Green growth strategy
We have lost reverence for nature. Photo: Amirul Rajiv
Several economists have been arguing for sustainable economic development which takes care of the natural resources and can ensure intergenerational equity since the 1960s, though it was not until the 1970s that an international environmental policy was thought of at the policy level.
In 1972, a milestone was reached with the Stockholm Conference on the Human Environment, which resulted in the establishment of the United Nations Environment Programme (Unep). During the 1980s two ground breaking reports, "Our Common Future" (1987) and "The Global Possible" (1985), highlighted issues such as poverty, natural resource degradation and the need to build on common interest of sustaining the world. Thus the environmental issue reappeared in the development discourse.
Throughout the 1990s several reports, including the major ones produced by the Intergovernmental Panel on Climate Change (IPCC), have been warning about the probable negative impacts of climate change. Economists also estimated the cost and benefit of climate change.
The famous Stern Review (2006) on the economics of climate change led by the British economist Nicholas Stern concluded that 1% of global gross domestic product (GDP) per annum is required to be invested in order to avoid the worst effects of climate change, and that failure to do so could risk global GDP being up to 20% lower than it otherwise might be.
By ignoring such caution countries, particularly the developed and developing ones, followed a development path which is based on the philosophy of accelerating growth by way of burning fossil fuels and emitting carbon. And now, with the resurfacing of food, fuel and financial crisis, the need for changing the pattern of growth is being increasingly recognised across the world.
The sources of economic growth are placing unsustainable pressure on the natural resources base, which in turn is creating long-term burdens on the economy and society. This pattern of economic development is not sustainable as it builds on extraction of natural resources and use of carbon intensive production and consumption system to produce goods and services for the economy.
The renewed effort in these countries to preserve and improve environmental quality in the backdrop of financial crisis has given rise to the adoption of ideology of so-called "Green Growth." This growth is achieving economic growth and development without environmental degradation, biodiversity loss, and unsustainable natural use. The pattern of green growth relies on investment in the environment as a major driver of economic development as opposed to the presently followed growth pattern.
The recent financial crisis has created opportunities for countries to replace standard capital with cleaner alternatives, for example, stimulus packages to create industries, jobs and skills restructuring. Stimulus packages have been used to make investment in green infrastructure such as public transport, energy efficient public buildings, renewable energy, smart grids, water and sanitation, pollution control, green technology investment and green R&D.
China's stimulus package comprises 40% of its $568 billion stimulus package. This is the highest green stimulus programme in any country of the world. Korea has invested KRW 50 trillion to create about one million jobs in environmentally friendly fields over the next four years. The country has been implementing a Green New Deal policy since January 2009 as part of its economic recovery package. Japan plans to double its employment to 2.8 million by 2020 in the environmental industries.
In Europe, France has allocated 21% of its total stimulus package of $33 billion for undertaking green measures. Over a period of three years (2009-11) it aims to create 80,000 to 110,000 jobs. Australia, Belgium, Canada, Czech Republic, Denmark, EC, Estonia, Finland, Germany, Israel, Italy, Mexico, the Netherlands, Norway, Poland, Portugal, Russia, Slovenia, Spain, Spain, Sweden, Switzerland, UK and USA, among others, have followed suit.
Fiscal measures such as tax incentives to firms and households to make green investments in energy efficient appliances are also being provided in several countries. Collection of green taxes by way of putting a price on pollution has been practiced in several countries. In order to attract the private sector for green investment Germany is going to introduce a new carbon dioxide component in automobile taxation, Denmark is going for a comprehensive tax reform which will reduce taxes on wages and increase taxes on pollution and energy consumption while in the UK public finances will be supported by increases in fuel duty and landfill tax.
However, one of the most harmful as well as debated issue is the subsidy on fossil fuels. It has been estimated that the removal of fossil fuel subsidies in emerging and developing countries will not only reduce global Greenhouse Gas (GHG) emission by 10% by 2050 but also increase the efficiency of these economies.
Ironically, while the above mentioned countries have taken measures towards green growth, some of their initiatives also have counter-productive environmental impacts. Some of these include finance and support to automobile industry, reduced charges for gas use for low income households, temporary suspension of highway toll increase, freezing fuel prices, reducing LP gas prices by 10%, reducing commercial and industrial electricity tariffs by up to 20%, credit lines to support exports from the automobile industry, fashion industries and cork industry, and support to the agriculture sector.
Though poor countries are minor contributors to global carbon emission and climate change it is now well established that low lying poor countries, such as Bangladesh, will be the worst victims of climate change. Given the massive and widespread nature of the impact there should be parallel initiatives domestically, mostly in terms of strategising, planning and designing efforts to combat the negative impact of climate change and also in allocating resources for the cause.
In line with a gradual shift towards green growth through investment in the environment as a driver for economic recovery and sustainable growth, job creation and poverty reduction, Bangladesh may also think of adopting a green economy path in order to reduce the burden of future environmental cost. There can be a number of areas for intervention to adopt a green growth policy in the context of Bangladesh.
A few sectors for investment may be green infrastructure such as energy efficient buildings; green energy generation, such as solar energy; energy saving measures for housing; water management, water desalination, treatment of wastewater, solid waste infrastructure to support, clean water; secure alternative water sources, such as rain water; coastal area development and management; reforestation; environment related R&D; public transport, railways, foot and bike paths.
Fiscal measures may include tax incentives for investments on energy efficient building; support for energy efficient bulbs; fiscal benefits for installation of solar panels in private buildings; low interest rate for loans to support low carbon technologies; tax rebate for environmentally friendly cars; measures to increase energy efficiency in industry and agriculture; allocation for protected areas and cultural heritage; support for environmental research and development.
In addition to the market and price-based policies to achieve environment friendly growth through addressing the environmental issues, institutional measures are also of crucial importance. The strategy of green growth requires not only resources for adapting to or mitigating the impact of climate change but also to sustain the effort of following the path through increased investment, appropriate fiscal measures and favourable policy support for a long-term development.
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