The Pathway to Sustainable Development - World …

1 THE World BANKThe Pathway to Sustainable DevelopmentInclusive Green GrowthThe Pathway to Sustainable DevelopmentInclusive Green GrowthThe Pathway to Sustainable Development 2012 International Bank for Reconstruction and Development / International Development Association or The World Bank1818 H Street N WWashington DC 20433 Telephone: 202-473-1000 Internet: 2 3 4 15 14 13 12 This volume is a product of the staff of The World Bank with external contributions. The fi ndings, inter-pretations, and conclusions expressed in this volume do not necessarily refl ect the views of The World Bank, its Board of Executive Directors, or the governments they World Bank does not guarantee the accuracy of the data included in this work.

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3 , 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: other queries on rights and licenses, including subsidiary rights, should be addressed to the Offi ce of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: (paper): 978-0-8213-9551-6 ISBN (electronic): 978-0-8213-9552-3 DOI: design: Richard Fletcher, Fletcher of Congress Cataloging-in-Publication Data has been requested. vContentsForeword .. xiAcknowledgments .. xiiiAbbreviations .. xv Overview .. 1 Greening growth is necessary, effi cient, and affordable.

4 4 But obstacles are plentiful, and green growth is no substitute for good inclusive growth policies .. 12 The way forward: Good and inclusive growth policies tailored to real- World challenges .. 15 Conclusions .. 23 Notes .. 25 References .. 251 An Analytical Framework for Inclusive Green Growth .. 29 Why not grow now and clean up later? .. 30 Delaying action can be costly .. 32 Is green growth really possible? The analytical basis .. 34 A real- World framework for green growth .. 36 What about welfare? .. 39 Trade-offs and synergies between green policies and growth .. 40 Notes.

5 41 References .. 422 Infl uencing Firms, Consumers, and Policy Makers through Market and Nonmarket Mechanisms .. 45 Incentivizing: Providing effective market signals to spur green growth .. 47 Informing and nudging: Using information and framing to infl uence economic actors .. 52 Imposing: Using rules and regulations .. 58 Notes .. 60 References .. 60vi CONTENTS 3 Green Innovation and Industrial Policies .. 65 Innovation policies: Tailoring mixes of instruments to a country s innovation potential .. 67 Green industrial policies: Ensuring that the standard caveats apply .. 80 Notes.

6 86 References .. 864 Human Capital: Implications of Green Growth Policies for Labor Markets and Job Creation .. 91 Green policies may create jobs, but are no substitute for sound labor markets .. 92 But environmental regulation need not kill jobs either .. 96 Smoothing the transition to greener growth paths for the labor market .. 99 Notes .. 102 References .. 1025 Natural Capital: Managing Resources for Sustainable Growth .. 105 Extractable renewable resources: Defi ning property rights and moving up the value chain .. 107 Cultivated renewable resources: Innovation, Sustainable intensifi cation, and integrated landscape approaches.

7 113 Nonprovisioning services: Creating knowledge and markets for economic valuation .. 117 Nonrenewable resources: Promoting rent recovery and reinvestment .. 123 Notes .. 126 References .. 1276 Physical Capital: The Role of Infrastructure in Green Growth Strategies .. 133 Infrastructure as the heart of green growth .. 134 Recognizing the need for effi ciency: Meeting large unsatisfi ed infrastructure needs within tight fi scal constraints .. 139 Minimizing the potential for regrets and maximizing short-term benefi ts .. 149 Notes .. 149 References .. 1507 Crafting a Green Growth Strategy.

8 153 The challenges of developing a green growth strategy .. 154 A step-by-step process for crafting a green growth strategy .. 158 Uncertainty and the need for robust decision making .. 165 Notes .. 169 References .. What is the aggregate economic support to the (over)use of natural capital? $1 trillion to $ trillion annually .. The many ways in which green policies can contribute to growth .. Why grow dirty and clean up later is misleading .. Morocco: The importance of political economy .. Green cash transfers are helping poor communities in the Brazilian Amazon.

9 Joining forces: A common platform to move forward on greening our economies and growth processes .. Persistent concerns about local pollution in high-income countries .. An economic framework for green growth .. Using individual transferable quotas to revitalize fi sheries .. 38 CONTENTS Reducing vulnerability to oil shocks by increasing energy effi ciency .. Institutional and market failures that help explain why growth is often environmentally unsustainable .. Lessons from CO2 emission trading schemes.

10 The political economy of subsidy reform .. What is green accounting ? .. Changing the default option to spur the use of renewable energy .. Modifying car buyer behavior in France .. How are PERPs faring in developing countries? .. What is the best way to promote vehicle fuel economy? .. Market failures that can justify innovation and industrial policies .. Shedding light on green innovation, technologies, and industrial policies .. What are green base-of-pyramid innovations?