Green Economics: Overview, Criticisms, FAQ

                             What Is Green Economics? 

A green economy is defined as low-carbon, resource-efficient, and socially inclusive. In a green economy, growth in employment and income are driven by public and private investment into such economic activities, infrastructure and assets that allow reduced carbon emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of biodiversity and ecosystem Green economics is a methodology that supports the harmonious interaction between humans and nature and attempts to simultaneously meet the needs of both. Green economists may study the impact of alternative energy sources, sustainable agriculture, wildlife protection, or environmental policies.

A green economy is one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities.  

The concept of green economy, in the context of poverty eradication and sustainable development, will attract further attention as it will be one of two key themes at the United Nations Conference on Sustainable Development to be held in Rio in 2012 (Rio, 2012).  

Green economy can refer to sectors (e.g., energy), topics (e.g., pollution), principles (e.g, polluter pays), or policies (e.g., economic instruments). It can also describe an underpinning strategy, such as the mainstreaming of environmental policies or a supportive economic structure.  

Resource efficiency is a closely related concept, since the transition to a green economy depends on meeting the twin challenges of maintaining the structure and functions of ecosystems (ecosystem resilience) and finding ways to cut resource use in production and consumption activities and their environmental impacts (resource efficiency).  Whatever the underlying approach of the green economy is, it stresses the importance of integrating economic and environmental policies in a way that highlights the opportunities for new sources of economic growth while avoiding unsustainable pressure on the quality and quantity of natural assets. This involves a mixture of measures ranging from economic instruments such as taxes, subsidies, and trading schemes, through regulatory policies, including the setting of standards, to non-economic measures such as voluntary approaches and information provision.  

Although no comprehensive assessments covering the priority themes of green economy and resource efficiency as applied in the EE-AoA exist, broad strategies for greening the economy (a dynamic rather than static process) or specific theme-based assessments have been undertaken at national, regional, and global levels by a range of public and private sector organisations. 

Most assessments cover well-established themes, such as energy, industry, and governance (green economy), and the use of natural capital (resource efficiency). 

However, far fewer cover other important (often newer) aspects of the green economy, including futures and scenarios, environmental impact assessment/strategic impact assessment (EIA/SIA), corporate social responsibility (CSR), life-cycle analysis (LCA), and finance, trade, and tourism.  Assessments are overwhelmingly focused on the state of different priorities, and this is particularly the case for the more well-established or traditional themes. Other aspects of the DPSIR framework (drivers, pressures, state, impacts, and responses) are discussed much less frequently.  

Countries worst affected by the global recession emphasise green jobs and growth in their recent assessments. Assessments covering the energy sector are widespread and focus on renewable energies and energy efficiency. In addition, countries dependent on primary and extractive sectors also tend to emphasise natural resource efficiency.  

Effective assessments require a green economy strategy to be at the very heart of the national or regional decision-making process. Currently, assessments address policy questions in specific but generally narrow areas, for example, related to an increased proportion of renewable energy, to green public procurement, or to green jobs. 

It is less clear how assessments, even those of the more strategic variety, are being used to drive economic policy in general. Importance of the green economy. The green economy is about transforming the way a nation produces and consumes, trades, and is governed, then assessments should be at the very heart of economic and political strategies, rather than at the fringes.  

Main findings of green economy-related assessments.

Green Economy

• Green economics refers to an economic discipline that focuses on devising an approach that promotes harmonious economic interactions between humans and nature. 
• It has a broad canvas that incorporates means of interaction with nature and the methods used to produce goods. 
• Green economists may study the economics of alternative sources of energy, materials, food, or other industrial processes. 
• Green economics is closely related to ecological economics, but is different because it is a holistic approach that includes political advocacy of sustainable solutions. 
• Some critics believe that "green" economic solutions are counterproductive, due to unexpected impacts on the natural environment.

There are a few different definitions of a green economy. In 2011, the International Chamber of Commerce (ICC) stated in its "10 Conditions for a Transition Toward a Green Economy" that a green economy is one "in which economic growth and environmental responsibility work together in a mutually reinforcing fashion while supporting progress and social development."One way that green economics has made its way into the mainstream has been by way of consumer-facing labels indicating a product or a business's degree of sustainability.  

Green economic theories encompass a wide range of ideas, all dealing with the interconnected relationship between people and the environment. Green economists assert that the basis for all economic decisions should be in some way tied to the ecosystem and that natural capital and ecological services have economic value.

Interpretations of Green Economics 

The term "green economics" is a broad one, and has been co-opted by groups ranging from green anarchists to feminists. Broadly speaking, it encompasses any theory that views the economy as a component of the environment in which it is based. The United Nations Environment Programme (UNEP) defines a green economy as "low carbon, resource-efficient, and socially inclusive."As such, green economists generally take a broad and holistic approach to understanding and modeling economies, paying as much attention to the natural resources that fuel the economy as they do to the way the economy itself functions.  

Broadly speaking, supporters of this branch of economics are concerned with the health of the natural environment and believe that actions should be taken to protect nature and encourage the positive co-existence of both humans and nature. The way that these economists advocate for the environment is by making an argument that the environment plays a pivotal role in the economy and that the health of any good economy is essentially determined by the health of the environment it is an essential part of.

Criticism of Green Economics 

While the idea of an equitable economy powered by renewable energy sources is alluring, green economics has its share of critics. They claim that green economics' attempts to decouple economic growth from environmental destruction have not been very successful. Most economic growth has occurred on the back of non-renewable technologies and energy sources.  

Weaning the world from these energy sources requires effort and has not been an entirely successful endeavor. The emphasis on green jobs as a social justice solution is also fallacious, according to critics. The raw material for green energy in several cases comes from rare earth minerals mined in inhospitable conditions by workers who are paid cheaply.  

An example of this is electric cars, whose batteries may be made from raw materials mined from fragile rainforests and regions wracked by civil war.4 Another criticism of green economics is that it is focused on a technological approach to solutions and, consequently, its market is dominated by companies with access to the technology.

How Can Green Technology 

Affect the Economy? Green technology refers to a wide range of developments and techniques, from alternative energy and fuel sources to sustainable agriculture and wildlife conservation. Overall, green technologies seek to reduce the negative impacts of human activity on the natural environment. This can support sustainable economic activities, although critics may say that green technology is less efficient than non-green alternatives.  

How Did the Green Revolution Affect Economics? 

The Green Revolution refers to a series of innovations that greatly increased agricultural output and efficiency throughout the world. This resulted in substantial increases in the world population and, consequently, in increased pollution and consumption of natural resources.  

What Is the Green Paradox in Economics? 

The green paradox is a counterintuitive and controversial idea first suggested by the economist Hans Werner-Sinn in 2007.6 It states that any policy that seeks to gradually reduce fossil fuel consumption will have the unexpected effect of accelerating the use of those fuels in the near term. This is because fossil fuel companies will seek to extract more profits from fossil fuels in the present, knowing that these profits will not be possible in the future.

Conclusions and recommendations

This chapter began by stating that there are no completely integrated green economy assessments in the pan-European region. As a result, it is difficult to draw conclusions from assessments that do not, as yet, exist. This section is therefore presented in two stages:  

• What conclusions can be drawn from assessments related to the green economy that do exist? 
• Where is the focus needed in the future to address the current deficiency of fully integrated assessments (recommendations)?

Conclusions  

A number of conclusions can be drawn from the assessment of current assessments.  

A clear framework to promote a green economy is lacking  Currently, assessments are largely driven from the bottom-up, developed to address a specific need or policy question related to a specific aspect of the green economy. This is largely as a result of the many and diverse aspects covered by the concept, but as a consequence, assessments do not generally form part of a clear ' top-down' integrated framework.  

A green economy is not yet defined clearly and consistently. 

UNEP's definition of a green economy is the most widely used and authenticated one. However, the green economy is still a novel concept and refers to a mix of existing and emerging sectors, topics, principles, and concepts. Most assessments focus on one or a few of these topics, with a particularly large number of assessments focused on energy (renewable and efficiency), mobility, industry, and the use of natural capital. However, very few assessments take a more integrated approach, encompassing a range of concepts or the whole of the DPSIR assessment framework. This explains why there are currently no comprehensive green economy assessments at the national level, and only a few in the area of resource efficiency.  

Institutional arrangements are unclear.  

Current assessments are published by a wide range of international, regional, and national institutions, both from the public and private sectors. There is limited coordination either between or within regions and countries, or between the public and private sectors. 

This situation inevitably leads to some overlap in assessments and reduces effectiveness in policymaking, since it is not clear which assessments are being used to inform which decisions or decision-making processes, or how they are being used.  The objectives of green economy assessments are not always clearly defined.  

At present, the purpose of these assessments is not always clear. It may be to improve understanding, to inform or influence policy, or to meet legal or voluntary targets. But the lack of clear objectives contributes directly to a lack of focus in too many assessments. There are also relatively few ex-post assessments that evaluate policy implementation or consider how assessments have led to the adoption of policies.  

Assessments are numerous, but often large and unfocused. 

There is a wealth of information available on many aspects of the green economy and resource efficiency. The assessment universe is constantly expanding, but in an uncontrolled way, and there is currently a lack of consistency in the basis, format, and frequency of data being collected and used to inform assessments and in the assessments themselves.  There are clear regional differences in assessments. 

Some assessment themes (e.g., SCP, innovation) are concentrated in EEA member countries. Others (e.g., mining) are most prevalent in Eastern Europe, Central Asia, the Russian Federation, and the Caucasus. These patterns typically reflect countries' sectoral backgrounds and the presence of traditional industries, but there are also indications that some of the ' newer' aspects of the green economy have not yet permeated all areas.  

There are specific knowledge gaps that have not been addressed. Specific information and knowledge gaps exist in a range of areas related to the green economy, for example, concerning the relationship between ecosystems and economic systems.   

Recommendations  

A clear strategic framework to promote a green economy is needed. 

Assessments need to be clearly part of an agreed, comprehensive, and consistent framework aimed at transforming the economies of those involved from a classical to a green model. This requires leadership and agreement at the highest level. If the aim truly is the mainstreaming of the environment into economic development, then all policies and priorities at the pan-European level should be assessed against agreed green economy principles. For consistency with emerging international approaches, the framework should follow UNEP (2011a).  

There is an urgent need to develop a clear and common understanding of the green economy. 

The green economy is not sector-specific, and both the green economy and resource efficiency apply to the whole economy. By artificially constraining the interpretation of these concepts to specific sectors or topics, we risk overlooking some cross-sector synergies and efficiencies. To encourage more integrated assessments and to enhance understanding and effectiveness in decision-making, an agreement should be made on a number of critical elements that will help define the green economy concept. This could form the basis of developing a tool-kit and guidelines to support capacity building and implementation, as well as a suite of indicators for use in regularly reporting progress towards a green economy. It should involve, at a minimum, the UNECE and other UN organisations, the OECD, the European Commission, and the EEA.  

Institutional arrangements need to be clarified. 

For assessments to clearly link to and consistently inform policymaking, national and other institutions charged with their production need to have a clear remit and appropriate levers at their disposal to ensure that the green economy is at the centre of national and regional economic strategies. Maximising the value from assessments also requires strong coordination, good cooperation, sharing of information, and the development of new partnerships.  Assessments should be clearly focused. 

In the future, assessments need to be streamlined, with fewer and shorter (more focused) reports, regularly updated. This will improve targeting, communication, consultation, and policy relevance. In addition, assessments should include an explicit statement of objectives. More emphasis should also be placed on ex-post evaluation and how assessments have led to policy adoption, as well as help to implement policy.  

Provide specific support where needed. 

Some parts of the pan-European region, notably countries of Eastern Europe, the Caucasus, and Central Asia, need help to monitor trends, produce assessments, and make progress towards a green economy. They face a specific set of circumstances as a result of the relatively recent transition towards market-based economies, including institutional barriers and the need to focus on more pressing social and economic issues. Awareness of the needs of these countries is steadily improving (e.g., OECD, 2011d), but the relevant measures need to be implemented.  

A system of information exchange is needed. 

A clear and agreed shared environmental information system would improve consistency and credibility of subsequent assessments, as well as showcase good practice in assessments and aiding capacity building and knowledge transfer. Such a system would also help to ensure knowledge gaps are recognised and addressed in a coordinated way. Gathering and disseminating such case studies, including good and bad examples and practices, should be seen as an integral part of the information system.