Tue, 22 Feb 2011


By Peter Mutai and Bedan Mengo
NAIROBI, Feb. 21 (Xinhua) -- The United Nations Environment Program (UNEP) report launched Monday here says spending about 2 percent of global GDP each year in green sectors would deliver long-term stability in the global economy.

The UNEP report shows that investing 2 percent of global GDP into 10 key sectors can kick-start a transition towards a low carbon, resource efficient green economy.

The sum, currently amounting to an average of around 1.3 trillion U.S. dollars a year and backed by forward-looking national and international policies, would grow the global economy at around the same rate if not higher than those forecast, under current economic models. "Governments have a central role in changing laws and policies, and in investing public money in public wealth to make the transition possible," said Pavan Sukhdev, the head of the UNEP Green Economy Initiative.

"Misallocation of capital is at the center of the world's current dilemmas and there are fast actions that can be taken starting literally today -- from phasing down and phasing out the over 600 billion U.S. dollars in global fossil fuel subsidizes to re-directing the more than 20 billion dollars subsidies perversely rewarding those involved in unsustainable fisheries," he said. The report named Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication also highlights enormous opportunities for decoupling waste generation from the GDP growth, including in recovery and recycling.

As such, it comprehensively challenges the myth of a trade off between environmental investments and economic growth and instead points to a current "gross misallocation of capital." According to Sukhdev, a green economy is not about stifling growth and prosperity, but is about reconnecting with what is real wealth; re-investing in rather than just mining natural capital; and favoring the many over the few.

"It is also about a global economy that recognizes the intergenerational responsibility of nations to hand over a healthy, functioning and productive planet to the young people of today and those yet to be born," Sukhdev said.

The report sees a green economy as not only relevant to more developed economies but as a key catalyst for growth and poverty eradication in developing ones too, where in some cases close to 90 percent of the GDP of the poor is linked to nature or natural capital such as forests and freshwater. Two percent of the combined GDP of Cambodia, Indonesia, the Philippines and Vietnam is currently lost as a result of water- borne diseases due to inadequate sanitation.

Policies that re-direct over a 10th of a percent of the global GDP per year can assist in not only addressing the sanitation challenge but conserve freshwater by reducing water demand by a fifth by 2050 compared to projected trends.

The report has modeled the outcomes of policies that redirect around 1.3 trillion dollars a year into green investments and across 10 key sectors, roughly equivalent to 2 percent of the global GDP.

To place this amount in perspective, it is less than one-tenth of the total annual investment in physical capital.

Currently, the world spends between 1 and 2 percent of the global GDP on a range of subsidies that often perpetuate unsustainable resources use in areas such as fossil fuels, agriculture, including pesticide subsidies, water and fisheries.

Many of these are contributing to environmental damage and inefficiencies in the global economy, and phasing them down or phasing them out would generate multiple benefits while freeing up resources to finance a green economy transition.

In addition to higher growth, an overall transition to a green economy would realize per capita incomes higher than under current economic models, while reducing the ecological footprint by nearly 50 percent in 2050, as compared to business as usual.

The green economy report acknowledges that in the short-term, job losses in some sectors, fisheries for example, are inevitable if they are to transition towards sustainability. Investment, in some cases funded from cuts in harmful subsidies, will be required to re-skill and re-train some sections of the global workforce to ensure a fair and socially acceptable transition. The report makes the case that over time the number of "new and decent jobs created" in sectors, ranging from renewable energies to more sustainable agriculture, will however offset those lost from the former "brown economy." For example, investing about one and a quarter percent of the global GDP each year in energy efficiency and renewable energies could cut global primary energy demand by 9 percent in 2020 and close to 40 percent by 2050, it says.

Employment levels in the energy sector would be one-fifth higher than under a business as usual scenario as renewable energies take close to 30 percent of the share of primary global energy demand by mid century.

Savings on capital and fuel costs in power generation would under a green economy scenario, be on average 760 billion dollars a year between 2010 and 2050.

"The world is again on the Road to Rio, but in a world very different to the one of the Rio Earth Summit of 1992," UN Under- Secretary General and UNEP Executive Director Achim Steiner said during the launch of the report in Nairobi.

"Rio 2012 comes against a backdrop of rapidly diminishing natural resources and accelerating environmental change, from the loss of coral reefs and forests to the rising scarcity of productive land; from the urgent need to feed and fuel economies and the likely impacts of unchecked climate change," he added.

Steiner said the green economy as documented and illustrated in UNEP's report offers a focused and pragmatic assessment of how countries, communities and corporations have begun to make a transition towards a more sustainable pattern of consumption and production. It is rooted in the sustainability principles agreed at Rio in 1992, while recognizing that the fundamental signals driving our economies must evolve in terms of public policy and market responses.

The report, compiled by the UNEP, in collaboration with economists and experts worldwide, takes meeting and sustaining the UN's Millennium Development Goals, ranging from halving the proportion of people in hunger to halving the proportion without access to safe drinking water, as one aim.

Bringing down emissions of greenhouse gases to the much safer levels of 450 parts per million by 2050 is another overarching target.

The findings were presented on Monday to environment ministers from over 100 countries at the opening of the UNEP Governing Council/Global Ministerial Environment Forum.

The report, part of a bigger macro-economic study published online, is aimed at accelerating sustainable development and forms part of the UNEP's contribution to the preparation of the Rio+20 conference scheduled in Brazil next year.

"We must move beyond the polarities of the past, such as development versus environment, state versus market, and North versus South," said Steiner.

"With 2.5 billion people living on less than 2 dollars a day and with more than 2 billion people being added to the global population by 2050, it is clear that we must continue to develop and grow our economies," he said.

"But this development cannot come at the expense of the very life support systems on land, in the oceans or in our atmosphere that sustain our economies, and thus, the lives of each and everyone of us."

The UNEP defines a green economy as "one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities."

A big part of that transition involves policies and investments that decouple growth from the current intensive consumption of materials and energy use. While there has been some decoupling over the past 30 years, the gains have been far too modest to put the planet on a sustainable path and conserve finite resources.