Should a green economy be a growing one?

Following a recent meeting between Asian Development Bank (ADB) President Takehiko Nakao and Chinese Finance Minister Lou Jiwei, the ADB has pledged its support for green and inclusive growth in China with a major new investment. 

In the next two years, the bank will provide $4.2 billion dollars for urban development, water supply and sanitation, and transport projects aligned with China’s current 12th Five Year Plan.

The ADB’s announcement comes at a time when the ‘green growth’ approach is receiving growing support at the expense of an alternative ‘green economy’ paradigm. 

The latter came to prominence at the UN Rio+20 meeting in June 2012, which concluded that developing countries should focus future development on non-polluting green industries, including renewable energies.

Green growth, by contrast, implies rising consumption of resources, food, and energy - and thus higher standards of living. However, implicit in this approach is that developing countries must also introduce fundamental changes in patterns of consumption, technology, and agriculture to ensure a sustainable future for their growing populations.

However, in the 12 months since, the green economy approach is increasingly viewed as politically unacceptable, especially by legislators in developing countries. This is largely because it will probably mean lower standards of living for many in the developing world.

Green growth, by contrast, implies rising consumption of resources, food, and energy - and thus higher standards of living. However, implicit in this approach is that developing countries must also introduce fundamental changes in patterns of consumption, technology, and agriculture to ensure a sustainable future for their growing populations.

The importance of sustainability for economic growth was illustrated during intense floods in Thailand in 2011, exacerbated by global warming, which disrupted the country’s car industry with knock-on effects for international supply chains. 

And in Asia, this year, there have been several examples of severe air pollution in cities spreading over hundreds of kilometres.  This disrupted both economic activity and affected the health of millions. 

Recent air pollution in Asia underlines the urgency of speeding up measures to protect the atmosphere. China, for instance, is moving toward substantially reduced emissions per unit of energy, with more efficient fossil-fuel power plants and growing amounts of renewable and nuclear power. 

Recent reports indicate that there should be a substantial net decrease in China’s annual emissions by 2050.

Despite increased popularity of the green growth approach, it nonetheless poses extraordinary challenges for experts, decision makers and also communities. This is nowhere more the case than in China where speed of reform, aimed at advancing green growth objectives, is outpacing even the scale of change witnessed during the extraordinary transformations brought by Bismarck and Meiji in late nineteenth century Germany and Japan respectively.

One example of these challenges is choosing appropriate policies to deliver green growth objectives. This can be controversial. 

China, for instance, is promoting on-line shopping and local delivery centres ‘on every street corner’. However, critics understandably question whether global shipping of consumer goods will not massively increase air pollution emissions from shipping which already accounts for 15 per cent of such global emissions.

It is clear that for more people to enjoy better standards of well-being at the same time as promoting sustainability, enhanced innovation is needed to reduce consumption of physical materials and damage to sensitive ecologies and resources. 

Some small states and cities in the developing world are showing the way in a number of directions, including world class, low emission transportation, low energy housing, agriculture with low energy and minimal water use, and bio-energy (including mixing human and animal wastes in village bio-reactors).

At a continental scale, developing countries have a record of establishing innovative energy and water networks, although transportation and trade networks have emerged more slowly. 

Buckminster Fuller’s vision of a world electricity network is becoming closer as Europe, Russia and China are linking together, and other Asian countries are planning to join. This is a key part of green growth and will bring significant benefits in ensuring power availability in developing countries in the event of natural disasters (e.g. earthquakes), and extremes of weather and temperature extremes associated with climate change.

For the developed world, a key challenge is how best to share knowledge about green growth with developing countries. And just as important, how to convince more decision makers, especially finance ministries, that economic development needs to be based upon optimum long term use of natural resources while preserving and enhancing the natural environment. 

There remains scope for improvement, but the increased popularity of green growth underlines that more people in the developing world are now listening. This is especially so as these arguments begin to be framed in terms of surveying, exploiting and investing in ‘natural capital’ - a term endorsed by the UN Biodiversity Convention.

National governments, including the United Kingdom, are now formally including natural capital in their accounting. This is beginning to be replicated in the private sector too. 

Indeed, a meeting at the UK Parliament recently heard how even international luxury goods companies, which use rare resources, now recognise the necessity for their future business sustainability of assessing the depletion of, or investment in, natural capital. This trend is crucial otherwise there simply can be no green growth over the long term.

Taken overall, it is clear that green growth represents a key, emerging development paradigm, and that China will probably be the crucial test bed. Whether this approach is widely adopted and proves successful will have vital implications not just for the developing world, but also global environmental sustainability.

Lord Julian Hunt is a visiting professor at Delft University of Technology, and vice president of the Global Legislators Organisation (GLOBE). This post originally appeared here.

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