The green ecosystem

In most underdeveloped and emerging economies, general discussion of a green economy is still at a nascent stage. This is largely due to the perception that "green growth" is always less than "standard" economic growth and costlier. As these countries have large concentrations of the world's poor and negligible social capital expenditures, their utmost priority is to increase income so that the state can ensure distribution and investment in a way that lifts people out of poverty and creates a conducive atmosphere for private investment.

In developing and underdeveloped countries, which is the home to nearly three-fourth of the world's poor (which ever definition one uses) - the issue of "going green" is yet to become part of the mainstream policy discussions mainly because there are not enough resources to meet the basic needs of substantial segments of the population. It is generally perceived that shifting to green businesses will mean high initial costs through adoption of energy efficient technologies, and could compromise growth and lead to an inflationary situation. Moreover, the growing number of youth who are unemployed, underemployed, or working under unacceptable conditions is one of the most daunting problems faced by these countries. Achieving Millennium Development Goals (MDGs) in these countries requires a substantial increase in growth and in employment opportunities so compromising these for green growth would create a dilemma. In addition, the support for green business ventures initiated in few countries is often crippled by an inadequate availability of resources, inefficient subsidies, limited opportunities for global partnership, lack of demand, and want of local action.

In case of India "Faster, Sustainable and More Inclusive Growth" is the focus of the XIIth Five Year Plan. This gives an impression that the growth that India has thus far achieved might not be sustainable and not inclusive of common citizens. Neoclassical growth is different from inclusive green growth. The pertinent question now is whether economic growth is different from sustainable growth? In other words, can the high-growth path adopted by India be decoupled from resource use intensity and environmental degradation? At least based on the current growth strategy, the answer could be the negative; hence, the Planning Commission specifically wants to focus on sustainability that can be achieved through accelerating the decoupling process.

However, in India, decoupling to achieve the green goals so as to include the common citizens can be difficult, as the focus continues to be on growth, which is a precondition for creating more resources for social sector allocations. In other words, in India at its current stage of development, there may be a clear trade-off between growth and green growth. Shifting from current growth strategies to green growth does come with costs, and these can be higher (in some cases, substantially higher) for developing countries than industrialised nations. Countries suffering from scarce capital may need to divert more resources towards new and energy-saving technologies that may be costlier than traditional technologies. Although one can argue that this change in technology might secure higher profit margins in the long run, in the short term it could push costs too high and compromise growth and, hence, distribution. In the absence of higher social sector outlays, and because fiscal space is limited, the cost for the common citizen (especially poor) from the loss in growth and employment can be irreparable. Nevertheless, in India, going green should not be seen as an option or by-passed. Most economic agents have accepted this concept and its importance is reflected in the many government initiatives (including eight missions under National Action Plan for Climate Change and taskforce on Climate Change and Green Jobs). Hence, for long-term benefits and sustainable growth, more focus should be on promoting green investment, even if it has adverse growth impacts in the initial phases. The process therefore requires substantial support from the global community, particularly developed nations and international organisations, as well as from the domestic fiscal policies to ensure the common citizens participation in the green process. Towards that direction is the forthcoming Rio+20 conference on sustainable development where green growth is one of the main agendas. Another pertinent concern in the green growth process is to generate more "green brains", which calls for priority investments in research and development.

Tags: green economy, energy access, economic growth, sustainable development, green growth