green Economy advocates will need to be ready when that window of opportunity presents itself.

Ultimately, the widespread transition to a Green Economy will depend on whether or not the long-term public interest is reflected in today’s economic policies.

MEDIA STATEMENT: WRI Response to President Obama's State of the Union Address

Michael Oko — Tue, 25 Jan 2011 21:54:01 -0500

President Obama delivered his annual State of the Union address setting new goals for America’s energy future.

Here are some of the targets he announced:

By 2035, 80 percent of America’s electricity should come from clean energy;
By 2015, America should have 1 million electric vehicles on the road; and
Within 25 years, 80% of Americans should have access to high-speed rail.

Following is statement by Jonathan Lash, President, World Resources Institute:

“President Obama made a renewed call for American leadership in clean energy that will create jobs while helping protect the environment. Obama’s declaration of a Sputnik moment is a reminder of the opportunity before us to shift to an energy future that can make America’s economy the most competitive and innovative in the world.

“Setting a new clean energy goal, the President made a strong commitment to America’s clean energy future. America should be setting the pace by investing in sustainable infrastructure, developing new technologies, and finding innovative solutions to meet the challenges of the 21st century.

“But more is needed to truly protect the planet– especially from the threats of climate change. After a year of record-breaking temperatures and a string of notable extreme weather events, the urgency of shifting to low-carbon energy and tackling climate change is as clear as ever. Yet there is a widening gap between what the science tells us is needed and action on the ground– and America needs to do more to reach its goal of reducing greenhouse gas emissions by 17 percent by 2020.

“We hope leaders across the country– from business executives to mayors to legislators– recognize the threats we face and will rise to achieve the goals the President has set.”

Q&A: World Bank Plan to Value Ecosystems

Janet Ranganathan — Mon, 01 Nov 2010 11:58:28 -0400

Last week at the UN Convention on Biodiversity, the World Bank launched a new program that aims to put a value on a country’s ecosystems in the same way a country measures its national income and product accounts, or GNP and GDP.

Note: This post was updated on November 4, 2010 to provide additional information.

In this Q&A, WRI’s Janet Ranganathan and John Talberth discuss why countries need to start measuring the value of nature and the benefits and challenges of setting up these so-called national ecosystem service accounts.

What are ecosystem services?

Ecosystem services are the benefits that nature provides to people. Food, freshwater, timber and cotton for clothes are some of the most familiar and visible services. But there are other types of unseen services that we often take for granted, for example the ability of forests to sequester carbon and mitigate climate change and the way in which wetlands filter and purify water.

What are national ecosystem service accounts and why are they needed?

More Information

Conventional measurements of national economic performance, such as Gross Domestic Product and Standard National Accounts, do a poor job of tracking stocks and flows of ecosystems and their services. A country can cut down its forests, drain its wetlands and pollute its water sources and none of this shows up in the national accounting system. There is therefore little incentive for better management of precious natural resources.

By giving these assets a value and including them in the national accounts, the hope is that what gets measured will get managed. Current macroeconomic decisions largely fail to account for natural assets, leading to decisions that degrade ecosystems.

Properly accounting for natural capital stocks and ecosystem service flows is one of the lynchpins of sustainable development. All economic activity depends on the quantity and quality of underlying capital. Capital takes four basic forms: built, social, human, and natural. By maintaining our capital stocks in good condition we insure that future generations will be at least as well off as we are today. Ecosystem service accounts help advance this goal with respect to natural capital.

These new accounts will also raise awareness about the value of a country’s natural assets and increase public support for decisions that are better for people and nature.

What is the connection between ecosystem services and economic development?

Economic development and ecosystem services are intertwined. We can’t really deal with one without dealing with the other. Unfortunately, the current mindset of society is to put economic development and nature in separate boxes, overseen by separate government agencies and separate academic disciplines. We think that protecting the environment is an impediment to development. We view it as a cost. Thinking about the environment in terms of ecosystem services can transform that mindset and help us see and value the environment as a series of assets or benefits that development in fact depends upon. By including ecosystems as assets alongside capital, labor and other commonly measured units in national accounts, governments will hopefully spur economic growth while sustaining or even growing natural assets.

A country can cut down its forests, drain its wetlands and pollute its water sources and none of this shows up in the national accounting system. There is therefore little incentive for better management of precious natural resources.

What are some of the challenges of creating national ecosystem service accounts?

Architects of green accounts must grapple with three measurement challenges: how to define standardized units, how to measure physical quantities and how to assign values. None of these tasks are easy. Unlike conventional accounts that track the value of goods sold (such as houses, cars, and food) many ecosystem services are not traded so the unit of measurement is not always obvious. Consider the ecosystem service of pollination. Should economists assume it is already captured in agriculture products sold or should they use a proxy, such as the number of pollinators or pollinations?

If the accounts are to be integrated into existing national income accounts, then double counting must be avoided. The chosen measurement units must also be quantifiable at the national level.

Fortunately, economists have at their disposal a wide range of peer reviewed methods for doing so. While the field of ecosystem service valuation is quite new and still evolving, it nevertheless has progressed to the point where it can be demonstrated at a larger scale as indicated by the UNEP recent report on The Economics of Ecosystems and Biodiversity. The pros and cons of various valuation approaches will need to be carefully weighed to avoid under or over valuing services and risking the credibility of the entire effort.

Will this solve the ecosystem degradation problem?

National ecosystem accounts are a good start. But putting a value on ecosystem services at the national level will not guarantee changes in the way ecosystems are managed in the myriad of sub-national decisions that determine their fate. For example, creating aquacultures versus conserving mangroves; building levies and dams versus sustaining wetlands; creating palm oil plantations in place of tropical rainforest. This will require stronger governance systems, policies that protect ecosystems, reforming subsidy programs, eliminating perverse incentives and the use of other incentives to sustain rather than degrade ecosystems.

A recent WRI report, Banking on Nature’s Assets guides policymakers on how to determine priority ecosystem services and then select the most effective policies for sustaining them depending on a country’s capacity and existing laws and policies.

Are any countries already doing this?

A number of efforts are underway to create national indicators of ecosystem health. The UK is conducting a National Ecosystem Assessment of the country’s natural environment in terms of the benefits it provides to society. The results of this could be integrated into national accounts. Emerging initiatives at the global, regional, and national scale are road testing ways to incorporate valuation of natural, built, human, and social capital into measures of national well being and economic sustainability that can be reported side by side with traditional measures such as GDP. Most of these initiatives address natural capital and ecosystem service flows. For example, the U.S. Genuine Progress Indicator includes costs of depleting old growth forests, wetlands, and farmlands in its sustainable economic welfare calculations. The European Commission, United Nations and others are exploring ways to define complementary indicators for GDP that address sustainable development.

What should the World Bank do in its own operations to take into account ecosystems?

In addition to helping countries account for the value of natural assets, the World Bank itself is well positioned to systematically integrate ecosystem risks and opportunities into its own operations. Banking on Nature’s Assets identifies entry points for mainstreaming ecosystem services into the World Bank’s core operations. These range from country assistance strategies and environmental analysis to sector work and development policy loans. The report also presents a range of tools and policy options that the Bank can use to help country partners sustain their precious capital. It concludes with recommendations for scaling up the use of an ecosystem service approach in the World Bank and other MDB’s operations. Eventually, valuation of ecosystem services should become a routine practice in formal benefit-cost analysis of all MDB policies, program, and projects.

U.S. Gulf Offshore Oil Production: Moving into Deeper Water Horizons

Susan Minnemeyer — Mon, 21 Jun 2010 13:25:54 -0400

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Overview

Source: U.S. Energy Information Administration

Offshore oil production in the U.S. portion of the Gulf of Mexico represents 30 percent of total U.S. oil production, with 35.6 million acres (an area the size of Maine) under active lease. As oil reserves in shallow water are declining, production is moving into ever-deeper water, incurring greater risk. The Deepwater Horizon disaster illustrates the safety, economic, and environmental risks inherent in this trend. Likewise, it illustrates why lawmakers need to enact policies that move the United States in the direction of cleaner, safer energy sources and caps harmful pollution that causes climate change.

Data Sources

Oil & gas platforms, pipelines, leases: US Department of the Interior Minerals Management Service
State boundaries, rivers, urban areas: ESRI Data & Maps collection

Copyright

This work is licensed under the Creative Commons Attribution License. Cite “World Resources Institute.”

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Maps From Other Organizations

This map is part of a continuing project to produce maps that shed light on significant environmental issues throughout the world.

Water Quality Trading

admin — Mon, 10 May 2010 15:35:47 -0400

Water Quality Today

Eutrophication, the over-enrichment of freshwater and coastal ecosystems with nutrients (nitrogen and phosphorus), is a rapidly growing environmental crisis. Worldwide, the number of coastal areas impacted by eutrophication stands at over 500. In coastal areas, occurrences of dead zones, which are caused by eutrophic conditions, have increased from 10 documented cases in 1960 to 405 in 2008. In addition, many of the world’s freshwater lakes, streams, and reservoirs suffer from eutrophication. Ecologically and economically valuable water bodies like Long Island Sound, the Chesapeake Bay, the Gulf of Mexico and Puget Sound are severely affected.

While nutrient pollution is a global problem, the causes vary. In developing countries, a lack of infrastructure means that most nutrients come from untreated or inadequately treated sewage and agricultural runoff. In developed countries with better waste management, nutrient pollution largely comes from agricultural runoff (chemical fertilizers and manure), urban stormwater runoff and other dispersed “non-point” sources, including significant contributions from atmospheric deposition.

Designing an effective response to nutrient pollution is a challenge. Some pollutant sources are regulated but others are not. Nutrient pollution can impact water bodies great distances from the discharges. Yet there are emerging best practices that can address the sources of pollution and protect water quality efficiently and cost-effectively.

Nutrient Trading and Reverse Auctions

Point source practices (such as upgrades to wastewater treatment plants and retrofits to stormwater systems) generally cost more than nonpoint source practices (like grass buffers along streambeds).

This cost differential creates an ideal environment for nutrient trading. Trading allows sources with higher pollution control costs to purchase pollution reductions from sources with lower costs. Those with higher costs can save money, while those with lower costs can earn new revenue.

In addition, moneys spent for nutrient reductions from nonpoint sources could be better distributed in order to achieve more pollution reduction per dollar spent. A reverse auction can accomplish this goal. Farmers in a reverse auction bid against each other for a limited amount of funding, and awards are given to the bidder who can reduce the greatest amount of pollution runoff for the lowest cost.

WRI’s Work on Water Quality Trading

The World Resources Institute (WRI) is a leading expert in using performance- and market-based mechanisms for watershed management. We research best practices and helps to implement programs in watersheds that could benefit from nutrient trading or reverse auctions. WRI contributes to the development of water quality trading and reverse auction programs by:

Performing financial analyses of nutrient trading: WRI forecasts potential revenue to farmers and cost savings to wastewater treatment plants and municipal stormwater programs under an interstate-interbasin nutrient trading program for the Chesapeake Bay watershed.
Designing nutrient pollution reduction programs: WRI works with local, state, and federal government, the private sector, and civil society to develop effective performance- and market-based mechanisms for addressing water quality.
Developing nutrient trading tools: WRI developed NutrientNet, an online credit estimation tool and marketplace, for nutrient credit buyers and sellers in existing and planned state trading programs.
Performing feasibility analyses of nutrient trading: WRI is currently assessing the feasibility of large-scale nutrient trading in the Mississippi River basin to reduce the Gulf of Mexico hypoxic zone.

Photo credit: flickr/ronzzo1

Measuring What Matters: GDP, Ecosystems and the Environment

John Talberth — Wed, 14 Apr 2010 10:39:44 -0400

GDP is no longer the gold standard for measuring a country’s progress.

On March 30th an historic gathering of thought leaders, non-governmental organizations, philanthropists and representatives from federal and international agencies met in New York City with an ambitious yet long-overdue goal: to replace GDP as the nation’s most common measure of economic progress.

The “Dethroning GDP” strategy session, hosted by Demos, WRI, and the Institute for Policy Studies, in partnership with the Rockefeller Brothers Fund, featured Nobel Laureate Joseph Stiglitz, WRI Founder Gus Speth, former WRI economist Robert Repetto, Gund Institute’s Robert Costanza and former Bureau of Labor Statistics Commissioner Katharine Abraham, and RealNetworks founder and chairman Rob Glaser.

The Shortcomings of GDP

As an overall barometer of progress, Gross Domestic Product (GDP) has long been criticized because it simply measures economic activity and not genuine improvements in the quality of our lives. As noted long ago by Robert Kennedy, “it measures everything, in short, except that which makes life worthwhile.” GDP lumps together costs with benefits, so that activities that enhance welfare (e.g., education expenditures) have equal weight as expenditures that represent the externalized costs of growth (e.g., oil spill remediation).

GDP also tells us nothing about sustainability. It fails to track the depletion or degradation of natural, human, built, and social capital on which all economic activity ultimately depends. It fails as well to capture the inherent unsustainability of economic activity financed by debt.

Finally, GDP fails to recognize the costs of inequality. It counts growth concentrated in the upper-most income brackets as “progress,” even if incomes and quality of life are falling for most.

Recent Efforts to Replace GDP

The movement to “green” or replace GDP has proceeded in fits and starts for decades. While dozens of new approaches have been developed such as the Genuine Progress Indicator, Green Savings, and Green GDP the traditional GDP-based framework of progress only became more ingrained in our economic thinking and policy structure in recent decades.

However, the political landscape has changed dramatically in the wake of the economic crisis and opportunities for fundamental changes in how we measure economic performance and social progress are now significantly more promising than they have ever been. Consider the following:

In February of 2008, French President Nicolas Sarkozy established the Commission on the Measurement of Economic Performance and Social Progress, led by Joseph Stiglitz. The Commission was charged with addressing the growing disconnect between people’s perceptions of their own day-to-day economic experiences and official economic performance pronouncements by statisticians and politicians. The Commission’s initial report specified the major flaws with GDP and outlined the contours of a better measure. The Commission is hard at work developing a single new indicator to replace GDP. The scope of the Commission’s work has now expanded, and will be housed under the auspices of the Organization for Economic Cooperation and Development (OECD).
In 2007, the European Parliament launched its Beyond GDP initiative, bringing together decision makers and policy experts throughout the world to develop a new set of “headline” indicators that can supplement GDP and gauge a nation’s overall sustainability. Eurostat, the EU’s statistical agency, is now developing a workplan to incorporate new indicators into economic performance evaluations and policy analysis.
Also in 2007, the OECD launched its “Measuring Progress of Societies” initiative to foster the development of sets of key economic, social and environmental indicators to monitor how the well-being of a society is evolving. It also seeks to encourage the use of indicator sets to inform and promote “evidence-based decision-making, where the effects of policy on these indicators are quantified over time rather than simply being discussed in purely qualitative terms.”
The newly enacted U.S. health care legislation establishes a Commission on Key National Indicators. The Commission is charged with partnering with the National Academies to establish, maintain, and disseminate indicators responsive to critical public issues including indicators that provide a more accurate portrayal of true economic welfare.
The Economics of Ecosystems and Biodiversity Initiative (TEEB) – a major UNEP study on the economics of biodiversity loss – is researching ways to integrate changes in ecosystem service stocks and flows into national accounts.
For the first time since the early 1990s, the Bureau of Economic Analysis (BEA) is set to consider ways to revamp the U.S. statistical architecture to include “[m]easures of sustainability of economic trends…”¹ This could provide a critical policy screen – policies designed to boost GDP must also be shown to be sustainable over time.
Throughout the country, U.S. states are considering new metrics to replace GDP’s state level equivalent – gross state product. The State of Maryland is leading the way. In February, Governor O’ Malley released a Genuine Progress Indicator and sanctioned its use in policy analysis at the state level. The State has expressed interest in coordinating a network of GPI practitioners throughout the United States.

A New Indicator: Valuing Natural Capital

There are two essential features of a macro economic indicator to replace GDP: (1) it should measure genuine economic welfare, not just economic activity, and (2) it should indicate the sustainability of that welfare over time. Proper valuation of natural capital and ecosystem services is essential to a rigorous metric. Economic activities that deplete natural capital, such as overfishing, are by definition unsustainable and therefore should not be credited in a measure of sustainable economic welfare since they limit the next generation’s prospects.

In addition, depleting natural capital degrades ecosystem services important to current welfare. For example, when we lose forests we also lose clean and regular water supplies. The externalized costs (e.g., expenditures on water filtration or groundwater pumping) now show up as positive contributions to GDP when in fact they represent the costs of poor land management. National accounts should be debited, not credited, to reflect these costs.

Replacing GDP with a measure of sustainable economic welfare is not an end to itself but rather a means for guiding policy. For the past 50 years, growth in GDP has been an overall policy objective pursued by governments at every level. Obsession with GDP growth has spurred policies to liquidate natural capital as quickly as possible. By correctly valuing changes in our stocks of natural capital and the ecosystem services that they provide will help advance a science of new metrics capable of inspiring more sustainable policy choices.

Language included in the FY 2011 U.S. Department of Commerce budget request for the BEA. ↩

Commission Proposes Plan to Battle Climate Change on the Ground

Paul Mackie — Thu, 14 May 2009 13:07:31 -0400

A path for financing smart economic development through strong institutions was announced today by a 14-person commission appointed to advise political leaders on climate change.

The Commission on Climate Change and Development reported on its progress today at the United Nations in New York and will also present its findings tomorrow at the Swedish Embassy in Washington D.C.

“The way that nations respond to the global recession can provide the basis for a path of sustainable development that eases the planet’s interlocked emergencies, where ecosystems are valued as much as other forms of capital,” said Gunilla Carlsson, chair of the commission and the Swedish Minister for International Development Cooperation.

The Commission is addressing climate change adaptation and its links with disaster risk reduction. Since its launch by the Swedish government in late 2007, the group has met with governments and citizens struggling with the effects of climate change in Cambodia, Mali, and Bolivia. It will issue policy recommendations on how to strengthen resilience of vulnerable communities and countries, establish appropriate institutional and financial architecture for adaptation, and mobilize new financial resources.

Developing countries are particularly exposed to the impacts of droughts, floods and wind storms as well as longer term changes in ecosystems. International negotiations have focused on reducing greenhouse gas concentrations in the atmosphere - with little success. Although all efforts must continue to reach agreement on implementing GHG limits, this work cannot blind governments to the need to begin to adapt to changing climate systems right now.

“Adaptation is more than ‘climate proofing,’” said Jonathan Lash, a member of the commission and president of the World Resources Institute. “It will require resources far beyond existing official development assistance, but it is a moral and strategic necessity.”

One of the many recommendations within the Commission’s Progress Report is that funding for adaptation must go far beyond current official development assistance and that all donors honor their commitments of 0.7 percent of gross domestic product. The recent Bangladesh Adaptation Strategy for responding to natural disasters sets an interesting example.

“People at risk need democratic and political institutions to listen to their needs and concerns,” Carlsson added. “In the age of climate change, the institutions of accountable and responsible government are more important than ever.”

The Commission determined that knowledge of local impacts is still largely in the form of hypotheses and scenarios. While greenhouse gas reductions are measurable, it is more difficult to determine the success of adaptation and requires much more cooperation between institutions in different fields. These institutions can no longer be reactionary, as was the case after the food and financial crises of 2008. Also, existing institutions must be made as effective as possible rather than adding to the already proliferating array of institutions.

The full findings are available in a report called Closing the Gaps: Exploring the Links Between Adaptation to Climate Change and Development.

The members of the Commission represent international and regional organizations as well as research, civil society and the private sector. Members participate in their personal capacities and include: Carlsson (Sweden); Angela Cropper (Trinidad and Tobago), deputy executive director for the United Nations Environment Programme (UNEP); Mohamed El-Ashry (Egypt), senior fellow, UN Foundation; Sun Honglie (China), professor and head of the China Climate Change Expert Committee at the Chinese Academy of Sciences; Nanna Hvidt (Denmark), director of the Danish Institute for International Studies; Ian Johnson (UK), chairman of IDEAcarbon; Lash (USA); Wangari Maathai (Kenya), professor and founder of the Green Belt Movement; Ivo Menzinger (Switzerland), Managing Director at Swiss Re; Sunita Narain (India), director of the Centre for Science and Environment; Youba Sokona (Mali), executive secretary of the Sahara and Sahel Observatory (OSS); Bernard Petit (France), deputy director-general, Directorate-General for Development, European Commission; Margareta Wahlström (Sweden); UN assistant secretary-general for Disaster Risk Reduction and the secretary general’s special representative.

"Green Stimulus" at the G20

Isabel Munilla — Thu, 02 Apr 2009 09:31:24 -0400

Global economic recovery plans are green—but not yet green enough.

Leaders of the world’s largest economies are meeting this week in London to take on the daunting task of getting the global economy back on track. By coincidence, international climate negotiators are also meeting this week in Bonn attempting the same for the global climate.

There is an essential link between economic recovery and addressing climate change, since both will require massive, well-crafted spending and investments. There is great urgency to both stave off further economic damage and reduce greenhouse gas emissions quickly. Therefore, the “stress test” for every government stimulus package should be whether it will reduce emissions and build communities’ resilience to climate impacts.

Fortunately, the majority of the G20 economic recovery packages announced to date include “green stimulus” measures. These include the United States, China, Japan, Germany and others. When you add them up, some 14 percent of stimulus packages are climate-friendly.

However, as Lord Stern suggests, this figure should be even higher. Stern suggests that 20% of the total stimulus should be “green,” with more spent in countries where more opportunities lie, and less in countries that have already made significant investments.

Stern argues that in order to get us on the right “green” track, the G20 must focus on seven strategic areas:

improve energy efficiency;
upgrade physical infrastructure;
support clean technology markets;
initiate flagship projects;
enhance international R&D;
incentivize investment; and
coordinate G20 efforts around these.

It is especially important that we “mainstream” green stimulus into the stimulus proposals being discussed for developing countries. However, scaling the “green” stimulus approach from the few to the many seems to have fallen by the wayside in the run-up to the G20 meetings. In March, U.S. Treasury Secretary Tim Geithner outlined the critical, central role the G20 needs to play, stating “the G20, working with international financial institutions, should mobilize resources that can be deployed quickly and in innovative ways to help emerging market economies and developing countries restore growth and begin recovery.” But despite U.S. leadership role in greening its own domestic stimulus package, Geithner’s remarks didn’t mention “green stimulus” as the proper approach for G20 recovery efforts. He also failed to set the stage for a discussion about ensuring that financial assistance to developing countries is green.

Infrastructure investments in developing countries must lay the groundwork for clean-energy growth and resilience to climate change impacts. Otherwise, countries risk “locking” themselves into a carbon-dependent economic pathway. This will make the transition to a low carbon economy all the more difficult, by increasing the level of future investment required and restricting competitiveness in new, low carbon markets.

The state of the global economy is disastrous, but the mandate for recovery is a chance for developed and developing countries to move towards a more sustainable economic trajectory. We may not get this chance again.

Todd Stern, Tony Blair among Political and Business Leaders to Address the Capitol

Wed, 25 Feb 2009 17:32:34 -0500

Senators convene top policy-makers, CEOs and economists to Capitol Hill for climate event March 3

Former UK Prime Minister Tony Blair will be among the high-level participants meeting with U.S. legislators and business leaders in the Capitol building on March 3 to discuss the challenges and opportunities for U.S. leadership on climate change, it was announced today. Secretary of State Hillary Clinton’s climate envoy, Todd Stern, will address an afternoon gathering of the event.

The symposium, U.S. Climate Action: A Global Economic Perspective, will foster discussion about how the economic opportunities of U.S. climate policy, such as new technologies and job growth, can be fully captured and how the costs can best be mitigated. Senators Jeff Bingaman (D-NM), John McCain (R-AZ), Olympia Snowe (R-ME) and Debbie Stabenow (D-MI) are cosponsors of this one-day bipartisan event.

Tony Blair will be joined by business leaders Jeff Immelt of GE, Jim Rogers of Duke Energy, Vinod Khosla of Khosla Ventures and John Chambers of Cisco to discuss how U.S. firms can capture opportunities in, and help to build, a low-carbon economy. Governors Jim Doyle of Wisconsin, Jennifer Granholm of Michigan, and Timothy M. Kaine of Virginia will also attend.

Policymakers from China and Europe will describe the lessons learned from their own climate policies. These include Zhou Dadi from the Chinese Energy Research Institute, Ed Milliband, Minister for Energy and Climate Change in the UK, and Minister Connie Hedegaard from Denmark, which will host the UN climate meetings in December in Copenhagen.

Lord Nicholas Stern, author of the highly influential 2006 report “The Economics of Climate Change: The Stern Review” and Nobel Prize-winning U.S. economist Professor Joe Stiglitz, will provide their perspectives on how principles for climate legislation can be developed alongside policies on the economy and energy security.

The event is being organized by three leading Washington think tanks, the Center for Global Development (CGD), the Peterson Institute for International Economics, and the World Resources Institute (WRI), together with the Grantham Research Institute on Climate Change and the Environment at London School of Economics and Political Science (LSE), which is chaired by Lord Stern.

The symposium will open with a high-level morning discussion (closed to the press) about how to advance U.S. climate policy in light of the global economic context and the upcoming climate change negotiations in December.

This conversation will be followed by a press conference to discuss the themes and key outcomes of the discussion. The symposium will continue in the afternoon (open to the press) with several presentations on key aspects of the climate change debate, including the costs of inaction, managing the costs of climate policy, pursuing the opportunities of a low-carbon economy, and reaching a global solution.

Tony Blair, former Prime Minister of the UK, said “The current economic woes provide us not with an excuse for inaction but a reason for acting. Let us stimulate economic growth by investing in alternative energy and energy efficiency; and let us invest now in these times of lower carbon price to prepare for the times when that price rises again. Let us put economic growth and combating climate change in alliance not opposition.”

Jim Rogers, CEO of Duke Energy added, “Decarbonizing our economy by 80 percent between now and 2050 would be historic. The sooner we pass climate change legislation, the better off for our economy and the world’s environment. We can go about it the wrong way and create a costly and very painful disruption to our economy. But if we go about it the right way, we can avoid unnecessary economic harm and dislocation.”

Stimulus Policies Can Serve Economic and Environmental Goals

Robert Heilmayr — Wed, 11 Feb 2009 16:31:10 -0500

A new Policy Brief provides policymakers with a timely framework for maximizing economic, energy and climate-policy objectives.

As they respond to the worst economic crisis the United States has faced in half a century, policymakers seek to direct government spending in ways that not only generate short-term growth and employment but also address long-term policy goals sidelined by the current crisis.

Chief among these are energy and environmental objectives, as evidenced by the considerable attention paid to “green” economic recovery by policymakers and the press.

The Policy Brief, co-authored by the World Resources Institute and the Peterson Institute for International Economics, assesses 11 “green” policy options under consideration by Congress for their economic and environmental impact against a backdrop of pending climate legislation.

Download a two-page fact sheet derived from the report here (PDF, 129 Kb).

Watch a CNN interview with Robert Heilmayr here:

Economic Benefits

The authors found:

Well-tailored green components of a recovery effort can create jobs and stimulate the economy while achieving significant energy cost savings for businesses, consumers, and the government.
Recovery policies currently under consideration have the potential to reduce demand for fossil fuels. The resulting drop in cost and consumption of energy has the potential to save Americans an average of $450 million per year for every $1 billion invested, serving as an “efficiency pay-go” for current fiscal spending.
By returning money to households through lower energy bills, green components of a recovery package combine the employment benefi ts of tax cuts with the construction and manufacturing jobs created through infrastructure investment. On average, green recovery programs create 30,000 jobs for every $1 billion in government spending.

The matrix below illustrates how the 11 policy options measure up in terms of speed of deployment and potential for job creation.

A Green Recovery Matrix. (Click image to enlarge.)

It also shows how more environmentally friendly policy options can produce added value compared with road investment – an example of traditional infrastructure spending. Road building is matched by several of our “green” options in terms of speed of deployment and job creation, but produces a negative effect on energy costs, energy security, and climate change abatement.

Environmental Benefits

While the primary goal of the recovery package is to encourage economic growth, a “green” recovery can lay the foundation for achieving climate change and energy goals. Nevertheless, even the most aggressive short-term “green” spending will have only a modest direct impact on carbon dioxide emissions.

The recovery package alone would fall far short of the billions of tons of reductions necessary to stabilize the climate – and on a price per ton basis, would be more costly than the comprehensive climate change policies under consideration by Congress.

It is nonetheless critically important that all recovery efforts be designed to complement, rather than replace climate change and energy policies down the road. In order to maximize the effectiveness of such future climate and energy programs, while reducing their costs, an economic recovery package should focus on:

Inefficient responses to price signals: Our report identifies several profitable or low-cost opportunities to reduce energy demand and carbon dioxide emissions from consumers that do not effectively respond to a price on carbon. For example, energy efficiency retrofits can reduce emissions from buildings that are not likely to be responsive to a future cap and trade’s price signal alone.
Technology hurdles: Uncertainty about the availability of critical low-carbon energy technology creates anxiety about the future cost of climate change policy. This is particularly true in the transport sector, where high barriers to technological change in transportation make weaning the country off foreign sources of energy expensive. Policies adopted today, such as next generation battery R&D can help accelerate technology development and cut the cost of reducing emissions and oil imports down the road.
Infrastructure bottlenecks: The deployment of low-carbon technology and the facilitation of less oil-dependent lifestyles also depend on enabling infrastructure. Whether via electricity transmission, carbon dioxide pipelines, or mass transit, the federal government will play a role in building and regulating the infrastructure that facilitates future energy and climate goals. Many of those investments can begin today.

Green Recovery Matrix

Payson Schwin — Tue, 10 Feb 2009 15:47:30 -0500

This chart assesses potential green-program impacts per $1 billion of U.S. government economic-recovery spending.