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I N C LU S I V E G R E E N G R O W T H: T H E PAT H WAY TO S U S TA I N A B L E D E V E LO PM E N T

For example, a study of the impact of carbon price policies on U.S. industry considers outcomes along four time scales (Ho and others 2008): • The very short run, where fi rms cannot adjust prices and profits fall accordingly. • The short run, where firms can raise prices to reflect the higher energy costs, with a corresponding decline in sales as a result of product or import substitution. • The medium run, when in addition to the changes in output prices, the mix of inputs may also change, but capital remains in place, and economy-wide effects are considered. • The long run, when capital may be reallocated and replaced with more energyefficient technologies. It concludes that employment consequences of green policies differ strongly, depending on the time horizon. Short-term employment losses mirror output declines and are substantial in energy-intensive sectors, but gains in other industries would fully offset those losses in the longer term. But few studies account for labor market rigidities and other obstacles to job creation, and yet they may impair any positive effect of green policies. As the World Bank study on South Africa (World Bank 2011a) noted, green policies cannot correct all the problems holding back job creation—such as skill mismatches and the dualism (insider-outsider) of the job market. Thus, the scope for green job creation is limited in the absence of parallel economic policy changes.

Evaluating the impact of green policies on jobs: Gross versus net job creation What is the overall job creation impact of green policies in developing countries? Few studies have explicitly focused on this, and those that have suffer from many definitional issues, making comparisons diffi cult.4 They also fail to look at economywide effects. That said, the few that do exist suggest that climate-change policies in general and renewable energy policies in

particular can generate considerable extra employment: • In South Africa, a study finds that an “energy revolution” scenario—that is, a scenario with a strong transition toward renewable energy—creates 27 percent more jobs than the International Energy Agency’s business-as-usual scenario and 5 percent more than the growth-withoutconstraints scenario (Rutovitz 2010). • In India, a study finds that low-carbon employment is one of the key co-benefits of promoting the renewables sector. It notes that solar power is more labor-intensive than wind power and better able to meet India’s requirements for small-scale, offgrid power. Biomass, green transport, and public works in water and forest management are also attractive ways of achieving both employment and environmental objectives (GCN 2010). • In China, a study emphasizes the possible employment losses from the planned sharp reduction in the energy intensity of Chinese industry, but notes that this could be outweighed by increased employment in renewables and—quantitatively, much more important—the shift of the Chinese economy toward services and away from heavy industry (GCN 2010). • In Brazil, a study argues that renewable energy sources have a stronger potential in Brazil than is envisioned in official studies and government policies, both in contributing to CO2 mitigation and generating jobs (GCN 2010). What is the record of green fiscal stimuli on job creation in developing countries? The evidence is scant, but a few studies do show some job creation, with substantial variation in jobs created per dollars spent. • In the Republic of Korea, forest restoration generated nearly eight times as many jobs per dollar as the least laborintensive green objective, “vehicles and clean energy” (Barbier 2009). • In China, biomass spending was found to be nearly 30 times more effective in generating jobs per dollar than wind

Inclusive Green Growth  

As the global population heads toward 9 billion by 2050, decisions made today will lock countries into growth patterns that may or may not b...