green trade

8/13/2019 Green Trade

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William Y. Brown

Nathan Hultman

Bruce Jones

Homi Kharas

Joshua Meltzer

Mark Muro

Devashree

Saha

Allison Shapiro

Katherine Sierra

Davi Steven

!"#$%&' (#A)"*"#NSD!"+"N, B#**#M- / (HAN,0

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Acknowledgements:

*he Brookin2s "nstitution is a private non-pro3it or2anization. "ts mission is to con uct hi2h-4ualit56in epen ent research an 6 7ase on that research6 to provi e innovative6 practical recommen ations 3orpolic5makers an the pu7lic. *he conclusions an recommen ations o3 an5 Brookin2s pu7lication are solel5those o3 its author8s96 an o not re3lect the views o3 the "nstitution6 its mana2ement6 or its other scholars.

Support 3or this pu7lication was 2enerousl5 provi e 75 the ,overnment o3 Norwa5.

Brookin2s reco2nizes that the value it provi es is in its a7solute commitment to 4ualit56 in epen ence animpact. Activities supporte 75 its onors re3lect this commitment an the anal5sis an recommen ationsare not etermine or in3luence 75 an5 onation.

Cover photo: This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 nported !icense.


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"N*!#D (*"#N

epresentatives 'rom world governments civil societ# andthe private sector will gather in io de 1aneiro on 1une 20-22 to address the man# environmental challenges 'acingthe global communit#. The io 20 (ummit will mark the20 th anniversar# o' the 4552 nited Nations Con'erence on6nvironment and Development and although man# gainshave been achieved over the past two decades the climatechange agenda continues to move at a glacial pace while

at the same time climate risks are increasing. As the io 20approaches the challenge will be to reenergi7e interna-tional will 'or meaning'ul progress in addressing climatechange achieving sustainable growth and developmentand protecting the environment.

The nited Nations Con'erence on (ustainable Develop-ment 8 N(SD96 or !io$%&6 has i enti3ie seven ke5priorit5areas 'or discussion: decent 8obs energ# sustainable cit-ies 'ood securit# and sustainable agriculture water oceansand disaster readiness. &reen growth as a pathwa# 'or sus-tainable development has been proposed as an elementto integrate these priorities. /ther issues to be discussedinclude establishing a new development agenda to replacethe 9illennium Development &oals set to e;pire in 204rookings "nstitutione;plore the critical issues and o''er polic# recommenda-tions 'or leaders to consider in order to promote sustain-able growth in both the developed and developing world.

Katherine Sierra outlines wh# green growth is importantand how it can be leveraged b# the international commu-nit# to bolster the global growth but e;plains how the out-comes 'rom io 20 will be driven b# bottom-up initiativesand organi7ations o'ten ahead o' national governments or

international consensus.

: !io$%&' (oalitions Drivin2 Bottom- p (han2e


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*he Brookin2s "nstitution ,l0conom5 an Development /ro2ram ;


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/olic5 (onsi erations&reen growth advocates call 'or strategies that empha-size e33icienc5 an pro uctivit5 as important3oun ationalgoals. Demand management policies that price energ#an water at levels re3lective o3 eCternalities are

nee e 6starting with removal o' 'ossil 'uel subsidies and the imple-mentation o' policies that price carbon. &reen growth?se33icienc5 2oal will 7e critical as we la5 the neCt2enera -tion o' in'rastructure to support an additional 3 billion

people who will be living in cities b# 20


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ns could include: public and private investment in re-h and developmentC strategies that nurture coalitions be- research institutions and entrepreneurs like businessation centers and an enabling environment 'or ventureal policies like targeted transitional subsidies to helpations move out o' the *valle# o' death, or the part o'innovation c#cle between invention and commerciali7a-where new technologies o'ten 'alter and especiall# 'oropin2 countries6 3inancial mechanisms to help com -ali7e investments in new technologies b# backstoppingrisks as a wa# o' promoting earl# adopters.

green growth agenda is still in an earl# stage o' develop-"ts concepts are being tested in a 'ew national conte;tsorea being the most notable e;ample. "nternational or-

ations like the /rgani7ation 'or 6conomic CooperationDevelopment /6CD= the nited Nations 6nvironment

am N6 = and most recentl# the %orld >ank with itsreport *"nclusive &reen &rowth, are articulating the

'or green growth. The &lobal &reen &rowth "nstitutenternational think tank based in orea was created toote these concepts b# supporting the development o'nal strategies and related capacit# building.

these global plat'orms are important the most e;-new elements are being driven b# a 'resh generation

ocal leaders and multi-stakeholder coalitions. Thesede the C-E0 Cities Climate !eadership &roup a co-n o' cities 'rom developed and emerging economiesare committed to taking action. New public-privatecin2 mo els are 7ein2 evelope such as the Jointtive on rban (ustainabilit# which is being launchedhe nited (tates and >ra7il to bring together inves-

an cities to secure innovative 3inancin2 3or sustain -in'rastructure investments. The (ustainable 6nerg# 'or

"nitiative a global coalition between o' governmentess and civil societ# under the auspices o' the .N.tar# &eneral is looking 'or breakthrough action on

# access 'or the poor renewable energ# and energ#ienc5. A common threa is the wa5 in which theseons are capitali7ing on new green technologies

ng new business models that give incentives to thee sector to 3in innovative sustaina7le evelopmentons and using limited public 'unds to leverage pri-nvestment an 3inance.


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!ecommen ations 3or !io$%&io 20 is not e;pected to result in a set o' concrete de-

liverables. "ndeed negotiations so 'ar have been disap-pointing and the dra't outcome document lacks ambition.Delegates ma# begin a process to develop sustainabledevelopment goals as discussed b# Fomi haras and Da-vid (teven later in the packet but the goals themselvesstill nee si2ni3icant iscussion 7e3ore the5 are3orme .The main outcome ma# well be the energ# created b#

concrete bottom-up initiatives that will be 'ormall# intro-duced at the con'erence and will be driven b# coalitionswho are not waiting 'or a global solution. The (ustain-

able 6nerg# 'or All initiative hope'ull# will be endorsedthe t#pe o' coalition which >ruce 1ones discusses in hischapter on building a new international 'ramework 'or

development. These t#pes o' coalitions are not basednecessaril# on international consensus on one wa# 'or-ward but rather bringing together the man# di''erent ini-tiatives alread# in e;istence.

(imilarl# issues related to green growth will also lack tan-gible outcomes. Fowever at io 20 leaders should en-courage the green growth agenda b# signaling support in a'ew ke# areas:

EE /ricin2 natural resources . %hile io 20 cannot

be a substitute 'or climate negotiations leaderscan signal the importance o' climate negotiators

in making progress towards setting national i' notglobal= policies that set a price on carbon either

through a ta; or market mechanism. !eaders shouldalso commit to implementing the &-20 agreement

to eliminate 'ossil 'uel subsidies. 9oves to intro-

duce natural capital accounting into economic ac-

counts as discussed b# %illiam >rown in this vol-

ume should be accompanied b# concrete pledges

b# willing countries and companies.EE )evera2in2 international 3inance. !eadersshould

direct ke# multilateral 'unders like the multilateral

development banks and speciali7ed 'unds like the

&reen Climate und to direct their 'unding to coun-tr#-driven green growth investments. 9ultilateral andbilateral 'unders should be asked to more aggressivel#support the innovation agenda b# leveraging privatesector action through mechanisms that reduce risk.

And as argued b# 9ark 9uro and Devashree (ahain their chapter with the generational opportunit# tochange the emissions tra8ector# o' cities given rapidurbani7ation and the importance o' cities as driverso3 innovation6 3inancial mechanisms to meet the lar2esub-national needs 'or green in'rastructure investmentshould be given priorit#.

EE "nvestin2 in innovation. !eaders in both developedand emerging economies can pledge to step up in-vestment in research and development in their owncountries while also investing to build research anddevelopment capacit# in least developed countries.

As outlined b# Nathan Fultman and Alison (hapiroin the ne;t essa# this could be through a combina-tion o' direct support to research through competitive

grants while also e;tending to development o' inno-vation capacities via business incubation centers and3inancial mechanisms to support venture capital inleast developed countries. And 'urther liberali7ationo' trade 'or environmental goods and services as dis-cussed b# 1oshua 9elt7er can also support di''usionand impact o' new technologies.

*he Brookin2s "nstitution ,l


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0conom5 an Development /ro2ram >


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,!00N ,!#W*H "NN#+A*"#N "ND0+0)#/"N, (# N*!"0SNathan Hultman an Allison Shapiro


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even trans'orm the market. The challenge o' transitioningonto cleaner evelopment pathwa5s is particularl5

i33icult'or developing countries whose need 'or rapid economicgrowth o'ten outweighs the importance o' sustainable orHclean? growth. This is one area in which international aid

needs to better support developing countries as the# designand implement their green growth strategies.

9an# polic# and intellectual propert# " = tools e;ist to

spur technological innovation although the# var# widel#across countries. "n a ition6 ozens o3 3inancialpro uctshave also been created to di''use and reduce risk in tech-nolo25 investment. *he most e33ective ones re3lectall o3 the 'ollowing 'actors:

EE !elevance to the challen2es o3 2reen 2rowth atall

levels o3 in ustr5. The ideal internationalarchitecture will be able to support breakthroughtechnolog# de-velopment at small medium and large scales.

EE (apa7ilit5 o3 stimulatin2 7oth hi2h-tech an low-techinnovations. "nnovations that a apt eCistin2technol-

o2ies to speci3ic conteCts or that enhance theireaseo3 use could be the ke# to meeting man# !DCs? cleandevelopment needs. olicies to stimulate this absorp-tive capacit# would increase the +ualit# o' sciencetechnolog# and innovation in higher education retaintalent in-countr# stimulate technolog# *discover#, atall levels o' innovation 'rom household through theresearch laboratories= and to promote econom#-wideopenness to new technologies.

EE Support 3or innovation across the technolo25valuechain. Technolog# deplo#ment can be encouragedthrou2h 3inancial support6 lo2istical support 3orsuppl5chain development and securit# and consumer mar-keting to improve market penetration. This includessubstantial investment in business advisor# services toattract international venture capital and to take suc-cess'ul start-ups to 'ull commercial scale.

EE "nclusive 3inancial innovation to e-riskprivate in-

vestment. "nnovative 3inancial pro ucts canlevera2epublic investments b# de-risking private capital. 6amples inclu e 3irst loss 3un s6 soverei2n riskinsur -ance6 collateralize loans with 3leCi7le interestratesdepending on pro8ect outcomes etc. There are man#


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unds that are supporting this ob8ective like the &reenClimate und o' the Climate "nvestment unds.The&reen Technolog# und recentl# approved as parto'he nited Nations ramework Convention on

ClimateChange N CCC= negotiations will likel# 'ocusonhis as well possibl# through its private sectoracilit#.>ut most 'unding has gone to support deplo#mento' proven technologies into developing countries.ittleocus has been on providing de-risking supportorarlier stages o' the research and development

dem-onstration and deplo#ment DDID= continuum.

A e value to eCistin2 institutions. "t is essential todesign a new architecture that compliments;istingnternational initiatives aimed at stimulating

lean

echnolog# DDID. (ome such initiatives

nclude

the N CCC Tech 9echanism C&"A Clean 6ner-g# 9inisterial the &reen Climate und and "n'odevClimate "nnovation Centers. "t will be important to

understand not onl# the gaps in services provided b#these organi7ations but also which programs havebeen most success'ul so the# can be replicated in

other countries and to other sectors.

EE Attractiveness to investors6 polic5makers6 an e-velopin2 countries "n this era o3 3iscal

austerit56 itwill be essential to create an in'rastructure with su'-3icient incentives to levera2e pu7lic 3inancin2 3romdeveloped countries

rom these criteria three categories o' programs o''erthe most likel# value 'or a renewed international initia-

tive to support green growth innovation: regional science'oundations national business incubators and dedicated'unds to de-risk entrepreneurial investments and stimulatethe sharing o' intellectual propert# " =. These three ap-proaches would moreover be more power'ul i' deplo#edsimultaneousl# because the# address di''erent elements o'the innovation ecos#stem.

!ecommen ations 3or !io$%&Fundreds o' international initiatives e;ist to promote

natural resource sustainabilit# and povert# alleviation indeveloping countries. Fowever there remain ma8or gapsin international collaboration. The io 20 meeting pro-

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vides an almost unparalleled opportunit# 'or e;pandingthe narrative o' sustainable development to include theenhancement and restructuring o' innovation. The io

meeting should establish a new international green in-

novation partnership to hasten the pace and scale o' in-novation stimulate international venture capital marketsand broaden international cooperation across public andprivate partnerships 'or DDID.

(uch a partnership could build on the work o' e;isting

institutions and be supported b# a network o' regional sci-ence 'oundations national business incubators and in-vestment de-risking 'unds. This new approach would bothbuild capacit# 'or technolog# development and adoptionand encourage private sector engagement in developingcountr# research and innovation 'or green growth.

EE !e2ional Science


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n-countr# entrepreneurs and start-ups working in allectors. (uch organi7ations would directl# address the

need to bridge research and commerciali7ation b# en-repreneurs in the private sector. The incubators woulde responsible 'or identi'#ing and conducting out-

each to promising entrepreneurs and start-up compa-nies as well as providing a host o' business advisor#ervices to them. (ervices the# could provide include

but are not limited to: business plan support network-ng 'acilitation access to international venture capital

an suppl5 chains6 pitch trainin26 3inance trainin26 ac -ess to market research6 o33ice space6 3acilitation o3 echnolog# trans'er and negotiation o' " licenses.ncubators could support and enhance the pipeline

+ualit# o' e;isting green technolog# trans'er mecha-nisms such as the N CCC Technolog# and CleanDevelopment 9echanisms. ossible models includehe "n'odev Climate "nnovation Centers C"6T6C in

>ra7il C"66 in "ndia and universit# technolog# trans-3er o33ices such as those at the Massachusetts "nstituteo' Technolog# and (tan'ord niversit#.

De icate


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*he Brookin2s "nstitution ,lo0conom5 an Development /ro2ram 11


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the package 9D& B= motivated developing countries

to sign up. or their part advanced countries were en-couraged b# the commitment to more concrete results

9D&s 4-J= in e;change 'or their aid. "n each casepoliticians were able to return home 'rom 9onterre#

8where the a2reement was 3inall5 reache in %&&%9withspeci3ic i eas a7out how to Imo7ilize 3inancialresourc -es and achieve the national and international economicconditions, needed to meet the 9D&s.

Toda# it is harder to construct a package that has some-thing 'or ever#one. The advanced countries are showingsigns o' aid 'atigue and ma# prove reluctant to bind their own societies to global goals. 9iddle income countriesare also reluctant to orient development pathwa#s to in-ternational norms6 pre3errin2 to maintain maCimum3leC-ibilit# 'or domestic polic#. !ow income countries worr#

that the discussions on (D&s could dilute the 'ocus onreducing povert#. (ome are also wondering how +uan-titative international targets can be reconciled with the

+ualitative improvements in peacekeeping statebuild-

ing and the strengthened institutions needed to underpinpovert# reduction.

$et there is hope that countries will be brought together b# a shared sense that the world toda# 'aces risks that re-+uire a new commitment to collective action and globalsolutions. Transnational threats like natural disasters

'ood price spikes and energ# shortages are directl# re-lated to local problems such as economic instabilit# a

lack o' 8obs especiall# 'or the #oung and urban blight.9an# topics once believed to be purel# national inscope such as income distribution have become inter-national in their impact thanks to new research linking

ine4ualit5 to cre it 7ooms an 3inancial crises.(urrentgrowth tra8ectories meanwhile continue to threaten

the climate an other planetar5 7oun aries thate3ine

Ha sa'e operating space? 'or humanit#.

The world?s leaders could potentiall# use the (D&s asa vehicle to articulate a new vision that links globalchallenges and domestic angst makes a case 'or howadopting global norms can improve the lives o' citi7ensat home and sets out practical steps that will help builda development model that is viable over the mediumand long-term. The biggest hurdles to sustainable de-

1% !io$%&' (oalitions Drivin2 Bottom- p (han2e


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ment paths are political6 not 3inancial or techni -Thus the (D&s must be 'ramed in a wa# that is

politicall# and that serves to connect individual

ns wherever the# live to the great challenges o'a#.

would suggest a 'ocus on: i= areas such as energ#

oceans and biodiversit# where global risks areng and collective action is essential i' we are to

mi7e human wel'are while respecting environmen-mits and where new +uantitative targets have the

tial to create new 'ocus and momentum climatebe added i' agreements are reached under the

(( process9 8ii9 topics where there is si2ni3icanttial 'or innovation green growth sustainable cit-

and disaster preparedness 'or e;ample= and whereng and dissemination can be accelerated with

tar# pledges o' solidarit# and iii= construction o'obal sa'et# net that will build on the 9D&s b# pro-g the most vulnerable and increasing the stabilit#a2ile states6 an where 3inancial trans3ers a2ainst3ic criteria are 3easi7le.

(D&s must also mobili7e and be relevant to thenumber o' diverse actors that are needed to tackle

inable development challenges. The 9D&s wereess'ul because the# 'ocused m#riad development

onto a 'ew ma8or a;es. Toda# there are even

development actors who must *own, the (D&s i'are to be success'ul: the private business sector in-

onal and local N&/s ma#ors and local govern-

o33icials6 parliamentarians6 tra e union mem7ers6organi7ations and concerned citi7ens philanthro-

and celebrities.

e actors have di''erent interests and perspectives onopment. (ome 'ocus on the multi-dimensional na-povert# and the prospect that it is now 'easible

eam 3or the 3irst time o3 era icatin2 a7solute povert5n a generation. /thers take a human rights perspec-as the basic 'rame and are motivated b# core moraliples such as ensuring all children are health# well-properl# educated and live in secure and stable soci-6nvironmentalists meanwhile are 'ocused both on

ge to natural s#stems and the potential impact on thest. erhaps most important@and least engaged as


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#et@is the private sector whose investment decisions arethe main determinant o' the nature speed and sustain-abilit# o' 'uture development tra8ectories.

econciling these disparate perspectives will not be

eas#. "t calls 'or a broad and inclusive dialogue with

ample space 'or prioriti7ation within di''erent countriesand in ke# sectors such as energ# water or agricul-

ture. "t re+uires Hwhole-o'-government? support 'or the

(D&s with 9inistries o' inance brought to the centero' the debate 9inistries o' oreign A''airs developing

new capacit# to build consensus across borders and

other government departments 6nvironment 6nerg#

"ndustr# etc.= participating in an integrated e''ort. The

international s#stem will also need to e;periment with

mechanisms 'or creating incentivi7ing and holding

accountable new t#pes o' partnership and especiall#those that re+uire real commitment 'rom ma8or corpo-

rate interests.

utting all this together is a tall order. Fere again there arelessons to be drawn 'rom the 9D& process. ># the timeo' the 9onterre# (ummit in 2002 there had alread# beenconsiderable technical and political momentum behindthese global development goals. "n 4550 the %orld De-velopment eport had recommended halving global pov-ert# while the 4550 %orld (ummit 'or Children 'ormulated

a set o' seven goals endorsed b# governments relevant.N. agencies development banks and a large number o'

N,#s. *he MD,s6 in their 3inal 3orm6 were erive3romconsolidating these earl# discussions and endorsementsrather than as a single process starting 'rom scratch. 0C postit would seem that the most success'ul 9D&s were thosethat had been sub8ected to inclusive and pro'essional con-sultations over a long time span and which also had com-mitte political champions within in3luential2overnments.

!ecommen ations 3or !io$%&%hat then can be e;pected 'rom io 20 to advance theagenda on the (D&s) %e have three recommendations:

EE 0n orse a process 3or arrivin2 at the SD,s that7rin2s to2ether 7uil in2 7locks over time6ratherthan attemptin2 to 3orce a premature consensus

inthe short-term. At least two such building

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are alread# in place. The (ustainable 6nerg# 'or Allnitiative has technical depth and real politicalup-ort and has proposed three ob8ectives 'or

030:

universal access to modern energ# services

dou-

7lin2 the rate o3 ener25 e33icienc5 improvementsand doubling the share o' renewable energ# inhenerg# mi;. The 9D&s are themselves

anotherbuilding block with the potential to moveromelative targets to those that aim to Hget to 7ero?

# 2030 on a new set o' povert# targets.

0ncoura2e innovation an create incentives 3ornew partnerships 3or sustaina7le evelopment.&reen growth sustainable cities and otheragendasan bring together governments businesses

nd

ivil societ# in novel wa#s and these coalitionsarepawning a vast arra# o' e;perimental

approaches.

A mechanism is needed to accumulate pledges

to

contribute categori7e and monitor implementa-

tion an 3inall5 evaluate an isseminate lessonsand best practices. A proposal 'or a HCompendiumo3 (ommitments ? coul 3ul3ill these 3unctions67utonl5 i3 it provi es a su33icientl5 stron2 7asis 3oren -couraging accountabilit# and 'or providing recogni-tion 'or success'ul innovations.

EE 0m7ark on a process capa7le o3 7uil in2 7roa politi-cal support 3or a post-%&1; 3ramework. At best

io20 will onl# launch a new process. A Figh !evel an-

el will then need to take up the baton doing the hardwork o' developing concrete options 'or new goalssponsoring deliberations on these options at interna-tional regional and local levels and beginning theprocess o' building support 'rom political business

and civil societ# leaders. The panel can hope to pro-vide a 'oundation 'or agreement over the ne;t #ear or 4B months. (ustained leadership will then be needed'rom a critical mass o' &-20 countries including ris-in2 an esta7lishe powers6 3rom in3luential

evelop -ing countries such as the gJ which brings together 3ra2ile an con3lict-a33ecte states6 3rom campai2ners6and 'rom the business communit#. The task is alread#an urgent one. The 9D&s took a do7en #ears to agree

upon. Their replacement needs to be in place in lessthan a +uarter o' that time.

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Their decisions generate attention onl# in developmentand environment ministries o' capitals and even thenonl# to a modest degree. inance ministries energ#

ministries and trade negotiators rarel# pa# attention to6C/(/C outcomes. 9an# private sector actors have

never heard o' it. The public barel# knows it e;ists. $etmost o' the decisions that will shape pathwa#s towardsor awa# 'rom a sustainable 'uture will be made b# pri-maril# b# individual citi7ens private economic actors

and the economic arms o' government.

This is an uncom'ortable realit# 'or countries that hold

dear the notion that the .N. not 8ust the >retton %oodsinstitutions should have a ma8or voice in international

economic issues. >ut even in those countries@>ra7iland "ndia have traditionall# been at the vanguard o'

this ar2umentLtheir own ministries o3 3inance are3armore 'ocused on getting better representation at the "9and in shaping the decisions o' the &-20 and the 9a8or6conomies orum. There is no reason to believe that

an# .N.-based intergovernmental mechanism would

have an5 i33erent impact on the core 3inancialanplanning tools o' the ma8or emitters and ma8or econo-

mies established or emerging. /' course an adaptationo' 6C/(/C?s mechanisms could do a better 8ob than

is currentl# done at coordinating a sustainabilit# agen-da across .N. agencies. Fowever the .N. agencies

themselves are onl# minor or modest pla#ers in all o'

this e;cept in the smallest economies whose activitiesmatter least to global sustainabilit#.

!ecommen ations 3or !io$%&There are two other approaches to address this chal-lenge: one the .N. is unlikel# to embrace but ma#

hold genuine answers and one where the .N. itsel' iscarving out an important lead.

or #ears some countries have e;plored the idea o' a

%orld 6nvironment /rgani7ation inspired b# the ear-

l# &eneral Agreement on Tari''s and Trade &ATT=. "nmost proposals this has been viewed as an all-inclusivebod# a concept that has moral merit but is unlikel# to

get o'' the ground. A more practical version has been

e;plored b# >rookings "nstitution?s (trobe Talbott and

%illiam Antholis: the idea o' a &eneral Agreement on

eduction o' 6missions &A 6=. %hile drawing on les-sons 'rom earl# &ATT negotiations Talbott and Antho-lis? proposals 'or a &A 6 mechanism bridges inclusionwith 'ocus b# starting with core economies but being

open to all countries as the# meet criteria on standardsand per'ormance. %ith care'ul design this could createreal incentives 'or countries to coordinate their e''orts

to cut carbon.

The second is a bottom-up multi-stakeholder process-es to align norms regulation technolog# and invest-ment@a process the .N. has used in its Figh-level

anel on (ustainable 6nerg# 'or All (6EA!!.= There aresome 3laws in the S0:A)) process6 an somepartici -pants have +uestioned the 'easibilit# o' some o' the ini-

tial ideas@but it?s earl# da#s and the process is beingworked on with a shoestring budget. %ith sustained

creative engagement well supported b# government

and industr# processes like (6EA!! could make a sub-stantial di''erence in charting new pathwa#s and driv-

ing bottom-up goals which could then be taken up in

authoritative wa#s.

"n this as in man# areas we need an iterative process.The largest economies essentiall# the &-20= have to beable to negotiate a credible deal to govern the B0-plus

percent o' global economic activit# the# control througha &A 6 mechanism or similar measure. >ut the# should

o so transparentl5 an maintain an in3ormation 3low towider bodies like N CCC and the &eneral Assembl#.Those more inclusive bodies can articulate broad princi-ples and give voice to smaller economies and those pa#-ing the price o' environmentall# unsustainable growth."n'ormal mechanisms like (6EA!! can shape pathwa#s inever more intensive consultation with the energ# sector an the 3inancial communit5. *he most in3luential an

committed states can 'orge connections between theseprocesses where necessar#.

The .N. can pla# a use'ul normative role in all o' this.io 20 could do a power o' good b# calling attention to

in'ormal processes like (6EA!! and making more space'or them in the international arena. %ell-cra'ted goals

'or sustainable development could send an important

normative signal@but onl# i' the# are care'ull# preparedand developed 'rom the ground up through genuine

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interaction with the private and public sector. io 20

can?t conclude that process but it can kick start it.

The search 'or e''ective governance shouldn?t push usto static inter-governmental 'orums especiall# not onesthat link parts o' government that have weak roles in

economic activit5. !ather6 we nee 3leCi7le networks'or interacting with the public and the private sector

to drive credible standards knowledge production andinvestment. This isn?t what the .N. is known 'or but it?swhat it?s going to have to learn i' it?s to make a genuinecontribution to the most comple; global governance

challenge o' our time.

1 !io$%&' (oalitions Drivin2 Bottom- p (han2e


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,!00N ,!#W*H AND"N*0!NA*"#NA) *!AD0

Joshua Meltzer


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*he Brookin2s "nstitution ,lo0conom5 an Development /ro2ram 1>


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that support more e33icient an environmentall53rien l5production processes. As a result reducing trade barriersto environmental goods and services has been part o' the%T/ Doha ound. Additionall# at the A 6C meeting inFawaii in November 2044 the 24 A 6C members agreed

to reduce tari''s on green goods. egional and bilateral'ree trade agreements are another opportunit# to reducetrade barriers and develop new rules to promote greengoods and services.

Trade and green growth policies also interact when coun-tries condition or limit access to their markets to achieveenvironmental goals. This can arise when a countr# seeksto ensure that the price o3 a 2oo re3lects its

omestic en -vironmental harms and adopts border measures to ensurethat these costs are also re3lecte in the price o3imports.

"n the absence o' international action to address globalenvironmental challenges such as climate change uni-lateral action b# countries to reduce their greenhouse

gas emissions ma# include trade measures that appl#

the costs o' climate change regulation to imports. This

is re+uired to avoid carbon leakage which arises whenindustr# seeks to avoid climate change regulations b# re-locating to countries that have adopted less costl# or no=climate change measures. %here industr# continues toemit carbon there is no net reduction in global green-

house gas emissions. 6;tending the price o' carbon toimports can avoid this outcome.

The use o' trade measures to achieve environmental

goals however needs to be balanced against the roleo' international trade as a driver o' economic growth

and development.

!ecommen ations 3or !io$%&&reen growth links the goals o' economic growth and de-velopment with environmental protection in sustainablewa#s. "nternational trade can both drive economic growthand help countries achieve their environmental goals. e-strictions on international trade can also be used to incen-tivi7e international action on global environmental chal-lenges. 6ncouraging international trade as a mechanismo' development while recogni7ing that countries will usetrade restrictions to achieve environmental goals involves

1= !io$%&' (oalitions Drivin2 Bottom- p (han2e


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ance that is re3lecte in the rules o3 the Worl *ra ei7ation. io 20 provides an opportunit# to recog-the wa#s in which international trade can contribute to greenth b# agreeing the 'ollowing principles:

Countries should recogni7e that green growth re-+uires a balance between promoting trade as a driver

o' economic growth while recogni7ing the legitimateuse o' trade measures to achieve environmental goals.ea33irmation o3 /rinciple 1% o3 the 1??% !io Declara -ion woul su33ice to capture this eCchan2e.

Countries should also recogni7e that reducing tradebarriers to green goods and services supports green2rowth 2oals an commit to 3in in2 wa5s to achievehis 2oal. (ountries shoul rea33irm the 2oal in the

%T/ Doha ound o' reducing trade barriers to envi-onmental goods and services.

nternational cooperation to address global environ-mental harms should be encouraged where possible.>ut countries should recogni7e the legitimac# o' uni-ateral action b# countries to address global environ-

mental harms such as climate change.

ountries shoul commit to 3in in2 wa5s o3 avoi in2ubsidies that distort trade and harm the environmentuch as those that lea to over-3ishin2


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,!00N ,!#W*H AND *H0 S B-NA*"#NA)D0+0)#/M0N* "M/0!A*"+0Mark Muro an Devashree Saha

ra7il and 9e;ico are now turning their 'ocusto 'ostering *clean, economic growth and cleantech eco-nomic development as a matter o' national priorit#.

Fowever while the national 'ocus on clean econom#

is a welcome development more and more evidencesuggests that the new 'ocus too o'ten remains divorced'rom the true locus o' clean econom# development: theworld?s urban economies. National governments in thisrespect have o'ten not onl# ignored the spatial elementso' green growth but have also 'ailed to take into accountcities? and cit#-regions? e;isting contributions. $et to besuccess'ul green growth planning needs to become aniterative process one that adapts to local and regionaldevelopments over time and responds to the needs o' the

local and regional stakeholders who in the end guide the*real, econom#.

All o' which points to the need 'or a new sub-national

'ocus in international green growth interventions. 9ore

and more o' the most sophisticated nations and industriesare recogni7ing the importance o' working at the cit# andregional level to achieve green growth and as it happensthe io 20 con'erence o''ers an important moment 'or e;-tending and implementing such an emphasis.

/olic5 (onsi erationsThe 'acts o' world urbani7ation as well as the dri't o'

leading-edge economic theor# are thrusting the power o'sub-national problem solving into the 'oreground o' greengrowth and clean econom# discussions.

apid world urbani7ation underscores the importance o'cities and regions in meeting green growth goals. 9orethan hal' o' the world?s population now resides in urbanareas a share that is e;pected to reach J0 percent b#

20# the end o' the ne;t decade there will be nearl#


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$ork and 9e;ico Cit# with populations e;ceeding 20

million each. 9egacities like these are literall# *where it?sat, in the emerging world order. Fow these sub-nationalmegacities and regions manage their growth will hugel#a''ect the sustainabilit# o' the world?s nations. And hereit should be said that these urbani7ed areas@large andsmall@serve as their nations? principle economic engines.

or e;ample these regions are increasingl# the chie' lo-cus o' labor 'orce matching technical innovation and

adoption industrial output and social opportunit#. or

instance the largest 400 metropolitan areas in the nited(tates produce three-+uarters o' the nation?s &D . (imi-larl56 in evelope Asia-/aci3ic countries %:metropolitanareas account 'or KE percent o' both their countries? totalpopulation and &D . Add in that environmental problems

are both created and solved in these locations and it be-comes clear that cities and regions are integral to the tran-sition to a global clean econom#.

&enerall# accepted economic theor# 'urther supports thelogic o' cit#- and region-scale action. egions and clus-tersL2eo2raphic concentrations o3 interconnecte3irmsand supporting or coordinating organi7ations@draw to-gether the uni+ue variations and speciali7ations that de-3ine pro uctive local economies an 3ocus

attention onthe m#riad o' actors and the d#namics o' their interac-

tions which also give rise to new innovations and 8obs.Fot spots o' productivit# and collaboration as well as

competition regions and industr# clusters are the loca-tions most likel# to deliver the ne;t clean econom# thatwill advance environmental sustainabilit# and economicprosperit# at once.

(tudies 'rom the .(. support this contention and revealhow national *clean, or *green, economies 'ar 'rom be-ing placeless are in realit# e;tremel# place-based andmani3est themselves in varie con3i2urations. #urrecentstud# *(i7ing the Clean 6conom#: A National and egion-al &reen 1obs Assessment, 'ound that while the American*clean econom#, permeates ever# corner o' the nationaleconom# it varies widel# in si7e and shape region b# re-gion in response to di''erent market and polic# d#namics.

(imilar stories abound in the rest o' the world. egionalcluster development is an important theme o' China?s 42 th

ive-$ear lan 'or its clean energ# industr#. (even Chinese

%& !io$%&' (oalitions Drivin2 Bottom- p (han2e


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nces@1iangsu Febei Lhe8iang 1iang;i Fenanan and "nner 9ongolia@have leveraged their re-l resource advantages and e;isting industrial basesmerge as regional industrial centers 'or China?s rap-growing solar photovoltaic industr#. And meanwhile

tech clusters are sprouting up all across 6urope and America such as the Copenhagen Cleantech Clus-!ahti Cleantech Cluster Amsterdam 6cocluster Clean-

F (an Diego and 6cotech Muebec all o' which ared towards positioning their regions to take their placenew clean econom#.

there is good reason 'or the regional cast o' thesegrowth stratagems. Muite simpl# the clean or green

om# per'orms best where strong industr# clusters3irms an relevant supportin2 actors ensel5 to2eth -

n discreet local regions. Along these lines our .(.

*(i7ing the Clean 6conom#, noted that companiesare clustered near those in similar or related indus-grew at a rate 4.E percent 'aster each #ear than moreed companies. 6;amples highlighting this d#namic

de 'uel cells in >oston wind in Chicago pro'es-

l environmental services in Houston6 an solar /+os Angeles. "n like 'ashion &erman#?s (a;on#-Anhaltne o' the world?s 'aster growing cluster o' solar cellaniesLearnin2 it the nickname ISolar +alle5ILwith# 40 percent o' solar cells produce globall# coming 'rom this

n.hort national competitiveness in green growth willate most e''ectivel# 'rom the sub-national urban ar-that are increasingl# the world?s hubs o' such develop- Nations that want to pursue such growth amid thetled realities o' the current world order will there'oreed best i' the# intervene at least partiall# at the sub-nal level.

mmen ations 3or !io$%&natel# man# cities and regions are alread# at the

r o' making the transition towards a clean econom#.aris to 1akarta Copenhagen to (ingapore and Chi-

to (ao aulo a growing reali7ation is taking holdng local and regional leaders that the well-being o'

regions is closel# tied to their promotion o' a greenth agenda. The C-E0 Climate !eadership &roup 'or


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instance resides at the 'ore'ront o' designing and imple-menting meaning'ul and sustainable strategies that willreduce their cities? carbon and water 'ootprints while alsocreating 8obs and growing their economies. This momen-tum nee s to 7e a33irme an carrie 3orwar anthe!io$%& eli7erations o33er a si2nal moment 3or thata33ir-mation. Along these lines both national and sub-nationalgovernments should consider embracing a number pos-sible action steps 'or advancing green growth through re-gional strategies. "n this connection the# should:

EE


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,lo7al 0conom5 an Developmentm %1


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NA* !A) (A/"*A) !0S# !(0SWilliam Y. Brown


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istorted markets pose a central +uestion 'or polic#atural capital. Can the value o' ecos#stem goods and

ces be 'ull# integrated into the economic planning o'nments and the business plans o' private enterprise)

5 (onsi erationsal capital is currentl# more a concept 'or govern-

s development agencies academics and civil soci-han a mainstream element o' economics or business.ecos#stems provide valuable goods and services is

in dispute and various international initiatives includein national asset measures. The %orld >ank deter-

s national wealth based on ecolog# education andrce depletion as well as economics. The .N. de-ed a s#stem 'or comparing national environmentaleconomic statistics the (#stem o' 6nvironmental-6co-

c Accounts (66A= that builds on the (#stem o' Na- Accounts (NA= an internationall# agreed standard

o' recommendations on how to compile measures o'omic activit#. The %orld >ank is currentl# advancingtnership it calls IWealth Accountin2 an +aluation o3stem ServicesI or WA+0S6 an an entire new 3iel o3 rch has developed to elucidate the value o' ecos#s-ervices. These and private group initiatives such as


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the *Natural Capital Declaration, are part o' the discus-sion running up to the io 20 meeting.

Fowever the usual approach 'or conserving natural eco-s#stems has been regulation and land purchase throughprograms whose mandates do not include integrated

economic planning. 9ost national environmental stat-utes were propelle 75 hi2h-pro3ile concerns overpollu -tion e.g. clean water clean air= loss o' biodiversit# e.g.endangered species protection= and general environ-

mental +ualit# e.g. environmental impact assessments=.The same can be said 'or multilateral conventions 'or

climate change biodiversit# endangered species andwaste shipments. 6conomic assessment and devices 'oreconomic e33icienc5 are increasin2l5 3eatures o3

environ -mental regulation such as tradable pollution rights butthese 'eatures are ancillar# to the policies o' the underl#-ing enabling regimes.

9oreover economic and business per'ormance is not

generall# measured with re'erence to natural capital e;-cept when it is an auditable institutional asset or liabil-

it5. !ecent 2overnment actions to a ress 3iscalcrises6 3ore;ample paid little attention to the environment treating

its protection more as an impediment than a path to eco-nomic recover#. Commercial enterprises remain cement-e to conventional measures o3 pro3it an loss."n ee 6investors in publicl# traded companies are legall# entitledto management that ma;imi7es their returns. >usinesseshave ma e si2ni3icant investments in environmentalansocial responsibilit# but most business leaders in privatewoul acknowle 2e that pro3it is the ultimatemeasure o3 success and o' their own tenure.

!ecommen ations 3or !io$%&The io 20 participant nations should mandate consider-ation o' natural capital in national wealth accounting andeconomic planning. "mplementation o' (66A is particu-larl5 si2ni3icant 7ecause it has 7een approve 75 the

.N.'or global use.

Those implementing the io 20 mandate should 'ocus onthe issues that lead international development advocates

and mainstream economists and business-people disagree onincluding:


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Fow might measures o' natural capital be inte2rat- into customar# anal#ses and actions on

mon-

tar5 an 3iscal polic56 or rapi responses toeces -ion or in3lation@

an natural capital 7e a resse in 7usiness 3inancial

statements other than as currentl# addressed as audit-able assets or liabilities o' the enterprise and can ac-countin2 stan ar s 7e mo i3ie 3or this purpose@

EE %hat would investors accept and what are business-es re+uired b# law to seek)

EE Fow does regulation as a means to conserve naturalcapital stand in the conte;t o' *green growth, and

interests in non-regulator# integration into economicplanning)

*he Brookin2s "nstitution ,lo0conom5 an Development /ro2ram %K


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