marianne fay, the world bank , june 2012

Marianne Fay, The World Bank, June 2012

INCLUSIVE GREENGROWTHThe Pathway to Sustainable Development

2

Sustainable development requires greener growth

3

Continued and more inclusive growth is needed

• GDP per capita still very low in developing countries: 1990: $1,2002010: $2,300 2030: $4,700*

• 918 million people still expected to live in poverty by 2015

*: in $2010, using WB growth projections1990 2005 2015

0

5

10

15

20

25

30

35

40

45

Poverty rate (%)

-445 million people

-453 million people

4Source: Rockström et al., Nature (2009)

??

But growth has come at a heavy environmental price

5

Green growth is……economic growth that is environmentally sustainable.

Not a new paradigm, but aims to operationalize sustainable development by enabling developing countries to achieve robust growth without locking themselves into unsustainable patterns.

Not inherently inclusive, hence the need for specific policies to ensure the poor benefit.

6

CAN WE GREEN GROWTH WITHOUT NECESSARILY SLOWING IT?

Is it possible?

7

Exploit the inefficiencies!

8

Y = f (A, K, L, E)Y = f (A, K, L)

Manage the environment as “natural capital”

9

• Loess plateau- before• Loess plateau- after

Manage the environment as “natural capital”

10

Seize opportunities before they are gone…

11

INCLUSIVE GROWTH THAT IS EFFICIENT, CLEAN, AND RESILIENT

And how to measure progress?

12

Challenges• Cultural: moving beyond GDP• Theoretical: capturing sustainability

in a single indicator• Policy: designing indicators that are

useful • Practical: data, data, data…

economic growthGDP p.c.

economic growth• GDP p.c.

poverty eradication• no of people below $1.25 poverty

line

shared prosperity• income growth of the bottom

40%+

inclusiveness

economic growth• GDP p.c.

poverty eradication• no of people below $1.25 poverty line

shared prosperity• income growth of the bottom 40%+

inclusiveness

Change in wealth• change in wealth in $ p.c

financial capital physical capital human capital natural capital

• gross savings • manufactured capital• infrastructure

• health• education

• climate• air• land • water

sustainability

Gross Saving Net Saving Net Saving plus Ed-ucational Expedi-

tures

Depletion-Adjusted Saving

Change in Wealth-250

-200

-150

-100

-50

0

50

100

150

200

250

USD

per

cap

ita

minusdepreciation

of fixed capital

pluseducational expenditures

minusdepletion of

natural resources

minus population

growthAdjustment /*

Note: /* how much additional savings are needed to keep per capita wealth levels constant = population growth rate x total wealth per capita

Data for Cameroon, 2008

Calculating Change in Wealth per capita

Source: World Bank calculations based on World Bank data, 2013.

0 2000 4000 6000 8000 10000 12000 14000 16000

-3,000

-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

Angola

BelarusChina

Grenada

Kazakhstan

Lithuania

Romania

Russia

Seychelles

St. Kitts and Nevis

St. Lucia

GNI per capita (US$)

Popu

latio

n-Ad

just

ed C

hang

e in

wea

lth p

er c

apita

economic growth• GDP p.c.

poverty eradication• no of people below $1.25 poverty line

shared prosperity• income growth of the bottom 40%+

resource efficiency• energy intensity• water productivity• green multi-factor productivity

inclusiveness

genuine savings• change in wealth p.c

financial capital physical capital human capital natural capital

• gross savings • manufactured capital• infrastructure

• health• education

• climate• air• land • water

sustainability

economic growth• GDP p.c.

poverty eradication• no of people below $1.25 poverty line

shared prosperity• income growth of the bottom 40%+

resource efficiency• energy intensity• water productivity• green multi-factor productivity

economic resilience• risk (hazard x exposure x sensitivity)• response (recovery, transformability)

inclusiveness

genuine savings• change in wealth p.c

financial capital physical capital human capital natural capital

• gross savings • manufactured capital• infrastructure

• health• education

• climate• air• land • water

sustainability

economic growth• GDP p.c.

poverty eradication• no of people below $1.25 poverty line

shared prosperity• income growth of the bottom 40%+

green policies and business environment• environmental regulation• environmental taxes and spending

• environmental markets and green investments• innovation

resource efficiency• energy intensity• water productivity• green multi-factor productivity

economic resilience• risk (hazard x exposure x sensitivity)• response (recovery, transformability)

inclusiveness

genuine savings• change in wealth p.c

financial capital physical capital human capital natural capital

• gross savings • manufactured capital• infrastructure

• health• education

• climate• air• land • water

enabling conditions

sustainability

www.worldbank.org/InclusiveGreenGrowth