Green GrowthGreen Growth A Regional Strategy for A Regional Strategy for Achieving Sustainable Achieving Sustainable

Development in Asia and the Development in Asia and the PacificPacific

ESDD, UNESCAP

UN ESCAP

United Nations Economic & Social CommissionOutpost in Asia and the Pacific

ESDD: Environment & SD DivIntegrating Env. into Socio-

Economic Development

Humans are Living far Beyond Humans are Living far Beyond Planet's MeansPlanet's Means

• Humans will need 2 planets every year by 2050 on current trends.

• "For more than 20 years we have exceeded the earth's ability to support a consumptive lifestyle. This is unsustainable.”

• "If everyone lived as America, we would need 5 planets to support us.”

• At WWF’ 2006 Living Planet Report Launched in Beijing

(WWF 2006: 10 and 24)

Ecological Status of the Global Ecological Status of the Global EconomyEconomy

• Deepening Ecological Deficit– Footprint is surpassing Biocapacity

Major Characteristics of Major Characteristics of Asia/PacificAsia/Pacific

• Rapid economic growth.• Most limited ecological carrying capacity.• High population density, 34% of global

GHG emission.• 2/3 world poor in the region.• Need rapid economic growth for poverty

alleviation, compatible with environmental sustainability.

TIME: ASIA'S ENVIRONMENT: Visions of Green October 9, 2006

• A 2005 United Nations report warned that although one-fifth of Asians still exist on less than $1 a day, "the region is already living beyond its environmental carrying capacity."

• But Asia can't wait for the invisible hand to grow a green thumb; The problems are too intractable. Asia's future has to become one of sustainable "green growth."

A/P Can not repeat

Quantity of Growth

Quantity of Growth

Grow First, Clean Up

Later

Grow First, Clean Up

LaterMarket Efficiency

Green Growth ApproachGreen Growth Approach

• Green Growth – Achieving rapid growth without compromising environmental sustainability

• Green Growth: attaining

MDG 1 & 7 at the

same time.

• GREEN GROWTH: focusing on Environmental Sustainability & Ecological Efficiency (EE)

• Adopted at the 5th Ministerial Conference on Environment and Development (5th MCED, March 2005, Seoul)

Green  Growth

Green Green  GrowthGrowth

Quality of   Growth

Quality of  Quality of   GrowthGrowth

UN ESCAP

Eco-efficiency

Conventional Approach• Environment VS Economy: Zero Sum Game• Grow First, Clean Up Later: Vicious Cycle• Focusing Pollution control performance,

mainly from production side, Env. Protection

• How to minimize pollution impact while maximizing quantity of GDP?

• Considerable Progress in pollution control as GDP grows.

Green Growth Approach

• Economy/Environment: creating win-win synergy, virtuous cycle, positive sum game

• Focusing on improving EE of Economic Performance (Both Prod & Cons)

• Enhancing Environmental Sustainability by improving ecological quality of GDP

• Why GG approach ?

Ecological Efficiency

• Internalizing Ecological Costs• Maximizing Resource Efficiency• Minimizing Pollution Impact

Ecological Efficiency

• Not Just Environmental Idea• Economic Condition for Growth

From Env. Protection towards Environmental Sustainability

• In spite of improving pollution control, as GDP grows, Environmental Sustainability tends to deteriorates.

• ESI goes down as GDP grows, while EPI goes up generally:

• Pollution Control alone is not enough: Ecological Efficiency of Economic Performance (Prod & Cons) has to be improved

ESI/EPI ESI/EPI vsvs EcoEco--efficiency Indicatorefficiency Indicator (EEI)(EEI)

• Yale and Columbia (Davos): ESI, EPI• ESI: Argentine(9), Brazil(11), Gabon(12),

Congo(39), Indonesia(75) > Korea(122) – measuring env challenge a country is facing country

with large carrying capacity tends to end up with high ESI

• EPI: high income(Korea42) >low income countries – measuring env performance towards international goals

country with high income tends to have high EPI• So far no indicator measuring EE pattern of

economic growth• That’s why we Need to develop EEI

Paradigm Shift from

• Quantity of GDP to QUALITY of GDP

Ecological QualityEconomic QualitySocial Quality

Quality Quality vsvs QuantityQuantity of Growthof Growth

• Current Growth Patterns based only on “Market Efficiency”& Quantity of Growth

• “Green Growth”: based on the“Ecological Efficiency” paradigm.

• Quality of Growth = Quality of Life = Environmental Sustainability

• Pattern of using ecological resources in achieving same level of GDP

• Ratio of the ecological footprintdivided by GDP

EE EE PatternsPatterns of Growthof Growth

Different Patterns of Ecological Quality

• Not all Growth has the same Pattern of Growth in terms of Ecological Quality

• Japan > Europe > US

• Asia & Pacific : Need to adopt ecologically efficient Green Growth “Pattern”

• Singapore, Korea: Viet Nam ?

Ecological Patterns of Growth (global hectares per capita, 2002)

Ecological Deficit, Bio-capacity, Eco-footprint

• Japan - 3.5 (0.8 / 4.3) • UK - 4.0 (1.6 / 5.6)• France - 2.6 (3.0 / 5.6) • US - 4.8 (4.6 / 9.7)• Rep. of Korea - 3.8 (0.6 / 4.4)• China - 0.8 (0.8 / 1.6)• Viet Nam 0.0 (0.8 / 0.8)

CO2 Emissions per capitaGNI per capita

2003 1998 1999 2000 2001 2002 2003

United States $ 37,610 19.88 19.81 20.21 19.73 19.65 19.68

Australia $ 21,650 16.91 17.00 17.07 17.49 17.54 17.35

Brunei Darussalam N/A 13.42 12.72 13.11 12.54 12.45 14.75

Chinese Taipei N/A 8.65 8.97 9.65 9.94 10.28 10.85

Russian Federation $ 2,610 9.76 10.07 10.40 10.48 10.43 10.65

Germany $ 25,250 10.57 10.22 10.15 10.34 10.20 10.35

Kazakhstan $ 1,780 7.70 7.03 7.84 9.19 9.57 10.23

Japan $ 34,510 8.70 9.03 9.13 9.03 9.30 9.41

Korea Rep. $ 12,030 7.84 8.51 9.10 9.32 9.22 9.36

United Kingdom $ 28,350 9.12 9.00 8.96 9.18 8.92 9.10

Singapore $ 21,230 10.43 9.65 9.60 9.44 9.20 8.98

New Zealand $ 15,870 7.15 7.56 7.69 8.08 7.94 8.09

Hong Kong, China $ 25,430 6.08 6.45 5.80 5.65 5.43 5.94

World $ 5,500 3.86 3.83 3.87 3.85 3.87 3.99

What is Ecological Efficiency?

• Minimizing Ecological Costs• Ecological Costs = impact of Resource Depletion + Pollution

Impact• Thus EE = Resource Efficiency (RE) +

Pollution Control (PC) Efficiency

Current Paradigm: ME• Market Efficiency: based on Market Price• Market price < Ecological price• Market Efficiency (ME) < Ecological

Efficiency (EE)• Thus closing the gap between

ME & EEis critical in improving

Ecological Quality of Growth

How can Asia/Pacific do that?How can Asia/Pacific do that?

• Paradigm shift: ecological quality of growth

• Choosing EE Growth pattern: • By applying “Ecological Efficiency”

paradigm to its Economic Development

* Otherwise, A/P can not continue its growth as its ecological carrying capacity is too limited.

China

• President Hu Jin Tao : mention Green Growth at the G-8 Summit Meeting held last June in Germany.

• Chinese Government: announced 6 measures for Green Growth, May 2006, at the opening of Green Growth Seminar of UN ESCAP, by NDRC,

President President NazarbayevNazarbayev, , 63 Commission Session, 63 Commission Session,

May 2007, Astana, KazakhstanMay 2007, Astana, Kazakhstan

• “High levels of economic activities increasingly lead to the emergence of problems connected with industrial production”

• “This requires urgent actions in terms of ‘Green Growth’, since environmental stress will limit potential economic growth.”

Who should be the driver of EE ?

• Market Efficiency : Market & Price• Ecological Efficiency (EE): No Driver• Government: should be the main driver• ETR (Eco-Tax Reform): could be

the major tool in improving Ecological Quality & Pattern of Growth

By improving

1. Price-structure: to close Gap between Market and Ecological prices

* Invisible Infra of Society (ETR)

2. Infra-structure: to provide eco- efficient physical foundation for economic performance

* Visible Infra of Society

How to close the gap?How to close the gap?

• Price structure• Infrastructure

• Ecological efficiency

EE as new paradigm: Is it feasible?

Skeptic View: • Internalizing ecological costs negative

impact on competitiveness and growth • EE: applied to individual firm level by

WBCSD, not yet applied to economy wide • just environmental idea: can not be used

as a new paradigm

Ecological Efficiency

• Can we operationalize EE without damaging Economy?

• Any Examples ? • Classical Failure of EE:

Climate Change

Areas to improve EE

• Transport• Infrastructure: energy, water• Demand Side Management

* sustainable prod/cons pattern• Climate Change

Transport Sector: failure of EE• Poor Public Transport: Rail, Bus, subway• Private Car centered: high congestion

Costs• Why ? No Rail to Airport, Congestion

Charge, Clean Comfortable Public Buses• EU/Japan: modernize Rail, • Congestion Cost: Korea 4.4%, Japan:

0.79%, US: 0.65%, UK: 1.25%, Bangkok: 6%, need more public transport, need to control private car

Reducing traffic congestion costs

• Traffic Congestion : Serious economic, ecological & social (health etc) loss

• Solution: Building more road ???• Need Ecologically efficient Public

Transport, Rail Network / Control Private Cars like Japan, Singapore, Europe

Investing in EE of Infra

• EE concept to any infra dev & investment

• Ecological Costs of long term use of Infra: higher weight in EIA or SEA: Rail vs Highway, new airports & large shopping mall with maximum public transport accessibility

• Transport, Energy (Building Insulation),Water Recycling

EE Infra: opportunity for EE growth• Investment for Infra of environment

(waste water etc), public transport, energy, water, renovating existing infra

• New opportunities for EE Growth• EE : should be a criteria for budget

allocation for public infra investment * relevant for MPI, Viet Nam

How: EEHow: EE Pattern of Growth ?Pattern of Growth ?

• Growth EE = Prod EE + Cons EE• EE of Prod/Cons Pat has to be changed• Prod: PC easy to target, some progress

RE rising resource price pushing • Cons: difficult to change lifestyle

PC some progress in waste/recyclingRE deteriorate as income goes up

Consumption

Pollution

Res-efficiency Res-efficiency

Production

Pollution

+

Res-efficiency Dimension

EnvKuznetCurve

Sustainable Consumption Sustainable Consumption and Productionand Production

Pollution Dimension

Conventional Approach

Green Growth

ApproachREEFChina

EEI

As income goes up, EE of • Production Pattern: expected to

improve (EKC) • Consumption Pattern: expected to

deteriorate. - no empirical evidence of EKC for EE of Consumption.

• ETR (Eco-Tax Reform): powerful tool in managing demand by changing price of consumption

Demand Side Management: Sustainable Consumption Pattern

• Rising Demand as income increases: challenge for DCs

• Urbanization: huge demand in a compact space

• How to manage increasing private cars in cities ? * More large cars in many Asian cities than in Japan and Europe

Demand side management: Sustainable Consumption Pattern• Government: make consumer to pay their

ecological responsibility• Road & water pricing, energy tax, CO2 tax,

congestion charge, • How to ensure Consumer Acceptability ?• Dialogue with Civil Society:

Consumer Right vs Consumer Responsibility

• Political Leadership: London, New Delhi, Singapore

Asian Cities

• Fail to provide ecologically efficient infrapublic transport,

poor public transport high congestion costs• Fail to control demand side management

control private car, congestion charge, road pricing, water pricing, building insulation

• Good Model: Singapore, Japan, Europe,

Climate Change (CC)

• greatest and widest-ranging market failure ever seen (Stern Report)

• Result of Gap between Market Price and Ecological Price, ME<EE

• Ecological Cost of CC has to be internalized into the Market Price of Energy

• ETR: tool for closing the gap ME = EE

Ultimate Response to CC is

• improving Ecological Quality of Growth (Production and Consumption)

• EE & GG is, in fact, direct response to CC• ESCAP promoting Market Mechanism to

provide incentives for climate action* Reforming CDM (removing technical additionality)

* Discounting CER (not imposing target)

What is the Role of Green Government ?

• Adopt EE as new economic policy paradigm• Should provide economic system based on

EE• Courageous enough to overcome initial

resistance• With a conviction that EE paradigm will

leapfrog our economy into ecologically efficient & high quality of life growth pattern in the long run

Policies for Green Government

1. By Eco-Tax Reform (internalize env costs)

2. By Integrating “EE” into Infra (Trans, rail, water, energy etc.) investment

3. By strengthening Demand side management (congestion charge etc.) to improve EE of consumption pattern

4. By supporting greening of business

Eco-Tax Reform

• Not earmarked env tax• Changing taxbase from INCOME to

POLLUTION• Reducing income tax, Increasing pollution

tax,total tax revenue same (Revenue Neutrality)

• Double Dividend: increasing employment, improving EE, (Germany, Sweden, etc.)

• EE applied without additional costs burden

Eco-Tax ReformTax

Base:

Income Tax Base: Pollution

Income Tax

Pollution Tax

•

Pollution TaxChanging Tax Base

Income Tax

Revenue Neutrality

Not Increasing Tax BurdenReducing Income TaxIncreasing Pollution Tax

Double Dividend

• 1 stone 2 birds

• Reducing GHG Emissions• Promoting Growth

Eco-Tax Reform

• Basis for Synergy between Climate Action and Growth

• Tool for Green Economics

Meaning of Green Tax Reform

• Key Message: EE can be applied without additional costs. Revenue Neutrality:

• Without increasing tax but by shifting tax base from Income to Pollution

• We can change our growth pattern• It is a matter of software of a society• Income regressiveness, competitiveness:

can be managed by design of Green Tax.

Exploring New Paradigm

• Happiness, Well-being, Quality of Life,- Richard Layard, LSE, “Happiness”

• Thailand: “Sufficiency Economy”• China: Harmonious Society, China

Development Forum: New Model of Economic Growth, Beijing, 17-19 March 2007.

• OECD: How to measure Social Progress? Future of Indicators (beyond GDP, MDG)

Spiritual dimension: 4th pillar• Sus Dev: eco, env, soc 3 pillars still mainly

materialistic dimension• SD + spiritual value (happiness, well-being

etc.)• Searching for new paradigm: GDP not

enough • OECD leading international discussion:

World Forum on “Statistics, Knowledge and Policy” 27-30 June 2007, Istanbul, “Is Happiness measurable?” conference, Rome, 2-3 April 2007,

ConventionalWestern Culture

ConventionalAsian Culture

SC = the EAST meets the SC = the EAST meets the WESTWEST

Happines s =

Material Possession/

Consumption

Desire

New AsianConsumerism

New WesternConsumerism

What could be our New Paradigm?

• USD 20,000 per capita ?• Thailand: “Sufficiency Economy” based on

Buddhist Value• Confucius Value: Harmony with Nature, • Ecological Efficiency: one of the new

paradigms to link GDP based material value with broader paradigm based on spiritual value

Is it only a matter of “Money” ?

• Many argue: if we have enough money, we can clean up and invest for env., so money is the answer. Or internalize env. costs.

• Money critical when income is low (EKC)• It is policy concept & paradigm• Huge Traffic congestion costs: Korea >

Japan, not money, but system & growth pattern

Matter of Vision and Leadership

• Political Vision & Leadership critical to adopt EE as new paradigm for transport, climate change, infra, consumption pattern, tax reform (Ex. Singapore) EE: critical condition for economically competitive, ecologically efficient growth Quality of Life & Well-being, Happiness,But ultimately it takes Courage to change Status Quo

Ultimate ChallengeUltimate Challenge

Political Leadership with vision and convictionPublic understanding and acceptance

Political Determination and LeadershipPolitical Determination and Leadership: : Ken LivingstoneKen Livingstone

• Environmental issues directly affect various interest groups.

• Any trial faces objections from the negatively affected interest groups.

The early stage of introduction

• 80% of citizens objected in a poll

• Supposed to have reelection in 2004

• Amelioration of traffic, decrease in air pollution, energy saving effect

• Reelected in 2004

Successful traffic congestion charging in the city centre in effect (Feb, 2003).

After adoption

Leadership Leadership with Strong Conviction & Vision:with Strong Conviction & Vision:

Lee Kwan YewLee Kwan Yew

Citizens with complaints began to readjust to the life style of a small nation with many people and accept the public

transportation system rather than automobiles.

• Consistent Policy making with strong conviction and vision.

• COE (Certificate of Entitlement)

-

COE sold at Auction (twice a month) allows car-

Development of public transportation lets people use public transportation rather than uncomfortable automobiles.

-COE Price Increase : $30,000~40,000

(90s) →

$14,000( Recent)

Highway Rush Hour

Centre of City

Singapore 60 km/h 25 km/hSeoul 38 km/h 15 km/h

• Singapore vs

Seoul

75% agree to congestion fee

60% agree to vehicle ownership tax

ESCAP is focusing on

• Eco-Tax Reform (ETR)• Improving EE of Infrastructure: Urban

Infra• Demand Side Management

* Sustainable Consumption Pattern • Climate Change: turning climate crisis into

economic opportunities• Supporting Green Business: turning EE

into business opportunities

ESDD/UNESCAP FocusESDD/UNESCAP Focus

• Promote capacity building for application of Green Growth/ EE policy tools

• Providing forum for inter-ministerial coordination in integrating Env. Sustainability into Socio-Economic Development

• Regional Platform for Environmental Strategic Review of AP: every 5 years MCED (Ministerial Conference on Environment and Development)

Green Growth• Is not Green GDP ( GDP –

pollution clean up cost)• Improving Ecological Quality &

Pattern of Growth Env. Sustainability

• By applying Ecological Efficiency (EE) to Prod & Cons

• AP Regional Strategy for SD

Vision for AsiaVision for Asia--PacificPacific Green Growth:Green Growth:

Environmentally sustainable economic growth for the improved well being of allFor more on Green Growth see

SOE 2005, Green Growth at a Glance visit our www.greengrowth.org portal and

www.unescap.org/esd website