Enabling environment for green growth

Green growth will be possible, only if policy and market conditions are conducive and stakeholders are confident and equipped to make the changes required. Unfortunately, such conditions are not always applicable and the risk is that green growth is pursued through one or two projects that are not able to tap their potential to leverage system-wide financial, technological and behavioural change.
Making the policy environment more enabling for green growth will entail identifying the drivers of green growth and the actions or interventions necessary to harness them or overcome constraints. Tackling the constraints to the drivers of green growth can be more straightforward (if not easier) in many developing countries than some OECD (Organisation for Economic Co-operation and Development) countries, because the government is often the main investor and/or policy innovator.
Six economy-wide policy challenges need to be addressed in the context of developing a national green growth strategy, in each of which government can exercise leadership. Broadly speaking, they encompass the enabling conditions for economic growth, reinforced by enabling conditions for inclusiveness, and tempered by the enabling conditions for environmental protection.
MORE EFFECTIVE LEGISLATION AND ITS ENFORCEMENT, IN PART, AS A DRIVER OF GREEN INVESTMENT: Weak enforcement reduces long-term investor and market confidence and gives little incentive for most businesses to improve. As far as possible, the legislation base should be strengthened with the key elements of sustainable development law, such as free, prior and informed consent and freedom of information. Given the need for integrated approaches at the landscape level and in urbanisation patterns, legislation in support of multiple use, land use planning and urban land markets may be needed. It may also need loosening to avoid entrenchment of technologies and support innovation.
SHIFTING SCIENCE, RESEARCH, EDUCATIONAL AND TRAINING PRIORITIES TO SUPPORT THE TRANSITION TO A GREEN ECONOMY: New knowledge and skills will be needed for government decision makers, professionals and workers, down to local levels; the structural employment and institutional changes required may also warrant support for fair transitional costs of organisations and their employees.
RESOURCE AND LAND RIGHTS REGIMES THAT SAFEGUARD THE INTERESTS OF THOSE WITH INFORMAL RIGHTS: Too many regimes favour powerful actors who are able to claim rights and/or emphasis technical efficiency of resource allocation, and do not support inclusion and equity for those who have a special dependence on the resource in question, this is especially critical for ensuring assuring rights to water or traditional lands.
CREATING ENABLING CONDITIONS FOR PSYCHOLOGICAL AND BEHAVIOUR CHANGE. GREEN GROWTH FACES AN UNDERSTANDING GAP: It has not yet been widely discussed or fully considered at any level - from politicians to the public, from farmers to major businesses. Green growth will not take off through bureaucratic measures and investments alone- the current psychology of decision makers and lobbyists, producers and consumers, rich and poor alike have been shaped and entrenched by the current economic model. The government has an important role as do the civil society organisations with access to local knowledge and values in support of green growth.
FACILITATING BUSINESSES TO FULLY INTEGRATE SUSTAINABILITY AND EQUITY CONCERNS: Whether corporate, SME (small and medium enterprise) or social enterprise, businesses form the key part of the transition to green growth, through their capacity to innovate, introduce efficiencies and influence consumers and trading partners. Many companies are increasingly concerned to secure a social licence to operate and ensure stable supplies of materials. A small but powerful group of businesses are reasserting their social purpose, revising their approaches to advertising and through value chains, are encouraging a wider adoption of business models compatible with green growth. Yet, generally speaking, there is an information gap.
BUSINESS MODELS: Government and other stakeholders can facilitate new business models through provision of information and coordinating research to supply it where there are knowledge gaps.
REMOVING BARRIERS TO GREEN TRADE: Green growth can be promoted by removing the existing barriers to trade and dissemination and transfer of technologies. Openness to trade is a key factor for high technology adoption rates. However, a number of barriers impede trade and the diffusion of green technologies and innovation via trade into developing countries. The literature suggests that tariffs on renewable energy technologies and subsidies for fossil fuels limit technology transfer to a larger extent than patent protection.
There is also evidence that eliminating tariff and non-tariff barriers in the top 18 greenhouse gas (GHG)-emitting developing countries would see increase in imports by 63 per cent for energy-efficient lighting, 23 per cent for wind power generation, 14 per cent for solar power generation and 4.6 per cent for clean coal technology (World Bank, 2007). Thus, green growth is expected to be promoted by liberalising trade and by removing trade barriers.
A major impediment to trade liberalisation is the failure to conclude the WTO Doha Round. Disputes on the extent and scope of liberalisation are slowing progress in the negotiations on agricultural trade and preventing environmentally conscious trade liberalisation. As consequences, agricultural tariffs and subsidies in this sector remain high compared to those in manufacturing, undermining investment and the adoption of efficiency promoting technologies (OECD, 2011). A number of industrialised countries also have important bio-fuel trade barriers. Removing these subsidies and trade barriers would foster more efficient competition and help bring about green growth (OECD, 2012).
The efforts needed to boost global trade include not only the resolution of the current Doha Round negotiations, but also efforts increasingly directed towards regional trade agreements (RTAs). The number of RTAs signed by countries has significantly increased and there are now more than 200 RTAs worldwide. Environmental concerns are increasingly being incorporated into their negotiations. While some countries ask for an assessment of the environmental impact on regional trade liberalisation, others specify the need to enforce environmental laws and standards.
The evidence suggests that these RTAs promote environmental benefits including mutual support of trade and environment policies, strengthening the enforcement of environmental laws, raising the level of environmental standards, establishing or reinforcing environmental co-operation and enhancing public participation in environmental matters. In some cases, the negotiation for an RTA incorporating environmental dimensions has driven reform and accelerated internal environmental policy processes (e.g. the codification of scattered environmental legislation).
Liberalised trade in environmental goods and services can also have environmental benefits, such as reducing air and water pollution, improving energy and resource efficiency, or facilitating solid waste disposal. On the one hand, it opens export markets for producers of green products, and on the other it gives importers access to environmental products. The share of environmental goods and services in global exports is rising. This is true not only for developed countries, but also for developing countries. Some developing regions like East Asia or Latin America export almost as many environmentally safe goods as high income countries. This suggests a significant potential of developing countries' economic growth based on the export of environmentally-safe goods and services. In 2004 trade in such goods and services was estimated at USD 580 billion worldwide.
What are the constraints to increasing the green growth potential offered by trade in environmentally-safe goods and services? Tariff barriers to trade in such goods are already low in developed countries. Therefore, reducing tariffs on goods related to solar, wind, biomass and other renewable energy sources is unlikely to increase the demand much. Differences in technical standards are a constraint, however, especially in developing countries. Evidence for this has been found in some sectors with high GHG emissions.
Many local and national PES (payment for ecosystem services) programmes provide both global and local ecosystem services. PES schemes give cash and/or in-kind payments to farmers and other land managers as an incentive to conserve and enhance ecosystem services. Such programmes provide international investors with the opportunity to co-finance activities which enhance the environment. This concept is also one way to facilitate the trade in environmental services, which more and more developing countries are exploring today.
To sum up, there are many challenges ahead while market forces can offer the potential to provide efficient and effective means of maintaining and enhancing ecosystem services. The issue of scale must clearly be addressed when considering ecosystem services and beneficiaries at the global level. To overcome the challenge, it is critical to address both market demand and supply by (1) building and enhancing consumer motivation in developed countries to scale up demand, and (2) setting up the institutional and financial arrangements in developing countries to ensure supply is adequate.
The writer is Assistant Deputy
Secretary of BKMEA.  rajonbkmea@gmail.com