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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

and are thus easier to implement. Not all green growth policies can yield such synergies, and trade-offs will be unavoidable. It is nevertheless useful to scrutinize policy designs for opportunities to achieve more cobenefits, if necessary by combining several policy interventions. This chapter does not provide a one-sizefits-all green strategy, because the appropriate measures and policies are highly dependent on the context, especially on the most pressing environmental and economic issues. Countries at different income levels will necessarily have different priorities; the lowestincome countries are more likely to delay the implementation of environmental policies that imply trade-offs with short-term productivity. Instead, this chapter provides a stepby-step approach to designing a strategy that is appropriate in a given context.

The challenges of developing a green growth strategy Much can be gained from framing environmental policies as national strategies with positive long-term goals. Doing so increases the acceptability of immediate costs by the population and the private sector. It also improves consistency among policies and fosters policy certainty—which creates a friendlier climate for investments, making it more likely that private resources will be invested in long-term projects. But building a national strategy creates some challenges of its own, including the need for interagency coordination, private sector engagement, and the defi nition of relevant long-term goals and indicators.

Balancing predictability and flexibility Promoting a transition toward a more environment-friendly grow th pathway requires balancing the credibility and predictability of long-term objectives on the one hand and the flexibility of the selected strategy on the other. Credible and predictable long-term objectives are necessary to help coordinate economic actors and promote

investments: businesses will not invest heavily in research on low-energy or water-saving technologies if they cannot be sure that a market will exist over the long term for innovations in these domains. Their willingness to invest in green technologies and infrastructure depends on their trust in and projections of future environmental goals. But environmental policies themselves need to evolve over time, in response to new information (such as technology or scientific facts) and to the actions undertaken by other countries or regions. Thus, the ability to adjust course is essential—even if it can occur only at the expense of predictability. Getting around the commitment problem. What factors might reduce predictability? Certainly, changes in the political landscape, scientific uncertainty, and differences in interpretations of scientific results or future technological potentials will arise—as will questions about the government’s ability to commit (Dixit and Lambertini 2003; Kydland and Prescott 1977). The fact that governments lack the ability (or credibility) to make long-term commitments has led to the transfer of monetary policy to independent central banks in many countries. On the fi scal front, independent fi scal councils (such as the Office of Management and Budget in the United States) have been created to monitor government policies and inform policy makers from a technical and nonpartisan perspective. This commitment problem exists in the environmental domain as well. Innovative solutions will have to be found to combine political legitimacy with the ability to commit. A process needs to be established that allows long-term objectives to be monitored by a body other than the government in place at a given point in time. There may be a role for an “independent environmental council” that monitors environmental policies for consistency with agreed-upon longterm objectives. Building consensus. How a national strategy is developed and implemented strongly influences its sustainability, credibility, and predictability. National strategies help bring

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...