Editorial: Inclusive green growth

A NEW World Bank report disputes repeated claims by government officials that there is just not enough funds for clean growth and that environmental concern is always a barrier to economic growth.

In ‘Inclusive Green Growth: The Pathway to Sustainable Development’ it pointed out that the tendency of poor countries to ‘grow dirty and clean up later’ should be put to an end as this costs more in the long run. It further points out that there is not much collateral cost to ensuring inclusive green growth, just some political will and appropriate growth policies.

While indeed rapid growth is necessary to keep up with the fast growing needs of leapfrogging populations of developing countries like the Philippines, such growth will be unsustainable ‘unless it is both socially inclusive and green’.

The World Bank report defines green as ensuring that the earth’s natural assets are able to adequately provide the resources and environmental services on which humans depend.

There’s a big hurdle that everyone has to face and jump over, however, and that is the mindset of the people, of government, and of those who spur growth.

“Inclusive green growth requires tackling political economy constraints, overcoming deeply entrenched behaviors and social norms, and developing innovative financing instruments to change incentives and promote innovation and thus address the market, policy, and institutional failures that lead to the overuse of natural assets,” the synthesis of the report reads.

The key is the next five to ten years vision of each government and people because continuing as they are in another decade will lock their paths to unsustainable growth and irreversible environmental damage, the report warned. But governments and economists may not be looking at what they should be keeping their eyes on as past mindsets dictate growth indicator is the gross domestic product or GDP. Conventional growth measures are no longer enough to ensure sustainability.

“National accounting indicators like GDP only measure short-term economic growth, whereas indicators like comprehensive wealth, including natural capital, help us determine if growth is sustainable in the long run,” it said.

Having said this, the report recommends a three-pronged approach to an inclusive green growth. These are:

Prong 1: Tailor national inclusive green growth strategies to a country’s circumstances, with an emphasis on maximizing local and immediate benefits and avoiding lock-in. Optimal solutions will differ across countries with varying degrees of institutional capacity, transparency, accountability, and civil society capacity.

Prong 2: Promote efficient and sustainable decision-making by policymakers, consumers, and the private sector. The use of pollution charges and other market-based instruments are important because they help incentivize efficiency and spur innovation. An array of complementary approaches will be needed to nudge individuals toward better behaviors and to unleash the power of the private sector. Critically, while we are still far from accurate pricing for ecosystem services, they are clearly valuable. Natural assets should be systematically incorporated into national accounts. The UN Statistical Commission adopted the System of Environmental and Economic Accounting as an international standard in February 2012, providing a broadly agreed methodology. Neglecting natural capital, like neglecting human and physical capital, is bad economics and bad for growth.

Prong 3: Meet up-front capital needs with innovative financing tools. Given the scarcity of fiscal resources, governments and multilateral financial institutions must work urgently to increase the role of the private sector in green investment. Private-public partnerships are crucial, as is increasing access to financing for small and medium enterprises.

We can just wonder what government can say about this given their continued push for the mining industry and the lease of valuable agricultural lands for foreign corporate plantations.