resilience and local green economies
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“Resilience and local Green Economies”
1. Resilient to what? - Systemic Risk2. Resilience – what does it look like?3. Local Green Economy – some policies to help
Oliver Greenfield, ConvenorGreen Economy Coalition
• Systemic risk is the risk of “breakdowns in an entire system, as opposed to breakdowns in individual parts and components”.
• Systemic risks are characterized by: – modest tipping points combining
indirectly to produce large failures– risk-sharing or contagion, as one loss
triggers a chain of others– “hysteresis”, or systems being unable to
recover equilibrium after a shock• Systemic risks come from an
interconnected global economy, with global finance, global supply chains built for efficiency BUT dependant on stable conditions – Can we rely on this stability?
Examples:• 2009 financial crisis to
current economic crisis• Banks – too big to fail• Interdependence• Homogeneity • Policies – stress testing,
capital reserves etc.• Carbon bubble:
• Costs of carbon • Stranded assets• Policies: Carbon
exposure economic stress testing, divestment
What is Systemic Risk?
1. Unprecedented precipitation (climate change?)
2. Rain rushes of the mountains due to deforestation
3. Floods farms, damages infrastructure, energy
4. Farms excessive dependence on nitrogen fertiliser, due to continual soil erosion
5. Major flood washes off unprecedented levels of nitrogen
6. River, has been straightened and has low levels of biodiversity – it does not clean
7. Nitrogen loaded floods wash quickly out to sea
8. Nitrogen loading creates algal bloom
9. Algal bloom kills local fish-stocks, creates dead-zones
10. Local implications: Harder to get insurance, so harder to get investment, rebuilding
11. Small businesses and communities face systemic economic decline
Systemic Risk – Weathering the storm
Food price rises, crops and fish failure, food availability, housing flooded, energy price rises and systems failing, transport price rises, roads & rail system failures
Increased anxiety Changing consumer behaviours & preferences
Declining confidence in governance
Disruptive change, opportunities and liabilities, stranded carbon assets, loss of profitability, Litigation, Licence to operate
Crisis of confidence - response?
Carbon price, reporting legislations, removal of subsidies, water rationing, major political change
Systemic Risk – contagion across systems
Systemic Risk – system interactions
• For a system to be resilient, no single entity or approach should dominate…
• Improved management of systemic risks:– Sustainable Development Goals– Financial stability board – (are they stress testing
for carbon bubbles?)• ….AND Local green economies
– Distributed and diverse economic systems able to withstand shocks, innovate, create community wellbeing, prosperity and jobs.
Resilience to Systemic Risk
5. Measuring progress• Sustainable development goals locally• Small business numbers and vitality• Community resilience
4. Influencing financial flows• Local taxes for local economies• Local banking – small scale sustainability
banks - Germany (cooperative and public savings banks), GABV
3. Greening economic sectors• Distributed renewables owned locally• Local food systems• Vibrant SMEs and green business
innovation parks2. Investing in people• Inclusive regional economic planning• Community development plans
A resilient local Green Economy – 5 policy areas
1. Managing natural capital• PES for system resilience and local jobs
3 Key points:
Thank you Oliver Greenfield, Convenor, Green Economy [email protected]
1. Systemic risk - A global interconnected system built for efficiency contending with increasing volatility
2. Resilience is diversity – in scale, type and approach3. Local green economies – need 5 areas of policy:
measurement& governance, finance, sectors, people investment, natural capital management