Green Economy Briefing Papers

Key Issues for the transformation towards the Green Economy




UNEP, in cooperation with the International Monetary Fund (IMF) and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), organized a Technical Workshop on Fiscal Policies Towards an Inclusive Green Economy in October 2012 in Geneva. The workshop brought together representatives from both finance and environment ministries to share and discuss their experiences and good practices for driving a green economy through fiscal policy reforms.

This paper is one of the follow-ups of this joint endeavour. Key issues addressed:

  • The role of environmental taxes in a green economy transition
  • Reforming energy subsidies
  • Implications of fiscal reforms and lessons learned

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Extreme poverty persists in large parts of the world despite decades of economic growth and efforts for poverty eradication. The recent financial, food and economic crises have brought new setbacks in the fight against poverty. Initiatives aimed at greening the economy in different parts of the world have been shown to improve the quality of life, stocks and flows of natural capital, and GDP, especially the GDP of the poor.

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For governments, having a clear assessment of resource constraints and ecological risks they face, as well as a sound understanding of sectors of their economies that offer the largest potential for green growth, employment creation and efficiency gains, while securing public support, are critical to orient public policy. UNEP’s green economy advisory services are geared towards providing tailored support to countries for them to take appropriate responses

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In the transition path towards the green economy, health is a powerful tool and a key precondition in harnessing sustainable economic development, as well as in eradicating poverty and in ensuring an economically equitable and socially inclusive society. 

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Building on the existing indicators, UNEP, in consultation with national and other international agencies and stakeholders, is developing options for measuring progress towards a green and inclusive economy

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Trade has the potential to drive a green economy by fostering the exchange of environmentally friendly goods and services, increasing resource efficiency, generating economic opportunities and employment, and contributing to poverty eradication. If managed poorly, however, unrestrained trade can contribute to environmental degradation, unsustainable resource use, and increased wealth disparities, all of which hinder a green economy transition and sustainable development objectives.

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The financing required for a green economy transition is substantial, but it can be mobilized by smart public policy and innovative financing mechanisms. Supportive public finance and policy, the growing green orientation of capital markets, and the evolution of emerging market instruments are opening up the space for large-scale financing that will bolster national initiatives to green economies. But these flows are still small compared to total volumes, and urgently need to be magnified for the transition to be successful in the near-term

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One of the key challenges facing policymakers in transforming their economies is creating decent and meaningful employment. According to the International Labor Organization (ILO), over 600 million new jobs would be needed in the next10 years.

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At a more fundamental level, healthy ecosystems represent the foundation of economic activity and a prerequisite for achieving a green economic transition. Given this, it is essential that the economic value of these services are recognized, demonstrated and captured in the accounts and decision-making of governments, the private sector and consumers

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Green economy policies, if properly designed, deliver social and economic benefits by improving resource efficiency and inducing domestic companies to innovate, which may provide them with a competitive edge – first mover advantage – vis-à-vis their competitors.

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