OECD Green Growth Studies O E C Putting Green Growth at the Heart of Development D G r e e Contents n OECD Green Growth Studies G r Chapter 1. Understanding the development dimension of green growth o w Chapter 2. Why is green growth vital for developing countries? t h Putting Green Growth Chapter 3. An agenda for action on national green growth policy S t u Chapter 4. International co‑operation on green growth d ie at the Heart of Development Chapter 5. Measuring progress towards green growth s Chapter 6. Gearing up for green growth across the developing world P u t t in g G r e e n G r o w t h a t t h e H e a r t o f D e v e lo p m Consult this publication on line at http://dx.doi.org/10.1787/9789264181144-en. e n This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. t Visit www.oecd-ilibrary.org for more information. ISBN 978-92-64-18112-0 -:HSTCQE=V]VVWU: 43 2012 17 1 P OECD Green Growth Studies Putting Green Growth at the Heart of Development This work is published on the responsibility of the Secretary-General of the OECD.The opinionsexpressedandargumentsemployedhereindonotnecessarilyreflecttheofficial viewsoftheOrganisationorofthegovernmentsofitsmembercountries. This document and any map included herein are without prejudice to the status of or sovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersandboundaries andtothenameofanyterritory,cityorarea. Pleasecitethispublicationas: OECD(2013),PuttingGreenGrowthattheHeartofDevelopment,OECDGreenGrowthStudies,OECD Publishing. http://dx.doi.org/10.1787/9789264181144-en ISBN978-92-64-18112-0(print) ISBN978-92-64-18114-4(PDF) Series:OECDGreenGrowthStudies ISSN2222-9515(print) ISSN2222-9523(online) CoverdesignbyadvitamfortheOECD. CorrigendatoOECDpublicationsmaybefoundonlineat:www.oecd.org/publishing/corrigenda. ©OECD2013 Youcancopy,downloadorprintOECDcontentforyourownuse,andyoucanincludeexcerptsfromOECDpublications,databasesand multimediaproductsinyourowndocuments,presentations,blogs,websitesandteachingmaterials,providedthatsuitable acknowledgmentofthesourceandcopyrightownerisgiven.Allrequestsforpublicorcommercialuseandtranslationrightsshouldbe submittedtorights@oecd.org.Requestsforpermissiontophotocopyportionsofthismaterialforpublicorcommercialuseshallbe addresseddirectlytotheCopyrightClearanceCenter(CCC)[email protected]çaisd'exploitationdudroitdecopie (CFC)[email protected]. FOREWORD – 3 Foreword Seven billion people inhabit the world today. By 2050, this number will rise to 9 billion, bringing with it growing demands for food, water and energy. In our increasingly resource- constrained world, the resilience of social and environmental systems is being tested, despite growing economic wealth. Only by putting in place policies that provide for sustainable and inclusive growth can we address these challenges. Putting Green Growth at the Heart of Development addresses the question: what type of growth can generate both wealth and well-being for all citizens of current and future generations, while at the same respecting the environment? The report proposes a twin-track approach to guide national and international action to support green growth in developing countries. It builds on a growing number of successful practices from across the world and highlights lessons learned. The examples and cases described in the publication present a clear and hopeful message: the pursuit of green growth by developing countries is vital for their future and can lead to large economic and social benefits over time, including for the poorest citizens. For example, the study concludes that as many as 25 to 50 million low-income households in developing countries could benefit from sustainable management of natural forests. Green taxes – largely untapped in developing countries – could also sustain the use of natural resources as well as economic growth, while creating revenues for government budgets that can be used to fund other development priorities. Reforms of fossil fuel subsidies could encourage efficient energy use and level the playing field for clean energy, while freeing up large amounts of public funding for other public policy priorities, such as education and health care. In another example, the report points out that rapidly growing demand for organic agriculture offers developing countries both domestic and export market opportunities. The challenge is to waste no time in embarking on this transformative journey. An urgent goal will be to manage the difficult trade-offs between short-term demands and longer-term impact, and the need to make choices that will deliver a more stable and sustainable future while also securing immediate gains. At the national level, the report identifies as key elements of a good green growth strategy the existence of strong leadership, the establishment of platforms for strong public and private stakeholder engagement, and the integration of green growth into specific policy packages. At the international level, co-operation can provide essential support to developing countries in managing their transition to green growth, through targeted development finance, strengthened international trade in green goods and services, and technological support to boost the pace of green innovation and tailor it to local needs. Integrating economic and environmental policies is easy to speak of, but harder to put in place. Instilling change takes real leadership, a shared vision for the future, and a solid commitment over time to cooperate across ministries and levels of government on this PUTTING GREEN GROWTH AT THE HEART OF DEVELOPMENT – © OECD 2013 4 – FOREWORD agenda. The international community must work hand-in-hand with developing countries to foster green growth. This report demonstrates the benefits of making this a priority to ensure better policies for better lives. Angel Gurría OECD Secretary-General PUTTING GREEN GROWTH AT THE HEART OF DEVELOPMENT – © OECD 2013 ACKNOWLEDGEMENTS – 5 Acknowledgements Putting Green Growth at the Heart of Development was prepared by the OECD Development Co-operation Directorate. The drafting and final editing was led by Jan Corfee-Morlot, Shannon Siyao Wang and Alexis Robert under the supervision of Serge Tomasi and Brenda Killen. The book builds on the consultation draft report (June 2012), which was led by Earnan O’Cleirigh, Shannon Siyao Wang and William Hynes. The content of the book co-produced with inputs from many staff and drawing on in-depth analytical work from 10 different OECD Directorates. Special thanks go to OECD colleagues, namely: Nick Kingsmill, Paul Van Den Noord, Farah Huq, Kiichiro Fukasaku, Annabelle Mourougane and Paul Schreyer, who provided substantive contributions to individual chapters, and Sáni Zou, who provided research assistance. Also thanks to Geraldine Ang, Dimitris Diakosavvas, Dorothee Georg, Nick Johnstone, Virginie Marchal, Dirk Pilat and Ron Steenblik, who provided substantive contributions to various sub- sections of different chapters, and Rob Dellink, Cuauhtemoc Rebolledo-Gómez, Valérie Gaveau and Cécilia Piemonte who provided relevant data. Comments and review by other OECD colleagues are also much appreciated and acknowledged, including Simon Upton, Helen Mountford, Alexandra Trzeciak-Duval, Nathalie Girouard, Anthony Cox, Myriam Linster, Michael Mullan, Nicolina Lamhauge, Eva Hübner, Nils-Axel Braathen, Nelly Petkova, Angela Bularga, Kathleen Dominique, Katia Karousakis, Guillaume Gruère, Dale Andrew, Jehan Sauvage, Karim Dahou, Cristina Tebar Less, Tomasz Kozluk, Carina Lindberg, Elodie Beth, Despina Pachnou, Joanne Caddy and Cristina Martinez. Contributions from outside experts are also gratefully acknowledged, in particular Steve Bass, Emily Benson and Maryanne Grieg-Gran from the International Institute for Environment and Development (IIED) provided an initial background paper for Chapter 3. Comments are also gratefully acknowledged from external experts: Kees Van Der Ree, Moustapha Kamal Gueye and Marek Harsdorff of the International Labour Organisation (ILO) and Richard Samans, Myung Kyoon Lee and Michael Sullivan of the Global Green Growth Institute. The book benefited from the comments of the members of the OECD Development Assistance Committee (DAC), the DAC Environment and Development Co-operation Network (ENVIRONET) and the Business and Industry Advisory Committee to the OECD (BIAC). Representatives from non-OECD countries also provided comments and inputs through several consultative processes, including a joint consultation organised with the Global Green Growth Institute (GGGI) in May 2012 in Seoul, technical and ministerial level consultations organised at the Rio+20 Conference in June 2012, and a joint workshop organised with the African Development Bank and the Government of Zambia in January 2013 in Lusaka, Zambia. Two in-depth country case studies looking at the specificities of green growth is being approached in national contexts were also developed in collaboration with the Governments of Cambodia and Ethiopia and serve as background materials for the book. PUTTING GREEN GROWTH AT THE HEART OF DEVELOPMENT – © OECD 2013 6 – ACKNOWLEDGEMENTS Fiona Hinchcliffe, Christine Graves, Marie-Claire Tuzeneu and Paul Gallagher provided editorial support, the graphics were produced by Stephanie Coic, and Peter Vogelpoel typeset the publication. Maria Consolati provided invaluable secretariat assistance throughout the production process. PUTTING GREEN GROWTH AT THE HEART OF DEVELOPMENT – © OECD 2013 TABLE OF CONTENTS – 7 Table of contents Acronyms and abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Chapter 1. Understanding the development dimension of green growth . . . . . . . . . . . . . . . . . . . . . . 17 1.1. Green growth can contribute to sustainable development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 1.2. The OECD approach to green growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 1.3. The case for a green development model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 1.4. Understanding developing country concerns about green growth . . . . . . . . . . . . . . . . . . . . . . . . .25 1.5. Political challenges, trade-offs and short-term transitional costs of going “green” . . . . . . . . . . . .26 Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Chapter 2. Why is green growth vital for developing countries? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 2.1. What does growth look like in developing countries today? . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 2.2. Current growth patterns in developing countries threaten long-term growth and well-being. . . .37 2.3. What potential benefits might green growth provide to developing countries?. . . . . . . . . . . . . . .43 Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 Annex 2.A1. O ECD list of recipients of official development assistance . . . . . . . . . . . . . . . . . . . . . . .56 Chapter 3. An agenda for action on national green growth policy . . . . . . . . . . . . . . . . . . . . . . . . . . .57 3.1. Establishing leadership, setting the vision and planning for green growth . . . . . . . . . . . . . . . . . .59 3.2. Designing, reforming and implementing policies that stimulate green growth. . . . . . . . . . . . . . .66 3.3. Cross-cutting policies to grow green. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82 3.4. Governing, developing capacity and resources, and learning. . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 Chapter 4. International co‑operation on green growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 4.1. International co-operation on green growth: An agenda for action . . . . . . . . . . . . . . . . . . . . . . . 116 4.2. Pillar 1: Strengthening green finance and investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 4.3. Pillar 2: Promoting green technology innovation through co-operation . . . . . . . . . . . . . . . . . . . 132 4.4. Pillar 3: Facilitating trade in green goods and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .136 4.5. Factors for success in international co-operation on green growth . . . . . . . . . . . . . . . . . . . . . . .140 Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .150 Chapter 5. M easuring progress towards green growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 5.1. Measuring progress towards green growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 5.2. Implementing green growth measurement in developing countries. . . . . . . . . . . . . . . . . . . . . . . 161 5.3. Developing country experience with green growth indicators. . . . . . . . . . . . . . . . . . . . . . . . . . . 169 5.4. Building capacity to measure and monitor green growth in developing countries . . . . . . . . . . . 170 Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 Annex 5.A1. Green growth indicators and themes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 PUTTING GREEN GROWTH AT THE HEART OF DEVELOPMENT – © OECD 2013 8 – TABLE OF CONTENTS Chapter 6. Gearing up for green growth across the developing world. . . . . . . . . . . . . . . . . . . . . . . 181 6.1. Getting green growth to work for developing countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 6.2. The time to scale up is now. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .184 6.3. Moving forward together, with confidence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 Annex A. Index of developing country examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Figures Figure 2.1 Real gross domestic product (GDP) growth, 2010-50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 Figure 2.2 Developing countries by income and main types of exports. . . . . . . . . . . . . . . . . . . . . . . .36 Figure 2.3 Developing country growth rates, 2000-10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 Figure 2.4 Global premature deaths from selected environmental risks in 2010, 2030 and 2050. . . . .38 Figure 2.5 Premature deaths worldwide from exposure to particulate matter in 2000 and 2050. . . . .38 Figure 2.6 Population lacking access to improved water supply in 1990, 2010, 2030 and 2050. . . . . .39 Figure 2.7 Population lacking access to improved sanitation facilities in 1990, 2010, 2030 and 2050 39 Figure 2.8 Projected global water demand in 2000 and 2050 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 Figure 2.9 Trends in greenhouse gas emissions, 2010-50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 Figure 3.1 An agenda for national action on green growth in developing countries. . . . . . . . . . . . . . .58 Figure 3.2 Share of fossil-fuel subsidies received by the lowest 20% income group, 2010. . . . . . . . . .68 Figure 4.1 An agenda for international co-operation on green growth in developing countries . . . . 116 Figure 4.2 Trends in environment aid (including climate-related aid), 2006-11. . . . . . . . . . . . . . . . . 118 Figure 4.3 Trends in aid for climate change mitigation, 2006-11 . . . . . . . . . . . . . . . . . . . . . . . . . . . .120 Figure 4.4 Total climate-related aid, 2010 and 2011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120 Figure 5.1 A measurement framework for green growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 Figure 5.2 Proposed headline indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160 Figure 5.3 Comparing the carbon footprints of OECD and emerging economies, 2005 . . . . . . . . . . 163 Figure 5.4 Overall disease burden attributable to poor water, sanitation and hygiene, 2004 . . . . . . . 167 Figure 5.5 Access to improved sanitation facilities, 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 Tables Table 2.1 Goods and services derived from natural resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Table 2.A1.1 The OECD Development Assistance Committee list of recipients of Official Development Assistance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Table 3.1 Large-scale PES schemes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73 Table 4.1 Innovative financial mechanisms for increasing investment in the water sector. . . . . . . .125 Table 5.A1.1 OECD Green growth indicators and themes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 Table A.1 Index of developing country examples in Putting Green Growth at the Heart of Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Boxes Box 1.1 OECD engagement with developing countries on green growth. . . . . . . . . . . . . . . . . . . . .19 Box 1.2 The development of the OECD Green Growth Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Box 1.3 Capturing the full value of natural assets for sustainable management. . . . . . . . . . . . . . . .22 Box 1.4 Some elements of a green growth path to development. . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Box 1.5 GDP and beyond: better ways to measure better lives. . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Box 2.1 Understanding natural assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 Box 2.2 The cost of environmental inaction – two country examples . . . . . . . . . . . . . . . . . . . . . . .37 Box 2.3 Green growth through forest, fish and water resource management: What developing countries are already doing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44 PUTTING GREEN GROWTH AT THE HEART OF DEVELOPMENT – © OECD 2013