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Moving to a Green Growth Approach to Development

March 23, 2011

Sustainable development at the World Bank is an approach that emphasizes a “triple bottom line” analysis: measuring and ensuring the economic, environmental, and social benefits of projects or programs. Since the first Earth Summit in Rio de Janeiro in 1992, the world has made much economic and social progress. To many, though, the drive for sustainability and environmental development, as pledged by delegates to the Rio conference, has not kept pace.



Inger AndersenWithout taking care of the environment we are shaving digits off GDP and, therefore, limiting our very potential for the future. That is why we in the Bank are talking about ‘green growth’, and that is why we are launching a green growth platform. || Inger Andersen, Vice President, Sustainable Development, The World Bank 

Debates about climate change, deforestation, natural resource management and the like are leading policymakers across the globe increasingly to ask not whether to integrate environmental concerns in their policies and development plans, but how to do it?

That “how?” was the core question when World Bank staff met, in Washington and “virtually” around the world, to examine the components of sustainability and “green development” at its Environment Week 2011.

Inger Andersen, Vice President for Sustainable Development, shared her thoughts on the issue with Jairam Ramesh, India’s Minister for Environment and Forests, and Achim Steiner, Executive Director of the United Nations Environment Programme (UNEP), both of whom joined the gathering by video link.

Andersen called for a rethink of the conventional formula that measures growth simply as a function of capital, labor, and technical change, and excludes the environmental costs and constraints of growth.

“Without taking care of the environment we are shaving digits off GDP and, therefore, limiting our very potential for the future,” Andersen said. “That is why we in the Bank are talking about ‘green growth’, and that is why we are launching a green growth platform.”

A multifaceted approach

Andersen spelled out five “thrusts” in the transition to green growth:

  • Getting the pricing right. Ongoing subsidies for petroleum, unsustainable agricultural practices, insurance policies that encourage people to build in flood plains, etc. all conspire to cheapen unsustainable practices. But although pricing – e.g. carbon taxes – is a useful instrument it is not truly transformative, as it often drives up costs without changing behavior. Andersen pointed to four additional fronts to complement the market:

  • Technology transformation. Public policies need to be concerted and aimed at scaling up sustainable technologies that might otherwise be prone to private-market failures;

  • Infrastructure transformation. Unless suitable infrastructure exists to support renewable energy, public transport, cycling paths, sustainable agriculture, and so on, people will not use these facilities in numbers sufficient to make them viable;

  • Natural resource management. Better management of natural resources will be critical to feed a global population heading toward 9 billion over the next 40 years – and to cope with the growing competition for land and water necessary for food, energy, biodiversity and other ecosystem services. Here, too, innovation and technology will play a crucial role; and

  • Human capital transition. An educated population with the appropriate skills and knowledge will be needed to cope with and adapt to the demands of a rapidly changing world. “Innovation, improved efficiency, job creation, poverty reduction and the reduction of risks, such as commodity price shocks, will be imperative if we are to achieve truly green growth,” Andersen said.

The true value of natural resources

Achim SteinerIt (the green economy concept) is not an ideological concept but an analytical concept that looks at how to shape a macroeconomic framework in order to allow certain sectors to accelerate in their development.  || Achim Steiner, Executive Director, UNEP 

UNEP Executive Director Steiner said the “green energy revolution” now underway would not have happened at this time had the “challenge of carbon dioxide” not emerged and set off a global search for scalable solutions. He referred to UNEP’s recently-released Green Energy report, saying countries needed to evaluate their natural resources as capital in the same way they measured their built-up infrastructure.

“Very often, the least developed economies are those that rely most on a green-economy infrastructure. Yet very often, in the name of development, that very infrastructure that is already there – that is domestic and nationally manageable, and doesn’t have to rely on world markets or outside technologies – is being eroded.”

The beauty of the ‘green economy” concept, Steiner added, was that it could be applied with equal relevance to advanced economies as to developing economies, or those that were small or large, market-led, or state-led. “It is not an ideological concept but an analytical concept that looks at how to shape a macroeconomic framework in order to allow certain sectors to accelerate in their development.”

Jairam RameshI hope that you will raise the influential voice of the World Bank in support of a more rational and realistic financing paradigm that recognizes the role of public finance in all five of these transitions.  || Jairam Ramesh, Minister for Environment and Forests, India 

India’s Minister Ramesh, whose efforts to apply green-economic principles to development in one of the world’s largest and fastest-growing economies has drawn plaudits from the environmental community and the occasional ire of the industrial lobby, highlighted the difficulties in balancing development with conservation.

India’s population is likely to reach 1.6 billion by mid-century, creating massive pressures on land use for mainly-rural livelihoods, public health, energy, and food production. The convergence of these human pressures with those of climate change and sustainability gave India little choice but to follow a green-growth path – but with careful consideration of the trade-offs between development and conservation on a case-by-case basis.

Ramesh admitted that his efforts on behalf of the environment were often met with “stony silence” by his fellow cabinet ministers. But, he said, the political pressure from communities having to contend with the vagaries of environmental degradation would most likely tilt government policies towards greener development.

However, said Ramesh, public financing would ultimately determine the success or failure of green growth. “To assume that the financing will be market-driven would be unrealistic,” he said. “I hope that you will raise the influential voice of the World Bank in support of a more rational and realistic financing paradigm that recognizes the role of public finance in all five of these transitions.”

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Contributed by Peter Honey, Communications Consultant, The World Bank


Last updated: 2011-03-23



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