ABSTRACT
The concept The overview provided in previous chapters shows that green jobs, green economy and green growth are interrelated concepts and have comparable goals. They are considered as tools for achieving sustainable development. Thus, as they are used for the same purpose (enabling sustainable development) the same policy tools might be used (regulatory and market based rules, e.g. tax and government spending, labour market regulations). Policy measures enabling sustainable development have been discussed at length since the Rio 1992 conference. For example, the Rio Declaration included principles promoting the internalisation of environmental costs and the use of economic instruments (Principle 16) as well as eliminating unsustainable consumption and production (Principle 8). Agenda 21 further elaborated on these principles and called for the development of national strategies for sustainable development1 incorporating measures for integrating environment and development, providing effective legal and regulatory frameworks, making effective use of economic instruments and market and other incentives, and establishing systems for integrated environmental and economic accounting (Agenda 21, chapter 8). Some ten years later, the JPoI also identified the need to change the way societies produce and consume, and called for the development of a ten-year framework of programmes for sustainable consumption and production. In recent negotiations under the UNFCCC it has been agreed that low emission development strategies (LEDs) that adopt appropriate policy measures for low carbon development are indispensable for achieving sustainable development. The concept of green policy should contribute to sustainable development, as it is based on the double dividend hypothesis. Green policy protects the environment and brings economic benefits. The environmental component of policy is traditionally considered as costcreating, i.e. as obstacles to production and industries, which, potentially increase unemployment. Environmental considerations are usually dealt with by the regulation of the activities that cause them (prohibition, or at least limiting
the behaviour that leads to the deterioration of the environment), or market based instruments (pollution tax, cap and trade). The regulation approach was used in the first major wave of environmental legislation in the early 1970s. It issues specific instructions in the form of regulations (e.g. as car emissions standards). The direct regulation of activities that cause pollution does not offer any scope for flexibility, and thus can slow down economic growth, e.g. the reduction of GHG emissions based on climate change policies is expected to lower output (between 1 and 3 per cent of gross world product). A market-based approach gives an incentive, via prices (e.g. pollution tax, a system of tradable emissions permits, a cap and trade system),2 to limit environmental degradation. Business usually reacts better to market demand than to government regulation. There is wide agreement among environmental economists that a market-based programme that limits carbon emissions by putting a price on them can achieve sizeable results at modest cost. However, there is vivid debate on how quickly market based programmes should be implemented – immediately or gradually. By the introduction of a pollution tax, the price of pollution is defined, and polluters know what price they will have to pay, but the government does not know how much pollution (and related revenue for the government) they will generate. The tax can be applied domestically and for international trade. Provided that pollution tax on import is comparable to domestic tax (or cost of licenses), it would be acceptable under international-trading rules. The cap and trade system limits the amount of pollution. Polluters do not know what the price of emissions will be. For the government, if licences are auctioned, the revenue impact is not known. If licences are distributed for free, the potential revenue goes to industry instead of the government. On the other hand, there is criticism claiming that market based approaches under the concept of green economy are wrong, because environmental and climate crises are not the result of market failure. Thus, it is considered that they cannot be corrected by putting a price on nature. With regard to the growth component, there is no consensus on policies that support growth. The Washington Consensus, post-Washington Consensus and initiatives on green inclusive growth have tried to list policies necessary to foster growth (see Table 5.1). The Washington Consensus outlines a standard reform package consisting of a set of ten economic policy prescriptions (see Table 5.1) supported by the IMF, the World Bank and the US Treasury Department. Criticism of the Washington Consensus relates to the measures that are included (e.g. openness to global market) and those that are missing (e.g. institution building), and has widely spread since the 1990s. The World Bank, identified several success factors of East Asian growth (the distribution of income and assets, mass education and state guidance of investment), which was the basis for the promotion of the new institutional economics and a post-Washington Consensus approach. This approach acknowledges that the development process is linked with social relations, the distribution of property rights, work patterns,
Ta bl
e 5.
