The new Green Economy

The global financial crisis that began in 2007, and is still resonant today, is considered by many economists as the worst financial crisis since the Great Depression of the 1930s. One of the key lessons we can draw from this experience is that running economies the way we’ve always done, doing business as usual, is clearly no an option. The new Green Economy is therefore a proposal for an alternative and far more sustainable way of doing business. 

A green economy is described as one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. In other words, we can think of a green economy as an economic environment that achieves low carbon emissions, resource efficiency and at the same time is socially inclusive.

Tragedy of the Commons

The dilemma we face between today’s conventional ‘brown’ economy and a proposed new Green Economy is best illustrated through an influential article written by Garrett Hardin, The Tragedy of the Commons, in 1968. He describes a common grass land in which several farmers allow their cattle to graze. In order to increase individual wealth, it is in the interest of each farmer to enlarge their herd and continue to graze on the same piece of land. But after the threshold of a certain number of cattle is exceeded, the quality of the land begins to decrease with every added cow.

Since no-one is individually responsible for the land however, and no fee is charged for grazing, each farmer continues to maximize profits by increasing the size of their herd. The problem however remains in that the quality of the land continues to degrade with the increasing pressure of the growing herds and soon there is not enough grass to feed the cows. The farmers who increase their cattle all benefit at first but, in the end, livelihood is lost and everybody loses in this scenario.

Environmental economists identify the main problem in this dilemma as the fact that the natural resource (grass) is consumed at no cost, since nobody owns ‘common’ land. If however a fee were placed per cow grazing and the value of the land increased as the cows increased, it would become too expensive to have cattle beyond a certain number. Farmers would at this point begin to make a loss and would be forced to reduce their cattle numbers, thus self-regulating herds to sustainable levels for the greater good.

The Green Economy Initiative

The Tragedy of the Commons is but one simplified example in a much more complex economic system. In our example, many questions are left unanswered such as who the money is paid to, what they use it for and how everyone continues to benefit from this process. The UNEP-led Green Economy Initiative, launched in late 2008, provides a comprehensive and practical working mechanism, through analysis and policy support for investing in green sectors and in greening environmental unfriendly sectors.
The Green Economy Initiative has three main activities, which are to produce a Green Economy Report and related research materials, which will analyse the macroeconomic, sustainability, and poverty reduction implications of green investment in a range of sectors; to provide advisory services on ways to move towards a green economy in specific countries; and to engage a wide range of research, non-governmental organizations, business and UN partners in implementing the Green Economy Initiative.

Green jobs

So why the fuss? Regardless of the environmental benefits and options for sustainability, investment into a Green Economy is captured in several reports as an agent for creating millions of new jobs, such as UNEP’s Green Jobs report. One of the main engines for economic growth is a higher rate of employment, which both reduces a burden on the economy and gives consumers the purchasing power to sustain lives through supporting industries.

By 2008, over 2.3 million people in just six leading countries in green jobs (China, Denmark, Germany, India Spain, and the United States) were employed in this low-carbon sector . The Green Economy is therefore not just a passing environmental fad but is one of the best solutions available for sustainable economic growth that recognizes the social component.

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