Green Economy Initiative

United Nations Environment Programme

Moustapha Kamal Gueye

Acting Head, Green Economy Advisory Services Unit

A multidimensional crisis rooted in patterns of

development

The global context

Multiple crises: More than a financial and economic crisis:

• Social - 18 to 51 million unemployed over 2007 levels & the number of extremely poor has increased by at least 100 million people worldwide.

• Fuel - rising prices cost developing economies US$ 400 bn in higher energy bills in 2007.

• Food - prices cost developing countries US$ 324 bn in 2007.

• Ecosystems - EUR 50 bn worth of biodiversity is being lost each year.

• Climate - current global GHG emissions at 42 Gt per annum - 5 times higher than the threshold.

By 2030 and beyondBy 2030 and beyond……

Global energy demand up by 45% Oil price up to US$ 180 per barrel GHG emissions up 45% Global average temperature up 6°C in the next

century Sustained losses equivalent to 5-10% of global

GDP as compared to the 3% of GDP loss from the current financial crisis

Poor countries will suffer costs in excess of 10% of their GDP

On a business as usual path…

Discounting Natural Capital

• Global GDP more than doubled between 1981 – 2005.

• But 60% of world’s ecosystems degraded/exploited unsustainably (MEA, 2005).

Distribution of Costs -> Poor people

“…natural capital is essential to wealth creation, accounting for a quarter of wealth creation in the poorest countries, while such a share is only 2% in the

world’s richest countries.” Source: World Bank, 2006, Where is the wealth of nations?

Natural capital is critical to wealth creation in low

income countries.

Natural capital is critical to wealth creation in low

income countries.

The role of environmental resources in reducing poverty,

fighting hunger, and lowering child mortality

The role of environmental resources in reducing poverty,

fighting hunger, and lowering child mortality

7

N

atu

ral C

apit

al

Financial & Physical Capital

Human & Social Capital

Our Capital Space… and our Economic Compass…

“We cannot manage what we do not measure”

Opportunity Amid Crisis

The Global Green New Deal

• Revive the world economy, create new and decent jobs, and protect the vulnerable

• Reduce carbon dependency, ecosystem degradation, and water scarcity - 1% of GDP in green sectors over two years

• Eliminate persistent poverty by 2015…achieve the MDGs

• Seed a process of transformative change by rebalancing financial and economic capital, human capital and natural capital

From : “Rethinking the Economic Recovery: A Global Green New Deal”, UNEP, Feb 2009

Green Stimulus

0

20

40

60

80

100

120

140

Rail Grid

Wate

r/wast

e

Building

EE

Renewab

le Power

CCS/Other

Low Carb

on Vehicles

G20 Green Stimulus Spending Per Sector(US$ Billion)

Source: HSBC Global Research, UNEP

South Africa’s Green Stimulus

• South Africa launched a $7.5 bn fiscal stimulus for 2009-2011. • Around 11% or $0.8 billion was allocated to environment-related themes.

Beyond Green Stimulus:Transition towards a

Green Economy

• A Green Economy is characterized by substantially increased investments in economic sectors that build on and enhance the earth’s natural capital or reduce ecological scarcities and environmental risks.

• These investments are driven by or supported by national policy reforms and the development of international policy and market infrastructure.

Definition of Green Economy

Green Economy Initiative Components

“We see the green economy as an opportunity to respond to the notion that there is a trade-off to be made between faster economic growth and sustainable

development, and the preservation of our environment”

President Jacob Zuma, South Africa

Fostering a Green Economy in Africa

UNEP – GREEN ECONOMY INITIATIVE UNEP – GREEN ECONOMY INITIATIVE

• Green farming practices have increased yields, especially on small farms, between 79 and 180%.

• 10% increase in farm yields -> 7% reduction in poverty in Africa, more than 5% in Asia

Enhancing natural capital, Expanding wealth creation

• Approximately 2.6 billion people rely on agricultural production systems for their livelihood (FAO 2009)

• 525 million small farms world wide, 404 million less than two hectares of land (Nagayets 2005)

•Small farms cultivate 60% of arable land (Herren et al. 2010)An increase in overall GDP coming from agricultural labor productivity is on

average 2.5 times more effective in raising the incomes of the poorest quintile in developing countries than an equivalent increase in GDP coming from

non-agricultural labor productivity.

Uganda’s Organic Agriculture Transformation

UNEP – Green Economy Initiative

Organic Agriculture

US$ 22.8 mil (2007/8)US$ 6.2 mil (2004/5)US$ 3.7 mil (2003/4)

OA Exports in Uganda

48-68% lower carbon emission

Carbon Sequestration

A $ 50 bn global market growing at 10% per annum.

Organic food & drinks:

97% of revenues in OECD countries80% of producer

in developing countries

Greening Industrialisation

Source: International Energy Agency, and World Bank PPP data.

Comparison of Energy Intensities

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.451

99

0

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

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99

20

00

20

01

20

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06

20

07

Year

Un

it o

f e

ne

rgy

us

e p

er

un

it o

f G

DP

(kg

of

oil

pe

r c

on

sta

nt

20

05

PP

P $

eq

uiv

ale

nt)

World Sub-Saharan Africa Latin America & Caribbean South Asia

GDP and Environment Performance Index in Africa

Relationship between 2010 EPI and GDP for African Countries

R2 = 0.0445

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

4.50E+08 1.00E+11 2.00E+11 3.00E+11

GDP (2010 US$)

En

vir

on

men

tal

Perf

orm

an

ce I

nd

ex

(EP

I)

South Africa

Nigeria

EgyptAlgeria

Libya

Angola

MoroccoTunisia

Mauritius

Kenya

Ethiopia

Ivory Coast

Cameroon

Namibia

Senegal

Niger

Source: 2010 Environment Performance Index

The EPI is constructed from the scores of two policy objectives: Environmental Health, and Ecosystem Vitality.

The Challenge of Energy

• Limited access to energy is one of the greatest challenges to achieve the MDGs in Africa.

• African firms lose 5% of their sales due to frequent power outages, a figure that rises to 20% for informal firms unable to afford backup generation.

• Overall, the economic costs of power shortage are 1 to 2% of GDP (World Bank, 2010).

• Investments in clean energy remain minor in Africa, totalling $0.9 billion in 2009 (SEFI, 2010).

Green Jobs through Clean Energy

• About 2.3 million jobs in renewable energies in comparison to 2 million employed in oil & gas refining industry in 1999.

• Globally, investing US$630 bn in the renewable energy sector by 2030 would create 20 million additional jobs.

Harnessing Africa’s Clean Energy Potential

Source: REN21, Figures from Renewable Energy Potentials 2008

Enabling Just Transitions

UNEP – GREEN ECONOMY INITIATIVE UNEP – GREEN ECONOMY INITIATIVE

•Governments•Private

investors•businesses

•Government policies and infrastructure can encourage private sector to invest in environmentally sustainable ventures

•Create and stimulate markets for green goods and services

•Incentivize green investments and correct negative externalities

Describe major policies

Draw lessons

Favoring Green over

Brown

Sustainable Public

Procurement

Pricing Instruments

•From enabling conditions identified in sector chapters

Capacity Building

•“Enable the enablers" in developing countries

Measuring Progress: Green Economy Indicators

UNEP – Green Economy Initiative

A set of indicators capturing different aspects of a green economic transition

1. Investment, employment, and output in key sectors of the green economy

2. Decoupling economic growth from impacts on the environment

3. Aggregate indicators of economic progress and well being, including poverty alleviation and natural capital depreciation

Supply Demand

Green Economy

Supporting National Initiatives:Green Economy Advisory

Services

2010 – 2012 rollout countries • Africa: Regional project in 7 countries - Burkina Faso, Egypt,

Ghana, Kenya, Rwanda, Senegal, South Africa.• East Asia: China, Indonesia, PNG, Philippines, Rep. Korea.• Europe: Armenia, Azerbaijan, Moldova, Ukraine. • Latin America and Caribbean: Barbados, Brazil, Dominica,

Mexico – regional initiative in the Caribbean.

• West Asia: Jordan, League of Arab States.

Current Active Engagement

Deliverables:• Green Economy Scoping Studies• Green Sector Studies• Green Jobs• Enabling policies• Multistakeholer engagement

UNEP Green Economy Website

http://www.unep.org/greeneconomy/

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