Green economy

The green economy is defined as an economy that aims at reducing environmental risks and ecological scarcities, and that aims for sustainable development without degrading the environment. It is closely related with ecological economics, but has a more politically applied focus.[1][2] The 2011 UNEP Green Economy Report argues "that to be green, an economy must not only be efficient, but also fair. Fairness implies recognising global and country level equity dimensions, particularly in assuring a just transition to an economy that is low-carbon, resource efficient, and socially inclusive." [3]

A feature distinguishing it from prior economic regimes is the direct valuation of natural capital and ecological services as having economic value (see The Economics of Ecosystems and Biodiversity and Bank of Natural Capital) and a full 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.[4]

Green Sticker and ecolabel practices have emerged as consumer facing measurements of friendliness to the environment and sustainable development. Many industries are starting to adopt these standards as a viable way to promote their greening practices in a globalizing economy.

"Green" economists and economics

"Green economics" is loosely defined as any theory of economics by which an economy is considered to be component of the ecosystem in which it resides (after Lynn 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 of feminism, postmodernism, the ecology movement, peace movement, Green politics, green anarchism and anti-globalization movement have used the term to describe very different ideas, all external to some equally ill-defined "mainstream" economics.

The use of the term is further ambiguated by the political distinction of Green parties which are formally organized and claim the capital-G "Green" term as a unique and distinguishing mark. It is thus preferable to refer to a loose school of "'green economists"' who generally advocate shifts towards a green economy, biomimicry and a fuller accounting for biodiversity. (see The Economics of Ecosystems and Biodiversity especially for current authoritative international work towards these goals and Bank of Natural Capital for a layperson's presentation of these.)

Some economists view green economics as a branch or subfield of more established schools. For instance, it is regarded as classical economics where the traditional land is generalized to natural capital and has some attributes in common with labor and physical capital (since natural capital assets like rivers directly substitute for man-made ones such as canals). Or, it is viewed as Marxist economics with nature represented as a form of Lumpenproletariat, an exploited base of non-human workers providing surplus value to the human economy, or as a branch of neoclassical economics in which the price 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.

An increasing commitment by the UNEP (and national governments such as the UK) to the ideas of natural capital and full 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 the Bretton Woods institutions (notably the World Bank[5] and International Monetary Fund (via its "Green Fund" initiative) responsible for global monetary policy have stated a clear intention to move towards biodiversity valuation and a more official and universal biodiversity finance. Taking these into account targeting not less but radically zero emission and waste is what is promoted by the Zero Emissions Research and Initiatives. The UNEP 2011 Green Economy Report informs that "[b]ased 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." [3]


Karl Burkart defines a green economy as based on six main sectors:[6]

Environment Equitable Sustainable Bearable (Social ecology) Viable (Environmental economics) Economic Social
The three pillars of sustainability.

The International Chamber of Commerce (ICC) representing global business defines 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”.[7][8]

In 2012, the ICC published the Green Economy Roadmap, containing contributions from experts from around the globe brought together in a two-year consultation process. The Roadmap represents a comprehensive and multidisciplinary effort to clarify and frame the concept of “green economy”. It highlights the essential role of business in bringing solutions to common 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:

Ecological measurements

Measuring economic output and progress is done through the use of economic index indicators. Green indices emerged from the need to measure human ecological impact, efficiency sectors like transport, energy, buildings and tourism, as well as the investment flows targeted to areas like renewable energy and cleantech innovation.

  1. 2010 - 2016 Global Green Economy Index™ (GGEI),[9] published by consultancy Dual Citizen LLC is in its 5th edition. It measures the green economic performance and perceptions of it in 80 countries and 50 cities along four main dimensions of leadership & climate change, efficiency sectors, markets & investment and the environment.
  2. 2009 - 2012 Green City Index [10] A global study commissioned by Siemens
  3. 2009 - 2013 Circles of Sustainability project scored 5 cities in 5 separate countries.

Ecological footprint measurements are a way to gauge anthropogenic impact and are another standard used by municipal governments.[11]

Green energy issues

Green economies require green energy generation based on renewable energy to replace fossil fuels as well as energy conservation and efficient energy use.

There is justification for market failure to respond to environmental protection and climate protection needs with the excuse that high external costs and high initial costs for research, development, and marketing of green energy sources and green products prevents firms from voluntarily reducing their ecological footprints.[12] The green economy may need government subsidies as market incentives to motivate firms to invest and produce green products and services. The German Renewable Energy Act, legislations of many other member states of the European Union and the American Recovery and Reinvestment Act of 2009, all provide such market incentives. However, other experts[13] 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.


A number of organisations and individuals have criticised aspects of the 'Green Economy', particularly the mainstream conceptions of it based on using price mechanisms to protect nature, arguing that this will extend corporate control into new areas from forestry to water. The research organisation ETC Group argues that the corporate emphasis on bio-economy "will spur even greater convergence of corporate power and unleash the most massive resource grab in more than 500 years."[14] Venezuelan professor Edgardo Lander says that the UNEP's report, Towards a Green Economy,[15] 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 and financial power of the corporations."[16] Ulrich Hoffmann, in a paper for UNCTAD also says that the focus on Green Economy and "green growth" in particular, "based on an evolutionary (and often reductionist) approach will not be sufficient to cope with the complexities of climate change" 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.[17] Clive Spash, an ecological economist, has criticised the use of economic growth to address environmental losses,[18] 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.[19] He has also criticised the UN's project on the economics of ecosystems and biodiversity (TEEB),[20] and the basis for valuing ecosystems services in monetary terms.[21]

See also

Notes and references

  1. "-- United Nations Environment Programme (UNEP) - Error page --". Retrieved 11 May 2016.
  2. Lynn R. Kahle, Eda Gurel-Atay, Eds (2014). Communicating Sustainability for the Green Economy. New York: M.E. Sharpe. ISBN 978-0-7656-3680-5.
  3. 1 2 UNEP, 2011, Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication,
  4. Runnals, D. (2011) “Environment and economy: joined at the hip or just strange bedfellows?”. S.A.P.I.EN.S. 4 (1)
  5. "World Bank to lead economic push on nature protection". BBC News. Retrieved 11 May 2016.
  6. "How do you define the 'green' economy?". MNN - Mother Nature Network. 2009-01-09. Retrieved 2013-11-09.
  7. "Green Economy Roadmap". Retrieved 11 May 2016.
  8. UNDESA, (2012). A guidebook to the Green Economy.
  9. "2016 Global Green Economy Index" (PDF). Dual Citizen LLC. 19 September 2016. Retrieved 19 September 2016.
  10. "Home - English - Siemens Global Website". Retrieved 11 May 2016.
  12. (Reinhardt, 1999; King and Lenox, 2002; Wagner, 203; Wagner, et al., 2005)
  13. Amory Lovins, Hunter Lovins, and Paul Hawken, authors of Natural Capitalism: Creating the Next Industrial Revolution, and Jay Conrad Levinson and Shel Horowitz, authors of Guerrilla Marketing Goes Green
  14. Etcgroup (2011) “Who will control the Green Economy"
  15. "Green Economy - Green Economy Report". UNEP. 2011-11-16. Retrieved 2013-11-09.
  16. "The Green Economy: the Wolf in Sheep's clothing". Transnational Institute. Retrieved 11 May 2016.
  17. U.Hoffmann (2011), "Some reflections on climate change, green growth illusions and development space"
  18. Spash, C.L. 2007. Fallacies of economic growth in addressing environmental losses: Human induced climatic change. Newsletter of the Australia New Zealand Society for Ecological Economics (ANZSEE), no. May, 2-4
  19. "EconPapers: Green Economy, Red Herring". Retrieved 11 May 2016.
  20. Spash, C.L. 2011. Terrible economics, ecosystems and banking. Environmental Values, vol. 20, no. 2, 141-145
  21. Spash, C.L. 2008. How much is that ecosystem in the window? The one with the bio-diverse trail. Environmental Values, vol. 17, no. 2, 259-284


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