by: United Nations Department of Economic and Social Affairs (UNDESA)

This paper prepared by UNDESA for the First Session of the Preparatory Committee for the United Nations Conference on Sustainable Development (UNCSD) provides a concise overview of the concept of green economy in the context of sustainable development and poverty eradication which was one of the two themes for the UNCSD 2012, or Rio+20. The concept is described as one of several mutually complementary constructions that have emerged in recent years to enhance convergence between the different dimensions of sustainable development.

The paper outlines four different approaches or ‘strands’ to green economy with slightly different modes of economic analysis: the first approaches the question through the analysis of market failure and internalisation of externalities; the second takes a systemic view of the economic structure and its impact on relevant aspects of sustainable development; the third focuses on
social goals (e.g. jobs) and examines ancillary policies needed to reconcile social goals with other objectives; and the fourth focuses on the macroeconomic framework and development strategy with the goal of identifying dynamic pathways towards sustainable development. Examples of existing programs and actors supporting each approach are also provided.

The paper also highlights a set of policy instruments that are common across the approaches, which are grouped into several categories: (a) getting prices right (including subsidies, valuing natural resources and imposing taxes on environmental “bads” in order to internalise externalities); (b) public procurement policies to promote greening of business and markets; (c) ecological tax reforms; (d) public investment in sustainable infrastructure; (e) targeted public support for research and development; (f) strategic investment through public sector development outlays, incentive programmes and partnerships; and (g) social policies to reconcile social goals with economic policies.

The paper concludes that green economy is an omnibus term, like sustainable development itself, which comprises a suite of economic instruments that could harness economic activity in support of one or more sustainable development goals. The application of these instruments will require careful consideration of the social, institutional and political context of the country.

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