Transcript Green economy and growth_WB Toman_18May-rev

Mike Toman, Lead Economist and Manager,
Environment and Energy Research Team
18 May 2010
MDG
Challenge
1) Eradicate poverty & hunger
Natural resource degradation
2) Universal primary education
Water/sanitation; energy access
3) Gender equality/empowerment
Land use; indoor air pollution
4) Reduce child mortality
Water/sanitation
5) Improve maternal health
Water quality; energy/pollution
6) Combat major diseases
Air & water quality//climate change
7) Environmental sustainability
NR degradation; BD, CC; governance
8) Global public good partnerships
Biodiversity, int’l waters, CC
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Low-carbon growth
“Green stimulus” recovery packages
“Green infrastructure” investment
Meeting basic energy and water needs
Increasing resilience to natural variability
Improved efficiency of existing
environmental regulation
Correcting harmful market distortions
New economic opportunities (green supply
chains, eco-tourism, green innovation,…)
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A guaranteed “win-win” for environment
and GDP growth
◦ Real costs of environmental protection yield
improvement in quality of life
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A direct path to new markets and
economic opportunities
◦ Some green technologies are not (yet) market
ready; others are missed opportunities
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An assured solution to problems of
poverty reduction and social equity
◦ South Africa’s electricity “lifeline” policy yields
significant benefits but also requires ongoing
expenditures; broader “safety net” challenges
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Complement technology development and
standards, implementation targets with
pro-environment, pro-inclusive-growth
economic incentives
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Target incentives for cost-effectiveness
Solid enforced legal structure also key
Policy reforms go beyond the environment
and energy sphere
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Stronger environmental & natural resource
management & investment to enhance
growth, reduce poverty
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Enhanced quality and availability of communal
land and water resources in rural areas
Growth-enhancing investments in technical
improvements and infrastructure that also reduce
environmental impacts
Includes but goes beyond existing approaches for
environmental protection
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Maintain environmental sustainability
◦ “Meet needs of present without
compromising ability of future to meet its
needs”
◦ Offset “natural capital” depletion with
other social wealth build-up – increased
aggregate savings to accelerate growth
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Reduce market failures and institutional
barriers to green markets
◦ Institutional and governance improvements that
improve economic incentives for sustainability
(investment and consumption)
o Addressing economically wasteful and
environmental harmful subsidies – energy, water,
land use, …with concern for impacts on poor
o Targeted, cost-effective fiscal incentives for
green investment
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Improved national accounting for costs of
resource and environmental depletion
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Enhancing natural resource
productivity – “basic needs plus”
 Addressing emerging problems as
economy grows and diversifies
 Taking opportunities in green
innovation and new market and
employment development
 Not just low-carbon development!
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Core Near-Term Policy Issues:
 Employment
 Fiscal Space
 Efficiency of Resource Use
 Immediate environmental threats
 Stage setting for longer-term
sustainability
Not listed in any priority order
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Stronger and clearer economic incentives
are crucial for advancing on all these issues
– not just for the environment
Price signals reflecting social costs of
resource & environmental impacts are
inherent part of incentive system – induce
more efficient and sustainable uses
But, there is much more to the story than
the pain of higher product prices!
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Changes in input demands creates ready
demand for more eco-efficient technology –
increasing economic rewards, reducing
risks & financing barriers
◦ Can be complemented selectively with
performance standards, demonstrations to
increase scale and lower costs
◦ Signals can be designed to reflect balance of
more immediate and longer-term environmental
and resource conservation priorities
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Can start with most available, low-cost and
labor-intensive opportunities
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Solar water heating
Green building retrofits
Off-grid power for more remote areas
Installation of efficient water using devices
Audit and assessment functions
Transport congestion reduction
On-site materials recycling, re-use
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Financing technology innovation/diffusion,
other longer-term green growth options
Increase green job skills
Help for cost of lifeline measures
Measures to reduce highly segmented and
distorted labor markets
◦ Research indicates net cost of increasing energy
prices may be minimal if accompanied by fiscal
and labor market reforms
Improved access for rural/poor credit,
transportation infrastructure,
education for rural/poor
 Cost-effective, market-enhancing
economic regulation in energy sector
 Reduced institutional barriers to green
technology policies – finance, trade,
human knowledge
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Subsidizing some green investment can be
costly, especially if not well targeted
◦ Tax breaks reduce fiscal space
◦ Feed-in tariffs for costlier renewables shift cost
to all users
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Industrial policy to develop green markets
and technologies?
◦ Generally has worked only for certain countries in
certain circumstances
◦ Important to rely on comparative advantages for
managing market and regulatory uncertainties
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Goal of 50% clean energy lending in relatively
near future, including low-emission transport
Improved watershed management (not just
end of pipe treatment)
Support for country access to donor green
grant funding
Integrating environment into national level
development partnership strategies
Technical assistance and knowledge transfer
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Africa Climate Resilient Growth
Strategy
Assessment of poverty,
environment and health linkages
in Egypt, Yemen and Djibouti
Expanded Bank assistance in
Sub-Saharan Africa for
management of protected areas
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Range of environment – growth
synergies not yet fully mapped out
◦ Tradeoffs between nearer-term stimulus
and longer-term growth
◦ Relative growth performance of more or
less green strategies
◦ Role of innovation and strategic capacity
investment to enhance green growth
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….I have discovered the secret that after
climbing a great hill, one only finds that there
are many more hills to climb….
….I dare not linger, for my long walk is not
ended.
[email protected]
Questions and comments very
welcome. Thank you!
Environmental
Health
and Pollution
Management
Sustainable
Natural
Resource
Management
 24% of disease burden and 23% of all deaths in
developing countries from environmental risk factors
 Half of malnutrition caused by poor sanitation from
lack of access to safe water
 Indoor air pollution responsible for 1.5 million
premature deaths from respiratory illness; 2.7% of
global burden of disease
 Deterioration seen in water, air, forests, grasslands,
marine resources, agro-ecosystems
 Overfishing: 75% of global fish stocks fully or overexploited
 Damages to protected areas, wetlands, other
ecosystem buffers
 Climate Change
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FY09, ENRM portfolio amounted to $13 billion
(10% of total)
Active
Environment
and Natural
Resource
Management
(ENRM) Portfolio
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Policies,
Governance
Institutions,
International
Cooperation
 Limited inter-ministerial coordination for advancing
and balancing economic, environmental goals
 Limited coordination among levels of government
 Shortcomings in natural resource management
 Challenges and opportunities of urbanization
 Inadequate enforcement
 Environmentally and economically harmful policy
distortions
 Weaknesses in international cooperation
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Higher profile of env in country strategies
Maintain safeguards management
Increased analysis of environmental
opportunities and implementation costs
◦ So far, limited economic analysis of
environmental improvements in practice
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Increased env policy-based lending
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Studies highlight severe infrastructure gaps:
% households with
regular
access to:
All
developing
countries
Africa
Non-Africa
low-income
countries
Electricity
63
29
56
Improved
water
84
60
79
Improved
sanitation
52
31
48
All weather
road (rural)
64
36
42
South Africa figures better, e.g.
81% electricity access
Africa
country
grouping
Infra
Needs
(%GDP)
Spending
(%GDP)
Correctable
inefficiencies
(%GDP)
Net gap
(%GDP)
Middle
income
10
6
2
2
Resource
rich
12
5
3
4
Low
income
22
10
3
9
Fragile
states
36
6
5
25
All Africa
15
7
3
5
Source: World Bank Africa Infrastructure
Country Diagnostic, 2010
180
160
140
120
100
80
60
40
20
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
East Asia and Pacific
Europe and Central Asia
Latin America and the Caribbean
Middle East and North Africa
South Asia
Sub-Saharan Africa
Source: World Bank data base on private
infrastructure investment (PPIAF)
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WB infrastructure lending increased from
$2.5billion in FY2008 to $3.6 billion in
FY2009
Separate longer-term economic benefits
from near-term stimulus effects
◦ Many green growth investments could have large
employment impacts only over the longer term
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Economic benefits of “creating new jobs”
depends on cost-effectiveness of stimulus
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Eskom investment – critical need to alleviate
power supply problems, longer-term focus
on improved efficiency and renewables
◦ Current WB guidance on coal investment
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Continued emphasis on biodiversity and
tourism benefits from protected areas
◦ Cape Peninsula, Simangaliso Wetland Park
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Water –persistent need to improve systemic
management and resilience to shocks,
increase efficiency of use