1 RIO+20 POLICY BRIEF #7 A green economy for a planet under pressure Moving away from the utopian ideal PHOTO: CREATIVE COMMONS / PATRICK CIEBILSKI Humanity is at a crossroads. Social, economic and environmental crises that have played out in recent years offer a unique opportunity for a step change in the way humanity does business. Although the concept of the green economy was introduced to address today s challenges, its continued dependence on traditional and questionable trickle-down economic growth theory has rendered it inadequate. A fast-growing population, rapidly diminishing resources and planetary boundaries are forcing humanity to find innovative ways to use resources more efficiently, to work within the limits of the Earth s natural capital, and to make fundamental changes to our economic systems. This policy brief sets out the guidelines for the social and technological transformations needed for a new economic system, as well as the new ways in which we will need to measure and monitor this system. Rio+20 Policy Briefs One of nine policy briefs produced by the scientific community to inform the United Nations Conference on Sustainable Development (Rio+20). These briefs were commissioned by the international conference Planet Under Pressure: New Knowledge Towards Solutions (www.planetunderpressure2012.net).
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6 Economy Produced capital Human capital Social capital Natural capital Ecosystems and ecosystem services Humans Instrumental Freedoms Political freedoms Economic facilities Social opportunities Transparency guarantees Protective security Ecological surety Human Well-Being PHYSICAL WELL-BEING Material living standards Health Physical security Stable ecosystems Societal scale Individual scale Percentage 60 40 20 0-20 -40-60 Produced capital Human capital 200 150 Percentage change in per capita wealth for Brazil Basezyearz=1990 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Natural capital Inclusive Wealth Index * GDP * Inclusive Wealth Index is additionally adjusted for two additional components when plotted: carbon damages and oil capital gains. Percentage change in per capita wealth for India Basezyearz=1990 Environment EMOTIONAL AND SOCIAL WELL-BEING Political voice and agency Percentage 100 50 Social relationships Education 0 Health Economic security -50 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Produced capital Human capital Natural capital GDP Inclusive Wealth Index * * Inclusive Wealth Index is additionally adjusted for two additional components when plotted: carbon damages and oil capital gains. Figure 2.zCapitalzfreedomszandzwell-being. Source:zIHDP,zupdatedz5zMarchz2012. Figure 3.zPercentagezchangezinzperzcapitazwealthzforzBrazilzandzIndia. Source:zIHDP,zupdatedz5zMarchz2012. arezpresentedzhavingzazfixedzbasezyearz (1990).zAlthoughzGDPzperzcapitazgrewz byz34%zandz120%zbetweenz1990zandz 2008zinzBrazilzandzIndia,zrespectively,zthez InclusivezWealthzIndexzincreasedzbyzaz merez3%zandz9%,zrespectively.zfurthermore,znaturalzcapitalz(i.e.zecologicalz assets)zdeclinedzbyz46%zinzbrazilzandz 31%zinzIndia.zTheseznegativeztrendszwerez howeverzoffsetzbyzincreaseszinzproducedz andzhumanzcapitalzinzbothzcountries.z Nevertheless,zthisztrendzofferszazwarningz tozpolicymakerszonzthezextentztozwhichz naturalzcapitalzcanzdeclinezbeforezwez transgresszenvironmentalzandzecologicalz thresholdszfromzwhichztherezisznozreturn. Itziszimportantztoznotezthatzthesezarez preliminaryzfigureszofzthezinclusivez WealthzReportz(IHDP,zforthcoming),z andzreflectzonlyzsomezaspectszofzeachz capitalzform.zforzexample,zchangesz inznaturalzcapitalzassetszarezbasicallyz measuredzbyzthezfollowingzfourz categories:z(1)zagriculturalzandzpasturez land;z(2)zforest;z(3) zfossilzfuelszand;z (4)zminerals.zThereforezitzmightznotz necessarilyzcapturezthezfullzpicturezofz thezenvironmentalzchanges.zindeed,zonez ofzthezmainzpurposeszofzthezfigurezisztoz suggestzthatzwezmayznotzbezprogressingz aszfastzaszotherzindicatorszstate,zforz examplezgdp,zbutzanother,zmorez important,zpurposezisztozshowzwherez investmentzshouldzbezdirectedzsozaszz tozmaintainzthezproductivezbasezz ofzanzeconomy. WHY IS A GREEN ECONOMY IMPORTANT? Thezsimplestzanswerztozthisz questionziszthatzthezwell-beingz ofzaznationziszirrelevantzifz Earth szlife-supportzsystemszarez degradedztozthezpointzwherez humanzexistenceziszthreatened.zazmorez complexzanswerzwouldzhavezaszitsz firstzpremisezthezrelationshipzzbetweenz sustainabilityzandzeconomics.ztwoz keyzpointszflowzfromzthiszzrelationship.z First,zsustainabilityzaimsztozcultivatez anzenvironmentzinzwhichzthezwellbeingzofzindividualsziszbalancedzwithz thezecologicalzlimitszofzazfinitezplanet.z Second,zeconomiczsuccesszbringszsocialz stability. Thus,zpushingzagainstzthez planet szenvironmentalzlimitszwouldz seezuszfallzshortzofzsustainability,zwhilez economiczfailurezthatzpreventszwellbeingzwouldzhavezthezsamezresult.z Aszwezlivezinzazworldzwithzfinitezresources,z itzisznozsimplezmatterztozeconomicallyz developz zi.e.zgrowz zthezpoorerznationsz sozasztozrealizeztheirzwell-being,zwhilezatz thezsameztimezmaintainingzthez(oftenz accelerating)zeconomiczgrowthzofzricherz nations.zthezgreenzeconomy,zalongzwithz itszstepsztowardszsustainability,zcouldz providezthezanswersztozthiszdilemma.
RIO+20 POLICY BRIEF #7: A green economy for a planet under pressure 7 PHOTO: CREATIVE COMMONS/THINKGEOENERGY Green Energy: Steam from this geothermal field is used for district heating in the area and for the Kísiliðjan Diatomite Plant, Iceland. ACHIEVING THE GREEN ECONOMY Azglobalzsocialzcontract Thezglobalznaturezofzmanyzofzourz environmentalzproblemszcoupledz withzourzcloselyzinterlinkedz globalzeconomiczandzsocialz systemszmeanzthatzsolutionsz requirezcooperationzamongznationz states.zthiszsuggestszazglobalzsocialz contractzwillzneedztozbezdrawnzup,zandz mustzbezunderpinnedzbyzthezideazthatz thezplanetziszazfinitezsystemzwithinzwhichz allzcitizenszneedztozco-habit.zwithzazrisingz population,zdwindlingznaturalzresourcesz andzgrowingzsocialzunrest,zanyzfailurez ofzcountriesztozlookzbeyondztheirzownz interestszwillzbezeconomicallyzinefficientz andzsociallyzdisruptivezinzthezlongzrun.z Coveringzfivezkeyzareas,zthezglobalz contractzwouldztozthezfollowing:z 1.z Findzcommonzagreementzonzanz agreedzsetzofzplanetaryzboundariesz thatzthezglobalzsocietyzshouldznotz cross.zcountrieszmustzshiftzawayz fromzseeingzthiszaszazzero-sumz game,zandzconsiderzitzazcooperativez endeavourzthroughzwhichzallzcitizensz ofzthezplanetzbenefit.zwezneedztoz setzboundarieszfor,zamongzothers,z climatezchangezandzourzusezofzwater,z biodiversityzandznitrogen.z 2.z Establishzazcommonzsetzofzrulesz forzthezglobalzeconomiczsystemz thatzemphasizesznotzshort-termz monetaryzbenefits,zbutzlongtermzsustainablezwell-being.zthisz wouldzmeanzrewritingzthezcurrentz economiczmodelszandzinvestmentz opportunitieszsozasztozencouragez azmovezawayzfromzthezirrationalz ideazofzperpetualzgrowth,zwithz consumptionzandzconsumerismzthez engineszofzthiszgrowth.zthesezwouldz bezreplacedzwithznewzmodelszthatz emphasizezemploymentzandzavoidz thezproductivityztrap,zwhichzfocusesz onzimprovingzproductivityzwhilez ignoringzthezimpactzitzhaszonzbothz employmentzandzthezecologicalz boundarieszwithinzwhichzitzmustz operate.z 3.z Allowzallzcountriesztozgiveztheirz citizenszaccessztozthezsixzkeyz instrumentalzfreedoms.zinsteadz ofzattemptingztozachievezequality,z countrieszshouldzstriveztozdesignz andzimplementzthezinstitutionalz structureszforzprovidingzthez instrumentalzfreedomszforzallzpeople.z Forzexample,zeducationzshouldzbez seenzaszazglobalzpubliczgoodzratherz thanzaszazcommodityztozbezsoldzaszaz privatezgood,zwithzthezbestzqualityz goingztozthezhighestzbidder.z 4.z Establishzazsetzofzruleszonztechnologyz transferzandzdevelopment,zwhichz wouldzenableztechnologyztozbez eitherzdevelopedzorzadaptedzlocally.z Suchzazframeworkzwillzallowzcitizensz withinzeachzcountryztozdeterminez theztypezofztechnologyztheyzuse,z andzthezpacezatzwhichztheyzusezit,ztoz improvezwell-being.zthezruleszmustz promotezinnovationzwhilezatzthez sameztimezpreventzexclusionzandz monopolizationzofztechnologies.z 5.z Measurezcountryzprogresszbyz establishingzaznewzsetzofzaccountsz thatztrackzwell-beingzandznotzjustz economiczperformance.zazportfolioz ofzindicatorszshouldzplacezspecialz emphasiszonzmacro-levelzindicatorsz suchzaszonezforzinclusivezwealth.z Thesezindicatorszshouldzprovidez informationzonzhowzeachzcountryz iszusingzitszproductivezbasezaszwellz aszsummarizezcountries zimpactsz onzeachzother.zthuszwezcanzgainzanz overviewzofzglobalzsustainabilityzandz notzjustzsustainabilityzwithinznationalz borders.z
8 CONCLUSION Thezcurrentzconfluencezofzcrisesz offerszuszazuniquezopportunityz tozfundamentallyzchangezourz economiczsystem.zthiszchangez mustzbezaccompaniedzbyzaz socialztransformationzthatziszdrivenzbyz theznewzsystemzitself.ztheztechnologicalz transformationzmustzbezazbottom-upz approachzdrivenzbyzcapacityzwithinz countrieszandztakingzintozaccountzthez socialzandzculturalzconditionszuniqueztoz eachzcountry.zmeasurementzofzprogressz mustzmovezawayzfromzanzeconomicsbasedzyardstickztozazmultidimensionalz indicator.ztherezalsozneedsztozbezazmovez awayzfromzproductionzandzconsumptionz towardszinclusivezwealthzatzthezmacroz levelzandzinstrumentalzfreedomszatz thezindividualzlevel.zlastly,ztheznotionz ofzglobalzresponsibilityzforzimprovingz thezwell-beingzofzallzindividualszacrossz thezplanet,zirrespectivezofzcountryzorz region,zneedsztozbezthezdoctrinezofzaznewz internationalzorderzofzgovernance. Looking at Green Economy through new glasses. CREDIT: CAROLYN LOUISE SMITH References and further reading Arrow,zK.J.,zDasgupta,zP.,zGoulder,zL.,z Daily,zG.,zEhrlich,zP.R.,zHeal,zG.M.,zLevin,z S.,zMaler,zK.G.,zSchneider,zS.,zStarrett,zD.A.z andzwalker,zb.z2004.zarezwezconsumingz toozmuch?zjournal of Economic Perspectivesz18(1):z147 172. Berkhout,zF.,zAngel,zD.zandzWieczorek,z A.z2009.zAsianzdevelopmentzpathwaysz andzsustainablezsocio-technicalzregimes.z Technological Forecasting & Social Changez 76(2):z218 228. Chopra,zK.zandzDuraiappah,zA.K.z2008.z Operationalizingzcapabilitieszinzaz segmentedzsociety,zinzalkirezetzal.zthe Capability Approach: Concepts, Measures and Applications.zCambridgezUniversityz Press:zCambridge,zUK. Cipolla,zC.M.z1993.zBefore the Industrial Revolution.zRoutledge:zLondon,zUK. Dasgupta,zP.zandzMalerzK.G.z2000.zNetz NationalzProduct,zwealth,zandzsocialzwellbeing.zEnvironment and Development Economicsz5:z69 93. Dreze,zJ.zandzSen,zA.z2002.zIndia: Development and Participation.zOxfordzUniversityz Press:zNewzYork,zUSA.z Duraiappah,zA.K.z1998.zPovertyzandzenvironmentalzdegradation:zinvestigationzofz theznexus.zworld Developmentz26(11). Easterlin,zR.z2003.zExplainingzhappiness.z Proceedings of the National Academy of Sciencesz100(19):z11176 11183.z IHDPz(forthcoming).zThe Inclusive Wealth Report.zInternationalzHumanzDimensionz ProgrammezonzGlobalzEnvironmentalz Change:zBonn,zGermany. Jackson,zT.z2011.zSocietalztransformationszforzazsustainablezeconomy.zzNatural Resources Forumz35:z155 164. Kosoy,zN.,zBrown,zP.G.,zDuraiappah,zA.,z Thomson,zR.,zRogers,zD.zandzMartinez- Alier,zJ.z2012.zWhite Paper: Pillars for a Flourishing Earth: Planetary Boundaries, Economic Growth Delusion and Green Economy.z Owen,zD.z2010.zThezEfficiencyzDilemma:z Ifzourzmachineszusezlesszenergy,zwillz wezjustzusezthemzmore?zannals of Environmentalism.zDownloaded:z 17 Februaryz2012zfromzwww.newyorker. com/reporting/2010/12/20/101220fa_ fact_owen. Rockström,zJ.zetzal.z2009.zPlanetaryz boundaries:zexploringzthezsafezoperatingz spacezforzhumanity.zecology and Societyz 14(2):32. Rogers,zD.S.,zDuraiappah,zA.K.,zAntons,z D.C.,zMunoz,zP.,zBai,zX.,zFragkias,zM.,z andzgutscher,zh.z2012.zazvisionzforz humanzwell-being:ztransitionztozsocialz sustainability.zcurrent Opinion in Environmental Sustainabilityz4(1):z61 73. Rutherford,zF.J.zandzAhlgren,zA.z1991.z Science for All Americans.zOxfordz UniversityzPress:zNewzYork,zUSA. Saunders,zH.z2011.zSix Misconceptions about Rebound and Backfire.zDownloaded:z17zMarchz2012zfromzhttp:// thebreakthrough.org/blog/2011/01/six_z misconceptions_about_rebou.shtml. Sen,zA.z1999.zDevelopment as Freedom.z OxfordzUniversityzPress:zOxford,zUK.z Stiglitz,zJ.,zSen,zA.zandzFitoussi,zJ.P.z2010.z Mismeasuring Our Lives: Why GDP Doesn t Add Up.zThezNewzPress:zNewzYork,zUSA,z andzlondon,zuk. Tierney,zJ.z2011.zWhen Energy Efficiency Sullies the Environment.zDownloaded:z 17 Februaryz2012zfromzNewzYorkzTimeszz www.nytimes.com/2011/03/08/science/z 08tier.html?_r=1&scp=1&sq=jevons%20z paradox&st=cse. UNEP,z2011.zTowards a Green Economy: Pathways to Sustainable Development and Poverty Eradication.zwww.unep.org/ greeneconomy. Compiled by: ThezInternationalzHumanzDimensionsz ProgrammezonzGlobalzEnvironmentalz Change,zincludingzAnanthazDuraiappah,z LeislzNeskakis,zPablozMunoz,zPabloz Fuetenebro,zVerazKöpsel,zElormzDarkey,z LouisezSmith. Editing,zdesignzandzlayout:zGreenzInk,zUKz(www.greenink.co.uk)