6 minute read
by Multilateral Organizations
opportunities for “building back better”—boosting climate-smart infrastructure and technologies, supporting adaptation measures, and avoiding carbon-intensive investments (Batini et al. 2021). Hence, recovery from COVID-19 provides an opportunity to reset policies toward green, renewable energy that will be more sustainable in the longer run.
The World Bank Group and other multilateral organizations have moved quickly to respond. Although most COVID-19 relief support measures have been “climate neutral,” there has also been some support for greening recoveries (box 2.1).
BOX 2.1
The World Bank Group supports governments around the world in their responses to the COVID-19 crisis, targeting the recovery of their health systems, populations, and economies. It is also supporting activities in some countries to facilitate a “green recovery.” For example, it is making the following investments: • In Egypt, a US$200 million operation aims to enhance air pollution management and upgrade waste management infrastructure in the Greater Cairo region (World Bank 2021c). Through measures to manage medical waste and foster public-private partnerships in solid waste management, the World Bank will support the response to COVID-19 while also advancing more sustainable patterns in the future. • In Morocco, in cooperation with the
French Development Agency (AFD), the World Bank is supporting a US$250 million “Green Generation Programfor-Results” project to facilitate a swift response to the COVID-19 pandemic while supporting activities in climate-smart agriculture that will help prevent and mitigate the impacts of severe droughts (World Bank 2021e). • In Panama, a US$300 million project supports the protection of human capital during the COVID-19 response and includes reforms to incorporate energy and environmental considerations into procurement processes, increase the competitiveness of renewable energies, and create an inventory and registry of carbon emissions to allow the future creation of a carbon market (World Bank 2021f). • In Mexico, a US$750 million Development Policy Financing (DPF) program supports the government in various activities related to forest conservation, the implementation of a greenhouse gas (GHG) emission trading system, and the introduction of standardized air quality monitoring and a public communication campaign in large cities (World Bank 2021b). Additionally, this DPF program aims to expand access to resilient urban infrastructure and social housing for the poor while simultaneously creating jobs that contribute to climate change mitigation and adaptation.
BOX 2.1
Other COVID-19 response efforts supported by the World Bank Group include programs in Brazil, Colombia, Ecuador, Ghana, Guatemala, Haiti, Maldives, Pakistan, and Rwanda, among other countries.
Inter-American Development Bank
The Inter-American Development Bank (IDB) supports a range of projects in Latin America and the Caribbean to identify best practices to enhance the recovery process through resilient and sustainable green growth investments.
Examples, among others, include support for developing renewable energy projects in rural Bolivia that strengthen the use of alternative energy during the COVID-19 recovery process (IDB 2020b). In addition, a project in Barbados will set up an integrated coastal zone management (ICZM) scheme (IDB 2020a). This will support the country’s post-COVID reopening and strengthen the transition to a blue economy while also addressing hazards related to coastal flooding and uncoordinated development.
Asian Development Bank
The Asian Development Bank (ADB) supports several projects to ensure a green recovery from the COVID-19 pandemic. In a regional project, it is supporting efforts to improve energy efficiency and ensure safe working conditions in public buildings by deploying efficient, clean, and smart centralized air-conditioning systems (ADB 2020c). In China, the ADB is providing US$150 million for a project in the greater BeijingTianjin-Hebei region in support of air quality improvement and GHG emission reduction through energy efficiency, cleaner transportation, renewable energy, and other measures (ADB 2020a). By employing “build back better” principles, this project aims to stimulate investment in post–COVID-19 recovery while scaling up clean energy technologies in the targeted region. Another project in China supports green development in rural areas through improvement of rural waste management services, promoting recovery from COVID-19 through inclusive and sustainable rural economic development.
In India, the ADB is providing liquidity support in the form of nonconvertible debentures amounting to US$22 million for Azure Power India Private Ltd., an independent solar power producer, to sustain renewable energy operations and simultaneously mitigate the impact of COVID-19 on economic activity (ADB 2020b).
Advantages in Common from Green Growth
Although the Middle East and North Africa is a highly heterogeneous region, reorienting its economies toward a greener economic model would benefit all of them, especially in the long term. This highly complex region comprises economies with (very) different income levels (from low to high); different economic structures (most notably, oil exporters versus oil importers); and different socioeconomic and
demographic structures. Hence, it is important to acknowledge that there is no one-size-fits-all approach to addressing the region’s varying developmental and environmental challenges. Nonetheless, initiating and promoting a green transition toward a more sustainable economic model holds promise for all of the region’s economies despite their heterogeneity.
Green growth has at least three distinct advantages over business-asusual brown growth: fewer costs from environmental degradation, more growth, and more jobs.
Cost savings. Green growth reduces environmental degradation and the economic costs associated with it. The cost of not decoupling growth from emissions and continuing to grow with large environmental externalities is high, as this report details in its chapters on air quality (chapter 3), marine-plastic pollution (chapter 4), and coastal erosion (chapter 5)—a cost upward of 3 percent of GDP in certain economies. The costs associated with the failure to decouple and its consequences show that the GRID approach would bring savings from avoided degradation costs.
Returns on investment. Building back greener also brings higher returns on investments for the region’s economies than would result from continuing traditional growth patterns. Investing in a greener future both raises prospects for the restoration of the region’s natural capital and presents opportunities for important economic benefits. Investments in clean energy and biodiversity conservation have a substantially higher output multiplier than investments that support brown growth (Batini et al. 2021). This implies that returns for each dollar spent in these sectors are considerably higher—confirming that reversing biodiversity loss and environmental degradation by changing development patterns is not at odds with economic advancement.
On the contrary, an increase in green spending will generate a disproportionately higher increase in economic activity, exceeding initial investments by 10–50 percent (Batini et al. 2021). Hence, building back greener has the potential to increase future growth, accompanied by a further increase in living standards. Thus, it is imperative to funnel policy actions away from options that are not eco-friendly and toward sustainable ones, to induce a switch away from industries that must be drastically reformed to meet climate goals (Hepburn et al. 2020).
Job creation. Blue or green projects can fare better in creating jobs than traditional fiscal stimuli. It is crucial for responses to the economic challenges caused by the COVID-19 pandemic to address the precarious labor market situation. To approach this issue, a stronger focus on green projects is warranted not only from an environmental perspective but also regarding green projects’ potential to create more jobs than traditional fiscal support measures (box 2.2).
