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Agreen economy is aneconomy that aims at reducing environmental risks and ecological scarcities, and that aims forsustainable development withoutdegrading the environment.[1][2][3] It is closely related withecological economics, but has a more politically applied focus.[4][5] The 2011UNEP Green Economy Report argues "that to be green, an economy must not only be efficient, but also fair. Fairness implies recognizing global and country level equity dimensions, particularly in assuring aJust Transition to aneconomy that is low-carbon, resource efficient, and socially inclusive."[6]
A feature distinguishing it from prior economic regimes is the direct valuation ofnatural capital andecological services as havingeconomic value (seeThe Economics of Ecosystems and Biodiversity andBank of Natural Capital) and afull cost accounting regime in which costs externalized onto society via ecosystems are reliably traced back to, and accounted for as liabilities of, the entity that does the harm or neglects an asset.[7]
Green sticker andecolabel practices have emerged as consumer facing indicators of friendliness to the environment andsustainable development. Many industries are starting to adopt these standards as a way to promote their greening practices in aglobalizing economy. Also known assustainability standards, these standards are special rules to make sure the products bought did not hurt the environment and the people that make them. The number of these standards has increased in recent years, and they now contribute to building a new, greener economy. However, their effectiveness is often limited by inconsistent enforcement, lack of global alignment, and insufficient incentives for compliance. They focus on economic sectors likeforestry,farming,mining orfishing, among others; concentrate on environmental factors like protecting water sources andbiodiversity, or reducinggreenhouse gas emissions; support social protections andworkers' rights; and home in on specific parts of production processes.[8]
Green economics is loosely defined as any theory ofeconomics by which an economy is considered to be component of the ecosystem in which it resides (afterLynn Margulis). A holistic approach to the subject is typical, such that economic ideas are commingled with any number of other subjects, depending on the particular theorist. Proponents offeminism,postmodernism, theenvironmental movement,peace movement,Green politics,green anarchism andanti-globalization movement have used the term to describe very different ideas, all external tomainstream economics.[citation needed]
According to Büscher, the increasing liberalisation of politics since the 1990s has meant that biodiversity must 'legitimise itself' in economic terms. Many non-governmental organisations, governments, banks, companies and so forth have started to claim the right to Define and defend biodiversity and in a distinctly neoliberal manner that subjects the concept's social, political, and ecological dimensions to their value as determined by capitalist markets.[9]
Some economists view green economics as a branch or subfield of more established schools. For instance, it can be regarded asclassical economics where the traditional land is generalized tonatural capital and has some attributes in common with labor and physical capital (since natural capital assets like rivers directly substitute for human-made ones such ascanals). Or, it can be viewed asMarxist economics with nature represented as a form ofLumpenproletariat, an exploited base of non-human workers providingsurplus value to the human economy, or as a branch ofneoclassical economics in which theprice of life for developing vs. developed nations is held steady at a ratio reflecting a balance of power and that of non-human life is very low.[citation needed]
An increasing commitment by theUNEP (and national governments such as the UK) to the ideas ofnatural capital andfull cost accounting under the banner 'green economy' could blur distinctions between the schools and redefine them all as variations of "green economics". As of 2010 theBretton Woods institutions (notably theWorld Bank[10] andInternational Monetary Fund (via its "Green Fund" initiative) responsible for globalmonetary policy have stated a clear intention to move towardsbiodiversity valuation and a more official and universalbiodiversity finance.[11]
The UNEP 2011 Green Economy Report informs that "based on existing studies, the annual financing demand to green the global economy was estimated to be in the range US$1.05 to US$2.59 trillion. To place this demand in perspective, it is about one-tenth of total global investment per year, as measured by global Gross Capital Formation."[6]
AtCOP26, theEuropean Investment Bank announced a set of just transition common principles agreed upon with multilateral development banks, which also align with theParis Agreement. The principles refer to focusing financing on the transition tonet zero carbon economies, while keeping socioeconomic effects in mind, along with policy engagement and plans for inclusion and gender equality, all aiming to deliver long-term economic transformation.[12][13]
The African Development Bank,Asian Development Bank,Islamic Development Bank,Council of Europe Development Bank,Asian Infrastructure Investment Bank,European Bank for Reconstruction and Development,New Development Bank, andInter-American Development Bank are among themultilateral development banks that have vowed to uphold the principles ofclimate change mitigation and a Just Transition.The World Bank Group also contributed.[12][14][15]
Karl Burkart defined a green economy as based on six main sectors:[16]
TheInternational Chamber of Commerce (ICC), representing global business, defines the green economy as "an economy in which economic growth and environmental responsibility work together in a mutually reinforcing fashion while supporting progress on social development".[17][18]
In 2012, the ICC published theGreen Economy Roadmap, containing contributions from international experts consulted bi-yearly. The Roadmap represents a comprehensive and multidisciplinary effort to clarify and frame the concept of "green economy". It highlights the role of business in bringing solutions to global challenges. It sets out the following 10 conditions which relate to business/intra-industry and collaborative action for a transition towards a green economy:
Eco-investing or green investing is a form ofsocially responsible investing whereinvestments are made in companies that support or provideenvironmentally friendly products and practices. These companies encourage (and often profit from)new technologies that support the transition fromcarbon dependence to more sustainable alternatives.[19]Green finance is "any structured financial activity that’s been created to ensure a better environmental outcome."[20]
As industries'environmental impacts increased,environmental sustainability then took center stage in pop-culture and the financial world as well. In the 1990s, many investors turned to moreenvironmentally friendly institutions. While some investors still rely on their funds to decrease theirecological footprints, many of them kept the same practices. Investment in companies that are damaging to the environment, and investment into the infrastructure that supports those companies detract from environmentally sustainable investment.[21]
The Global Climate Prosperity Scoreboard – launched by Ethical Markets Media and The Climate Prosperity Alliance to monitor private investments in green companies – estimated that over $1.248 trillion has been invested in solar, wind,geothermal, ocean/hydro and other green sectors since 2007. This number represents investments fromNorth America,China,India, andBrazil, as well at other developing countries.[22].jpg)
Green growth is a concept in economic theory and policymaking used to describe paths ofeconomic growth that are environmentally sustainable.[23][24][25] The term was coined in 2005 by the South Korean Rae Kwon Chung (de), a director atUNESCAP.[26] It is based on the understanding that as long as economic growth remains a predominant goal, adecoupling of economic growth from resource use and adverse environmental impacts is required. As such, green growth is closely related to the concepts of green economy andlow-carbon orsustainable development. A main driver for green growth is the transition towardssustainable energy systems. Advocates of green growth policies argue that well-implemented green policies can create opportunities for employment in sectors such asrenewable energy,green agriculture, orsustainable forestry.[27]
Several countries and international organizations, such as theOrganisation for Economic Co-operation and Development (OECD), World Bank, and United Nations,[26] have developed strategies on green growth; others, such as theGlobal Green Growth Institute (GGGI), are specifically dedicated to the issue. The term green growth has been used to describe national or international strategies, for example as part of economic recovery from theCOVID-19 recession, often framed as agreen recovery.
Critics of green growth highlight how green growth approaches do not fully account for the underlying economic systems change needed in order to address theclimate crisis,biodiversity crisis and otherenvironmental degradation. Critics point instead to alternative frameworks for economic change such as acircular economy,steady-state economy,degrowth,doughnut economics and others.[28]Approximately 57% of businesses responding to a survey are investing inenergy efficiency, 64% in reducing andrecycling trash, and 32% in new, less polluting industries and technologies. Roughly 40% of businesses made investments in energy efficiency in 2021.[29][30]
Measuring economic output and progress is done through the use ofeconomic index indicators. Green indices emerged from the need to measurehuman ecological impact, efficiency sectors liketransport,energy,buildings andtourism, as well as theinvestment flows targeted to areas likerenewable energy andcleantech innovation.
Ecological footprint measurements are a way to gauge anthropogenic impact and are another standard used by municipal governments.[34]
Green economies requirea transition togreen energy generation based onrenewable energy to replacefossil fuels as well asenergy conservation andefficient energy use.[35] Renewables, likesolar energy andwind energy, may eliminate the use of fossil fuels for electricity by 2035 and replace fossil fuel usage altogether by 2050.[36]
Themarket failure to respond toenvironmental protection andclimate protection needs can be attributed to highexternal costs and high initial costs for research, development, and marketing ofgreen energy sources and green products.[37] The green economy may need government subsidies as market incentives to motivate firms to invest and produce green products and services. TheGerman Renewable Energy Act, legislations of many othermember states of the European Union and theAmerican Recovery and Reinvestment Act of 2009, all provide such market incentives.[citation needed] However, other experts[38] argue that green strategies can be highly profitable for corporations that understand the business case for sustainability and can market green products and services beyond the traditional green consumer.
In the United States, it seemed as though thenuclear industry was coming to an end by the mid-1990s. Until 2013, there had been no new nuclear power facilities built since 1977. One reason was due to the economic reliance on fossil fuel-based energy sources. Additionally, there was a public fear of nuclear energy due to theThree Mile Island accident and theChernobyl disaster.[39] TheBush administration passed the2005 Energy Bill that granted the nuclear industry around 10 million dollars to encourage research and development efforts.[40] With the increasing threat of climate change, nuclear energy has been highlighted as an option to work to decarbonize the atmosphere and reverse climate change.[41] Nuclear power forces environmentalists and citizens around the world to weigh the pro and cons of using nuclear power as arenewable energy source. The controversial nature of nuclear power has the potential to split the green economy movement into two branches— anti-nuclear and pro-nuclear.
According to a European climate survey, 63% of EU residents, 59% of Britons, 50% of Americans and 60% of Chinese respondents are in favor of switching torenewable energy. As of 2021, 18% of Americans are in favor ofnatural gas as a source of energy. For Britons and EU citizens nuclear energy is a more popular energy alternative.[42]
After the COVID-19 pandemic, Eastern European and Central Asian businesses fall behind their Southern European counterparts in terms of the average quality of their green management practices, notably in terms of specified energy consumption and emissions objectives.[43][44]
External variables, such as consumer pressure and energy taxes, are more relevant than firm-level features, such as size and age, in influencing the quality of green management practices.[43][44] Firms with less financial limitations and stronger green management practices are more likely to invest in a bigger variety of green initiatives. Energy efficiency investments are good to both the bottom line and the environment.[43][44]
The shift to greener energy and the adoption of more climate regulations are expected to have a 30% positive impact on businesses, mostly through new business prospects, and a 30% negative impact, according to businesses that took part in a survey in 2022. A little over 40% of the same businesses do not anticipate the transition to greener alternatives to alter their operations.[45][46][47]
A number of organisations and individuals have criticised aspects of the 'Green Economy', particularly the mainstream conceptions of it based on usingprice mechanisms to protect nature, arguing that this will extend corporate control into new areas fromforestry to water. Venezuelan professorEdgardo Lander says that theUNEP's report,Towards a Green Economy,[48] while well-intentioned "ignores the fact that the capacity of existing political systems to establish regulations and restrictions to the free operation of the markets – even when a large majority of the population call for them – is seriously limited by the political andfinancial power of the corporations."[49]
Ulrich Hoffmann, in a paper forUNCTAD also says that the focus on Green Economy and "green growth" in particular, "based on an evolutionary (and oftenreductionist) approach will not be sufficient to cope with the complexities of [[climatechange]]" and "may rather give much false hope and excuses to do nothing really fundamental that can bring about a U-turn of global greenhouse gas emissions.[50] Clive Spash, an ecological economist, has criticised the use of economic growth to address environmental losses,[51] and argued that the Green Economy, as advocated by the UN, is not a new approach at all and is actually a diversion from the real drivers of environmental crisis.[52] He has also criticised the UN's project on the economics of ecosystems and biodiversity (TEEB),[53] and the basis for valuing ecosystems services in monetary terms.[54]
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