Published in The Daily Star on Monday, 31 August 2015.
MACRO MIRROR
Green growth in poor countries: Burden or benefit?
Dr Fahmida Khatun
Global development path has been based on the philosophy of accelerating growth by way of burning fossil fuels. This pattern of economic development is not sustainable as it builds on the extraction of natural resources and use of carbon intensive production and consumption system to produce goods and services for the economy. Since the 60s and 70s, several economists have been arguing for a sustainable economic development which takes care of the natural resources and can ensure intergenerational equity. The Stern Review, on the economics of climate change in 2007, concluded that one percent of global GDP per annum is required to be invested in order to avoid the worst effects of climate change. The failure to do so could risk global GDP being up to twenty percent lower than it otherwise might have been.
In the wake of the triple crises of financial, fuel and food during 2007 and 2008, several countries committed to invest stimulus packages in green infrastructure. Several countries including the USA, countries from the European Union, Australia, China, Korea and Japan used their stimulus package to create industry, jobs and skills restructuring.
Since then, the concept of green growth received prominence in the 2012 United Nations Conference on Sustainable Development, popularly known as Rio+20. However, there is still no visibility as to how these will be implemented and when they could be achieved. Because countries which made the initial move, have not shown any progress towards this. Rather, extraction of fossil fuels in some of the large countries such as the USA and China continues to emit CO2. Moreover, some advanced countries also provide subsidy on fossil fuels which is a counter-productive measure. Similarly, support to automobile industry, reduced charges for gas use for low income households, temporary suspension of highway toll increase, freezing fuel prices, reducing LP gas prices, reducing commercial and industrial electricity tariffs, credit lines to support exports from the automobile industry and support to the agriculture sector in some developed countries also act against the spirit of green growth strategy.
Poor countries, such as Bangladesh, on the other hand, are showing much enthusiasm on adopting a green growth policy. Even though its CO2 emission is only a little over 0.1 percent of global CO2 emission, it has committed to make a transition towards green economy in its national plans and strategies. Even though Bangladesh is an insignificant CO2 emitter at present, as it progresses economically and thrives towards reaching the middle income status, carbon emission is likely to increase since the demand for energy for growth will increase. Besides, the country has various environmental problems. The most serious environmental problem is climate change which will severely impact the lives and livelihoods of a large number of people. So Bangladesh’s green growth strategy will mostly be geared towards addressing environment related challenges. It will be to reduce the burden of future environmental costs. And this requires huge investment in green infrastructure.
Such green infrastructure includes energy efficient buildings, green energy generation, such as solar energy and public transport, railways, foot and bike paths. Investment is also needed in energy saving measures for housing, water management, water desalination, treatment of wastewater, solid waste management infrastructure, securing alternative water sources, such as rain water, coastal area development and management, reforestation, and environment related R&D.
The government alone cannot make such massive investments. The private sector has to come forward. In order to attract private sector investment in this field, the government has to provide fiscal incentives in the form of tax rebates for investments on energy efficient buildings, support for energy efficient bulbs or fiscal benefits for installation of solar panels in private buildings. Additionally, low interest rate for loans to support low carbon technologies, tax rebate for environmentally friendly cars, measures to increase energy efficiency in industry and agriculture and allocation for protected areas and cultural heritage could also be undertaken to encourage adoption of a greener development path.
The private sector in Bangladesh has already felt the urgency of greener technologies. For example, as the global trade regime is getting stringent on compliance issues every now and then, many Bangladeshi readymade garments factories have either already implemented or in the process of implementing green technologies in their factories. The leather industry also plans to follow suit. However, for smaller factories, this is an additional burden. They will need the government’s support. Development partners will have to play a greater role as well in supporting green investment and providing more aid for the environment related issues.
Increased awareness across broader stakeholders on the issue is essential. Because there is every possibility that at times the green growth concept may be used for prohibiting exports from non-compliant countries. There is also worry about using this as a conditionality for accessing aid and loans and availing debt-relief. Weaker countries such as Bangladesh may become a victim of such green growth hype of developed countries and international development organsiations. Therefore, while moving towards a green economy will be beneficial in the long run and from an intergenerational equity point of view, the current burden of increased cost on poor countries has to be mitigated through more support from the international community.
The writer is Research Director at the Centre for Policy Dialogue, currently a Visiting Scholar at the Centre for Study of Science, Technology & Policy, India.