Issuu on Google+

Green Growth and Policy Applications of the SEEA Workshop on Natural Capital Accounting for Green Growth in the Middle East and North Africa Centre for Mediterranean Integration, Marseilles, France March 26-27, 2013 Glenn-Marie Lange, Program Manager for WAVES Global Partnership Agriculture and Environmental Services Department, The World Bank


“What we measure affects what we do; and if our measurements are flawed, decisions may be distorted.� (Stiglitz, Sen and Fitoussi 2009)


Inclusive Green Growth •

Better measurement of economic performance for the long term (sustainability of growth)-- ‘Beyond GDP’

Increased resource efficiency (water, energy)

Cleaner production (reduced pollution)

Better incentive schemes (taxes/subsidies )

These require better information to integrate the economy and natural resources & the environment— NATURAL CAPITAL ACCOUNTS


Why do Natural CapitalAccounting ? Better indicators for monitoring sustainable developmentlong-term growth • •

Is GDP growth sustainable or are we just “living off our natural capital? Water and energy productivity indicators—improving over time?

Better tools to manage natural capital for growth & poverty reduction • • •

What development strategies/policies improve resource efficiency and clean production? How do we weigh tradeoffs among competing users, for example water or land use? How much should be invested in natural capital, such as forests or protected areas?


Accounting for Natural Capital— Are National Economic Accounts up to the Job? Key information about natural capital is missing or invisible in the System of National Accounts (GDP): • Depletion of natural capital – minerals, forests • Use of materials and energy not fully represented • Environmental degradation – air & water pollution, loss of soil productivity • Ecosystem services – carbon storage, flood mitigation

Filling the information gap—SEEA, System of Environmental and Economic Accounting


Where has Natural Capital Accounting been most useful? 1. 2. 3. 4.

Indicators for monitoring sustainable development Water accounting: managing a scarce resource Energy and air pollution: cleaner, more efficient production Stocks of minerals & energy: managing resource rents for long term growth 5. Land and ecosystems: balancing the needs of tourism, agriculture and other uses


1. Indicators of sustainable development …Is GDP growth sustainable or are we just

“living off our (natural) capital?”


Sustainable Development and Wealth We don’t judge a company solely on the basis of its income statement—look at both income and balance sheet. • Increasing assets (wealth) support long-term growth. • In the short term, income can appear to grow by liquidating assets, but this undermines long-term growth. Why do we assess country economic progress on the basis of national income, GDP alone? (J. Stiglitz, Nobel prize, economics) The source of income and well-being is wealth, broadly defined to include – Manufactured capital, Natural capital, ‘Intangible’ capital (human capital and social capital)


Wealth Approach to Sustainable Development Economists focus on GDP growth because it is closely related to employment But GDP growth does not tell us anything about the wealth that underpins GDP Sustainable development is about building & managing wealth • GDP measures annual economic growth • Wealth & Adjusted Net Savings measure whether that growth is sustainable or not BOTH ARE NEEDED!


Measuring country sustainability through changes in wealth—Adjusted Net Savings ANS measures gross saving adjusted for • • • •

Depreciation of fixed capital Human capital investment, Resource depletion Pollution damages

Key question is whether adjusted net saving is positive or negative Negative saving indicates unsustainability


Examples using Adjusted Net Savings: Sudan and Algeria In SUDAN, finding oil boosted gross saving, but not enough to offset depletion of oil…ANS is negative

ALGERIA: Public + private savings more than offsets depletion. ANS is positive

Gross and adjusted net saving in Sudan 30

Gross and Adjusted Net Saving, Algeria 70

25

60

20

50

Per cent of GDP

15

40 10

30 5

20 0

10 -5

0

-10 -15 Adjusted net saving

Gross domestic saving

Adjusted net saving

Gross domestic saving


2. Water accounting: managing a scarce resource


Water accounting in Australia Are scarce water resources in Australia allocated efficiently? Monetary vs. physical use of distributed water in key sectors, 2008-9 (Australia) Agriculture

Mining Volume of water

Manufacturing

Water tariff paid All other Industries Households 0%

10%

20%

30%

40%

50%

60%


Water use in Botswana % share in GDP, employment & water use, 2011 50%

% of GDP

45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

% of formal employment % of water consumption


Water management in Mexico Mexico City basin —planning for future water demand (water accounts + Social Accounting Matrix) Campeche region: green growth program— increasing efficiency of water use • Modeling economic impact of changes in tariffs • Identifying less water-intensive sectors for growth • Payment for environmental services (forest land in watershed)


4. Resource-rich economies: managing rents from minerals and energy


Development Challenge: transform nonrenewable resources into other forms of capital • Recovery of rent by government through appropriate taxes, royalties Indicator: % of resource rent obtained by government

• Manage rents for long term growth— • Investment to compensate for depletion • Stabilization fund Indicator: Comprehensive wealth or Adjusted Net Savings


Natural resource rents –a major source of income (% of GDP, 2012) 20 18 16

Percent of GDP

14 12 10 8 6 4 2 0 World

East Asia

E. Europe and Central Asia

Latin America

Middle east/N. Africa

South Asia

Subsaharan Africa


Botswana’s mineral rents and long term growth 1. Govt. recovers mineral revenues/rent 3. Investment of mineral revenues build wealth and income (index of real, percapita growth in wealth, GDP)

Rent Taxes on rent

Million Pula

20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0

4.00 3.50

BOTSWANA

3.00 2.50

Wealth GDP

2.00

2. Revenues are invested

1.50

1.2

1.00

1

0.50

0.8

0.00

0.6 0.4 0.2

Sustainable Budget Index < 1, All mineral revenues invested

19

80 1 9 / 81 81 1 9 / 82 82 / 1 9 83 83 1 9 / 84 84 1 9 / 85 85 / 1 9 86 86 1 9 / 87 87 1 9 / 88 88 / 1 9 89 89 1 9 / 90 90 1 9 / 91 91 1 9 / 92 92 / 1 9 93 93 / 1 9 94 94 1 9 / 95 95 1 9 / 96 96 / 1 9 97 97 / 1 9 98 98 / 1 9 99 99 2 0 / 00 00 2 0 / 01 01 /0 2

0

GDP Wealth NAMIBIA


5. Land and ecosystems: ….taking into account non-market ecosystem services and ‘externalities’ like pollution


Making informed decisions about mangrove forests in Thailand MARKET value of mangrove: under current use $864 per ha (timber and non-timber) Additional NON-MARKET value: : $16,861 per ha--Coastal protection from storms

MARKET value of mangrove: if converted to shrimp farm $9,632 per ha (shrimp)


Protecting Australia’s Great Barrier Reef Major asset, source of income and jobs from: • Tourism • Fishing industry

National icon—symbol of Australian identify Coral reef managed well (protected from overfishing, overuse by tourism ) BUT, Major threats from on-shore activities— sediment, pollutants (phosphorus, nitrogen) mainly from Agriculture


Ecosystem Accounts for the Great Barrier Reef Catchments Manage watershed by linking agricultural practices and land use, jobs & income to water quality (sediment, chemicals), impact on GBR. Assess â&#x20AC;˘ costs to the reef from current land use (impact on fishing, tourism) â&#x20AC;˘ economic impact of alternative land uses (agriculture jobs, income) Disaster management tool: After floods in 2009, accounts provided immediate tool for assessing economic impact & future vulnerability

Survey forms included maps of individual land parcels


Thank you!

www.wavespartnership.org


1 %20green%20growth%20and%20policy%20applications%20of%20the%20seea