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Green economy
It is widely accepted that only collective economic adjustment on a global scale can avert the dangerous consequences of environmental degradation and climate change (Stern 2006). The concepts and discourses of the green economy represent a radical transition for more efficient, environmentally friendly and resource-saving technologies to reduce emissions and mitigate the effects of climate change (Jänicke 2012), and tackle resource depletion and serious environmental degradation. Its discourses have strategic merit in reframing a negative debate around constraints into a positive one about opportunities (Bowen and Fankhauser 2011). The green economy concept also has the potential to ensure that, when national, regional and international implementation plans are designed, the Sustainable Development Goals (SDGs) and the post-2015 development agenda can overcome inherent conflicts between the goals.
The green economy concept has gained popularity in international, regional and national policy circles: initially as a response to the financial crisis (Bina and La Camera 2011), but also a motor for growth and development. It is an operational policy agenda to achieve measurable progress at the environment–economy nexus (Schmalensee 2012), as a ‘pillar’ of sustainable development implementation to lead the transition to low carbon, green economies. As of today, green economy concepts and frameworks have influenced discourses and policy in many countries. These include the UK, France and China with a greater focus on growth (Bailey and Caprotti 2014), a number of countries in Africa (such as Rwanda, Morocco, Ethiopia, Senegal and South Africa) with emphasis on its ability to deliver transformations that ‘leapfrog’ current high-pollution development paradigms (United Nations Environment Programme 2015, hereafter UNEP), and perhaps with a greater link to socioeconomic challenges and resilience in the Asia-Pacific region (United Nations Economic and Social Commission for Asia and the Pacific et al. 2012, hereafter UNESCAP). Green economy discourses are also gaining traction in various sub-national jurisdictions, such as the state of Mato Grosso, Brazil (UNEP 2016). In its scale, the green economy is becoming a significant part of the global economy; revised estimates of global investment in ‘clean energy’ alone in 2015 suggest a figure of $348.5 billion (Bloomberg New Energy Finance 2016a, hereafter BNEF), with global investments between now and 2040 projected to be $7.8 trillion (BNEF 2016b).
Green economy frameworks and practices are highly relevant to ongoing debates on the types of economic and societal reorganisation necessary to achieve environmental sustainability, emissions reductions, social justice, and stable economies. For example, to reduce global carbon emissions, radical changes in energy policy are required. The International Energy Agency (IEA) suggested that globally we only have until 2017 to shift to a 450 ppm CO2 trajectory before the lock-in effect of existing infrastructure would require all investments made between 2020 and 2035 to be zero emissions options (IEA 2007). This entails a fundamental shift in resource use, which has not previously been a significant factor in policy. Moreover, progress towards achieving such transitions at national, regional and international levels must be measured, so future policies can be developed as required.
The SDGs, officially announced in September 2015, create a new imperative for the green economy. Though only partially successful, the Millennium Development Goals (MDGs) established the principle that measuring key indicators can improve our ability to tackle major issues. With the SDGs, the process begins to deliver significant positive changes by 2030. In negotiations, green economy discourses had a lesser role than during Rio+20; we suggest that it must be realigned as a major part of SDG implementation. With this review, we seek to create a new imperative for clarifying the aims of green economy concepts and discourses, and measurement of green economy practices.
A balanced framework for green economy actions must be complemented by comprehensive, relevant frameworks for measuring progress. Policies need effective measurement and indicators can improve the level of debate on the green economy and inform the wider public (Vossenaar 2013). The Green Growth Knowledge Platform (GGKP), an initiative of various international organisations, noted the importance of measuring green growth-related economic opportunities and transitions, and the assessment of environment-related policy tools in the measurement agenda (GGKP 2013). The United Nations’ System of Environmental-Economic Accounting (SEEA), a global effort to implement agreed accounting standards, states that measuring the financial commitment of an economy to environmental protection can evaluate the influence of environmental protection costs on international competitiveness (United Nations 2014b). However, there are many examples of unintended consequences of policy performance measurement (Smith 1995; Bevan and Hood 2006; Fukuda-Parr 2014); therefore measurement and indicators should be analysed in concert with green economy concepts to understand whether they support or constrain efforts to implement these visions.
The global green economy cannot be simply GDP growth driven by a ‘green stimulus’, because GDP growth containing some ‘greenness’ cannot be proved to deliver the necessary and urgent changes in resource use, emissions and consumption patterns required to negate environmental degradation, resource depletion and climate change. However, the ‘greening’ of economies is not necessarily a drag on growth (Schmalensee 2012). The rapid pace of development in emerging economies presents great opportunities for green economy transitions. Sierra Leone aims to transition to middle-income status based on a ‘green growth’ strategy, envisaging the next five years as the most transformative in its history (African Development Bank 2014, hereafter AfDB). Transformation emerges as an important term for the green economy. In relation to adaptation, Pelling et al. describe transformative actions as those ‘that have the reach to shift existing systems (and their component structures, institutions and actor positions) onto alternative development pathways’ (Pelling et al. 2014, 114). Such an understanding of transformation has great relevance for framing green economy responses to national and global challenges.
This review evaluates major international and national efforts to define green economy concepts and, uniquely, current efforts to measure the practices and impacts of the green economy. Green economy concepts have great potential for emerging sustainable development discourses but could be side-lined by the SDGs and the Paris Agreement. The review assesses the development of green economy concepts and visions, and the typologies of competing concepts. It proposes a realigned definition of the ‘transformational green economy’. The review then explores key programmes and standards relating to measuring the impacts and practices of the green economy, how measurement interacts with concepts and visions. Without effective measurement, it will be difficult to assess policy efficacy, define and measure the potentially transformative role of green economy concepts in this new policy space, or achieve green economy goals for sustainable development and climate action. Finally, we make four recommendations to improve measurement for green economy transformations.
The development of the green economy concept
The aftermath of the 2008–9 global financial crisis represented a perfect storm for the green economy’s international rise; ‘The combined forces of global economic recession, humanly induced environmental change and stark social inequalities have led to international calls for a radical transformation of current development practices and transitions towards a ‘green economy” (Davies 2013, 1285). However, the concept itself first emerged with Pearce et al.’s (1989) Blueprint for a green economy for the UK’s Department for the Environment.
The green economy’s conceptual foundation recognises that the separation of economic development and environmental policies is artificial (Barbier 2013). The United States, China and South Korea labelled their stimulus packages as ‘Green New Deals’ (Zysman et al. 2012); the rationale was that green fiscal stimuli provide a boost to the economy, whilst also laying the foundations for sustainable and more stable growth in the future (Bowen et al. 2009). Such measures recognise that economic recovery and climate change responses are not in opposition (Bowen et al. 2009). Green growth was positioned as a more attractive alternative to economic recovery than returning to ‘brown’ growth (van der Ploeg and Withagen 2013). Although they were ‘one-off’ policies, temporary interventions can deliver sustainable long-term growth when the sustainability of the inputs is assured (Acemoglu et al. 2012).
The size and number of ‘Green New Deals’ notwithstanding, the green economy already existed at scale; green technology firms alone were worth $284 billion globally in 2008 (Caprotti 2010). By way of context, fossil fuel subsidies reached $523 billion globally by 2011, compared with $88 billion for subsidies for renewable energy (IEA 2012). The two new agreements that mark the start of the SDG and Habitat III era can function as a moment of realignment (Caprotti et al. 2017). A moment of crisis can also represent an opportunity to act; the ‘green’ responses to financial crisis partially represent a return to greater levels of statism and the re-legitimisation of intervention (Death 2015). Therefore, a crisis event may create a ‘window of opportunity’ for new strategies or radical reform (Aberbach and Christensen 2001).
After 2009, the green economy evolved into a broader policy framework. In 2012, the United Nations Conference on Sustainable Development (UNCSD, or Rio+20) was a focal point for the green economy internationally. There was qualified hope in the build-up that Rio+20 would generate enough progress to give the concept the necessary political and financial backing, or at least recognition of a more central role in international policy debates (Damon and Sterner 2012; Martinelli and Midttun 2012; Sierra 2012; Zysman et al. 2012).
Clark commented that ‘Rio+20 emphasizes that economies must be made both green and inclusive. It singles out poverty eradication as the world’s most pressing challenge’ (2013, 19). However, many commentators concluded that the UNCSD was a missed opportunity to make the green economy central to international policy debates (Clémençon 2012; Halle 2012; Powers 2012; Barbier 2013). Although the green economy was a ‘theme’, the conference lacked a ‘vision’ (Bernstein 2013) and its outcome document, The future we want, failed to lay out a coherent roadmap (Clémençon 2012).
The green economy must coexist with other sustainable development concepts. The Economics of Ecosystem and Biodiversity’s (TEEB) green economy report describes a clearer hierarchy (ten Brink et al. 2012), represented in diagrammatical form in Figure 1. Following this hierarchy, there is no conceptual inconsistency with sustainable development, challenging the artificially imposed barriers around policy debates. However, these terms are not frequently used in alignment with this hierarchy.
In some ways, public support for the green economy has faltered since the ‘Green New Deals’ with their strong focus on economic growth (Barbier 2015) and the immediacy of the financial crisis. The SDGs could shape the green economy’s development post-Rio+20 (United Nations 2014a). The goals and targets, announced at the UN General Assembly in September 2015, could bring greater attention to the practices of the green economy after Rio+20’s relative lack of success. However, green economy discourses were absent from most delegations’ statements during negotiations. As analysis begins on how to achieve the goals, green economy discourses need to gain a key position within SDG implementation. Moments of agreement on shared goals and collective action also present opportunities to move beyond goal setting to implementation in a way that can be transformative (Stevens and Kanie 2016), creating the spaces to deploy green economy discourses in national and sub-national contexts. A greater understanding will also be required of how to differentiate North–South and national priorities in the implementation of green economy plans, exemplified by the role of green economy discourses in state-led transformation in China, given its unique institutional structure (Gupta and Wong 2014). Other reports demonstrate how national green economy visions vary between different continents (UNEP 2011; AfDB 2012; UNESCAP et al. 2012). While recognising the shortcomings of green economy concepts, there is ‘the capacity for green economy discourses and initiatives to bring genuine benefits to citizens of the global South’ (Caprotti and Bailey 2014, 199).
Current green economy definitions
Several studies have analysed international organisations’ green economy or green growth definitions. Bina and La Camera (2011) analysed six international-scale responses to the ‘double crisis’ (climate change and the financial crisis), concluding that these policies uphold mainstream economics’ interpretation of the environment and they are primarily concerned with economic recovery. Borel-Saladin and Turok (2013) examine the green economy definitions of the UNEP, the Organisation for Economic Co-operation and Development (OECD) and the World Bank. They conclude that, a few caveats notwithstanding, the green economy provides the tools required to transform economic activity for healthier environments and more inclusive economies. Their criticisms of green economy concepts are: being too closely aligned to current systems, not considering potential limits to growth, oversimplification, misplaced optimism and questions over the models used. While comprehensive comparisons, neither study discusses the measurement of green economic activity. Other studies that have assessed some green economy definitions and discourses are Brown et al. (2014) and Death (2015).
Ferguson’s (2014) study of green economy discourses concludes that green growth discussions must be separated from green economy discussions. Ferguson identifies many tensions in green economy discourses. His study also identifies three categories of green economy discourse: weak, transformational and strong. Part of this categorisation includes assessing measurement, focusing on their relationship to GDP.
There is a growing body of literature on the importance of ‘transformation’ concepts to address deep-rooted, complex challenges; herein we aim to further Ferguson’s conceptualisation of transformational. As Meadowcroft concludes, ‘the state has been forced to accept that an ever more profound transformation of economic activity and of political and legal obligations will be required if environmental problems are to be managed’ (Meadowcroft 2012, 69). The work of Pelling and others on transformation and adaptation suggests a potential relationship for transformation and the green economy. Transformation can be an enabling focus for approaches that address underlying causes and create the potential for dynamic and inclusive change, as opposed to other risk management formulations that aim to reduce stresses on the status quo (Pelling and Manuel-Navarrete 2011; Pelling et al. 2014). Death (2015, 2216) recognised four green economy typologies, one of which was ‘green transformation’, characterised by calls for the model of economic growth to be transformed in ways that involve ‘explicitly political interventions into transforming the structure of the economy’. Death’s typologies are based on a more specific focus on national strategies from the global South, which represents a very important contribution to the literature, but differs from the aims of this review. We have focused on building on Ferguson’s three typologies as we believe that it represents an effective evolution of the ‘weak/strong’ dichotomy from ‘sustainability’ definitions, providing a useful basis for a framework for this review of green economy visions and their interactions with efforts to measure progress.
The reports analysed in this review are summarised in Table 1. Reports were selected as key reports from international organisations, and important regional, national and academic conceptualisations of the green economy, from a literature review focused (but not exclusively) on the period of build-up to and aftermath of Rio+20 (2010–13). We find that, in agreement with Ferguson, the strong green economy generally only exists within academic literature. We have also included reports labelled as ‘green growth’ as the difference in discourse is perhaps deliberately obscured. The majority fall between weak and transformational.Table 1. Green economy and green growth reports
| Organisation/authors | Title | Green economy typology | Key aspects of definition | Measurement agenda | Key shortcomings |
|---|---|---|---|---|---|
| European Commission | Europe 2020: a strategy for smart, sustainable and inclusive growth (2010) | Weak/ transformational | Operationalisation of the green economy paradigm at EU level. Green economy broadly defined as ‘smart, sustainable and inclusive growth’. Defined by ‘Flagship Initiatives’ (‘Resource efficient Europe’, ‘An industrial policy for the globalisation era’). | National and EU level indicators, aligned with Eurostat. | Thematic areas are broad (resource efficiency, headline emissions targets) but do not cover the full spectrum of the green economy. |
| OECD | Towards green growth (2011) | Weak | Good economic policy at the heart of green growth. Economy must be ‘flexible’, ‘dynamic’ and more resource efficient Economy and environment as ‘mutually reinforcing’. Innovation is key. | 30 OECD green growth indicators. Furthers OECD’s work to identify other indicators to accompany GDP. | Unequivocal support for potential of unlimited ‘green’ growth. Economic-policy-as-usual scenario (innovation, productivity, technology) with added environmental benefits. |
| UNEP | Towards a green economy (2011) | Transformational | Moving towards a green economy can be profitable, it is possible to combine healthy living with strong economic growth. Economic growth will be healthier, stronger and more vigorous with this transformation than without it. (Brockington 2012). More focus on social aspects of green economy. | Questions role of GDP in assessing well-being. Focuses on indicators for decision-making and policy design. | Solutions offer little innovation. Despite initial critical assessment of current production and consumption, only proposes mainstream sustainable development based on markets, technology and regulation (Brockington 2012). |
| HM Government | Enabling the transition to a green economy (2011) | Weak | Based on need for strong, sustainable and balanced growth and strong economic arguments for immediate action on climate change. Green economy defined by its benefits to the UK economy: new international markets to be captured and opportunities for growth. | Government to provide information on expected impacts of climate change and resource risks. Measurement not on ‘Policy Timeline’. | Social imperatives of the green economy are absent. Regulation framed as solely a burden on businesses and businesses positioned the ultimate beneficiaries of green economy policies. |
| World Bank | Inclusive green growth (2012) | Weak | ‘Inclusive green growth is the pathway to sustainable development’ (World Bank 2012, xi). ‘Growth itself is good, but it has not been green or inclusive enough’. | How green policies affect conventionally measured GDP. Incorporating the environment into accounting, | Insistence that growth must be green but not slower. Narrow range of economic perspectives considered. Heavily reliant on existing solutions. |
| GGKP | Moving towards a common approach on green growth indicators (2013) | Weak | Claims existing definitions have a lot in common. States no definition of its own for its ‘common approach’. | Approach based on communication need, not monitoring. Adopts OECD’s headline indicators. Wealth accounting as complementary. | Masks green economy under green growth. Bases indicators on natural assets as input to a production function only. |
| United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) | Green growth, resources and resilience: environmental sustainability in Asia and the Pacific (2012) | Transformational | Explicit focus on the green growth objectives of the Asia-Pacific region. Highlights connection between green growth and poverty reduction, and importance of resilience and mitigation for many countries in the region. | Indicator-based approach, different issues to OECD. | Focus on green growth, no criticism of growth. Highlights difficulties in comparisons between regions. |
| Global Green Growth Institute (GGGI) | Various (the GGGI, has not released a comparable report; it focuses on green growth implementation across various national contexts) | Weak | ‘Green growth seeks to fuse sustainable development’s economic and environmental pillars into a single intellectual and policy planning process, thereby recasting the very essence of the development model so that it is capable of producing strong and sustainable growth simultaneously’ (Samans 2013, 3). Policy frameworks will be context specific. Resilience, equity and inclusivity are important. | Based on GDP. Set by particular national contexts. | ‘Economic growth should remain a driver of welfare improvements and poverty reduction’ (GGGI 2014). |
| Barbier | Various publications (Barbier 2011 2015) | Transformational/ strong | Policies need to deliver economy-wide innovation and structural transformation. Rising ecological scarcity shows current economic development is unsustainable. | Full environmental valuation and accounting for natural capital depreciation. Better information on the environment is vital. | Transformational agenda requires much more data. Political will for institutional transformations may be lacking. |
| Cato, Jackson and Victor | Various (Cato 2009; Jackson and Victor 2011) | Strong | Academic strong green economy literature varies from green and ecological economics to de-growth and no growth perspectives. | Rejection of GDP. Broader measures of welfare and the environment. | Limited influence on policy-making so far. Difficulty in communicating de-growth and no growth positions more broadly. |
UNEP’s Towards a green economy has perhaps received the most critical attention. Its profile was heightened by its association with Rio+20 and it is more clearly transformational. UNEP makes an explicit attempt to model future green economies and questions whether existing measures of economic performance, such as GDP growth, are adequate for assessing human wellbeing. The report provides a detailed study of the enabling conditions required for green economy transitions (UNEP 2011). It makes the economic case for shifting public and private investment to transition to a green economy, offering greater support for heterogeneous economic thinking and the strongest criticism of current modes of production and consumption. UNEP comments significantly on the importance of national GE and North–South differences, which is important for mobilising green economy concepts to respond to different national challenges and influence transformations.
However, their modelling was criticised by Victor and Jackson (2011) because the green economy futures model assigns more funding to the green economy than the ‘business-as-usual’ scenario; calling into question the conclusion that a green economy would grow faster. Victor and Jackson also question whether the policies proposed would reduce emissions sufficiently by 2050 to achieve the 450 ppm CO2 target suggested by the fourth Intergovernmental Panel on Climate Change (IPCC) report, if global temperature rise were to be kept below 2°C (IPCC 2007).
The OECD and World Bank reports show that certain ideas of environmental economics and policy have now reached international policy-makers. The OECD recognises ‘natural capital as a factor of production and its role in enhancing well-being’ (OECD 2011, 20). Inclusive green growth draws strong conclusions on the barriers to green growth, the short-term foci required and the need to recognise local contexts (World Bank 2012). These conclusions, while not new, are now more central in global policy debates and thus have greater influence over policy-makers.The World Bank demonstrates most clearly weak green economy discourses and their uncritical assumptions of the role of economic growth in development. Their reasoning is that growth is good, but it has not been green or inclusive enough:
Over the past 20 years economic growth has lifted more than 660 million people out of poverty and has raised the income levels of millions more, but growth has too often come at the expense of the environment … Growth has not been inclusive enough … sustained growth is necessary to achieve the urgent development needs of the world’s poor and that there is substantial scope for growing cleaner without growing slower.World Bank 2012, xi
Growth has not been consistently positive for poverty reduction. Just 1.2% of global GDP growth between 1999 and 2008 went to the poorest 30% of global population (Woodward 2013). While growth may have lifted 660 million out of poverty, 1.2 billion people still lived on less than $1.25 a day in 2010 (World Bank 2013). Rate is not necessarily key; to deliver lasting change, growth that is environmentally sustainable (i.e. ‘green’) and can be sustained over the long term would be a better aim for green growth policies. Weak green economy and green growth frameworks rely on merely harnessing the green economy for economic growth. This is a source of significant criticism of certain green economy discourses and, more broadly, general scepticism about green economy concepts (Brockington 2012; Brown et al. 2014; McAfee 2016).
UNESCAP’s report demonstrates the tension between national priorities and international discourses. UNESCAP states the links between environmental and social challenges, such as water security and access to clean water. Compared with the EU, national-level priorities are very different within the region. This presents challenges for measuring the green economy, requiring additional indicators (UNESCAP 2012).