Guest Article #96

Green Growth is the Heart of Development

When you fly over the beautiful island of Hispanola, you see the border on the ground below. Where there is green forest, it is the Dominican Republic. Where there is dry, brown and deforested land, it is Haiti. The environmental catastrophe of Haiti is due to the policies of irresponsible dictators. It also originates in poverty. But environmental degradation is also a cause for the continued poverty of Haiti. The Dominican Republic is six times richer when measured in per capita terms than is Haiti. In only few places on planet earth is the complete integration of environment and development visible.

Environmental degradation can take a significant toll both on a country's economic development and on the well-being of its citizens. Today, I am pleased to say that we are seeing more and more examples of nations, where improved management of natural resources and environmental services are creating new sources of income and providing livelihoods for poor people and communities.

In Ethiopia, forest regeneration has boosted livestock productivity and increased the incomes of herders. Ethiopia has launched an extremely ambitious low carbon strategy aiming at becoming a middle income country in 2025 without increased greenhouse gas emissions. In Bangladesh, use of solar heating has met the challenge of energy access while creating thousands of jobs for rural women. Bangladesh is also much more prepared than in the past to save life and property in the case of an increase in the risk of cyclones caused by climate change. In Costa Rica, financial incentives have induced indigenous farmers and forest dwellers to conserve forests and watersheds that provide clean water upstream. Currently, Costa Rica's eco-tourism industry contributes a larger share of its GDP than any other economic sector.

Natural capital comprises 25% of total direct per capita wealth in many developing countries, compared to only 2% in OECD countries. This makes the links between environmental performance, equity and poverty much more direct and significant. The value of natural capital must be taken into account by everyone – from top-level decision makers to building contractors – when choosing technologies and production processes.

Some things are irreplaceable if lost, like the unique services that bees provide when they pollinate flowers that in turn produce fruit. A destroyed rain forest takes thousands of years to re-grow. Others, like clean water and air, can be re-established over time, although with varying degrees of success and at significant cost. And even renewable resources – freshwater, forests and fisheries – are seeing much faster depletion than renewal rates. Ultimately, a green growth approach must ensure that every citizen, business and government perceives the value of natural assets in providing growth, well-being and a sustainable future.

OECD will launch Putting Green Growth at the Heart of Development, on 5 June, World Environment Day. This report brings together 74 examples of green policies and measures gathered from 37 developing countries and five regional initiatives. The publication highlights three “must-do's" for successfully tackling green growth at the national level. Primordial among these is the need to secure backing at the highest political level so as to establish a long-term vision and guide policy and investment. I have already seen clear examples from countries like Cambodia, Ethiopia and Rwanda – some of the least developed nations today – whose ministers have told me of their first-hand experience in designing natural resources management policies to produce economic growth while reducing poverty. A middle income country like Brazil has reduced the deforestation rate in Amazon by 80%, probably the greatest service done to the environment by one nation at any time.

We also need political courage to reform some policies that are counter-productive, such as fossil fuel subsidies. Globally we spend more than USD 523 billion a year of scarce public resources – more than four times today's foreign aid – on harmful energy subsidies. Reforming these can free up resources for priorities such as education and health, which have profound impact on development. Thanks to strong leadership, we are seeing progress in countries ranging from Ghana and Mozambique in Africa to Indonesia and India in Asia.

As providers of development cooperation, the members of the OECD Development Assistance Committee (DAC) have an important role to play, working together with committed developing countries to find ways to green the global growth, make it sustainable and ensure that it is inclusive. This requires imagination to bring together the environment and the economic policy aims of government.

I was very happy to be part of the group initiating international efforts to Reduce Emissions from Deforestation and Forest Degradation (REDD). This has helped reduce greenhouse gas emissions in many developing countries while boosting local livelihoods. When designed properly, these systems ensure that local communities share the economic gains from payments for ecosystem services. Another example is the recent support from the European Union and others for the UN Sustainable Energy for All initiative, placing emphasis on the access to modern, clean energy sources that can create millions of jobs for those involved in their installation and maintenance.

Time has come to seize the opportunities of green growth. We can face the challenges and trade-offs involved. Building on all the positive examples we should now scale up, so we can deliver benefits on a much larger scale.

Report Webpage for 'Putting Green Growth at the Heart of Development'

Erik Solheim's Biography