Green economy: will it ever be people, planet and profit?

The Asian Development Bank has pledged $4.2bn (£2.6bn) for urban development, water supply and sanitation, and transport projects to China to support the country's green and inclusive growth, following a meeting between ADBank president Takehiko Nakao and Chinese finance minister Lou Jiwei.

The announcement comes at a time when many developing countries (including the Brics) are focused on economic growth and reducing emphasis on sustainable energy and non-polluting industries. This modified 'green growth' approach is receiving growing support at the expense of an alternative 'green economy' model.

The latter came to prominence a year ago at the UN Rio+20 meeting in June 2012 which concluded that developing and emerging countries should focus future development on non-polluting green industries, including renewable energies. However, in the 12 months since, a purely green economy approach is increasingly viewed as misguided, including by Chinese legislators. In June, they said at a meeting in Brussels this would lead to lower standards of living for many in the developing world, since their economies depend on maintaining a level of growth comparable to that in recent years.

Although green growth and higher standards of living imply rising consumption of resources, food, and energy, implicit in this approach is that countries must also introduce fundamental changes in patterns of consumption, technology, and agriculture to ensure a sustainable future for their growing populations. Often these developments have begun in particular regions in countries and then spread outwards, as in Brazil and India.

The importance of sustainability for economic growth was illustrated during last year's massive floods in Thailand, exacerbated by global warming, which disrupted the country's car industry with knock-on effects for international supply chains. And in Asia, this year, there have been several examples of severe air pollution in cities spreading over hundreds of kilometres. This disrupted both economic activity and affected the health of millions.

But the move towards green growth in developing countries poses extraordinary challenges for experts and decision makers because of the greater need to address the costs of natural risks and environmental and industrial safety, and large variations and unpredictability in global trade. These challenges are forcing the need in developing countries for speedy but different reforms appropriate to their societies and institutions, although this strategic aspect of development is seldom discussed at meetings of legislators and governments.

There are many examples of how technology is stimulating new policy directions to deliver green growth objectives. But they can be controversial. China, for instance, is promoting online shopping and local delivery centres on every street corner. However, critics understandably question whether global shipping of consumer goods will not massively increase air pollution emissions from shipping which already accounts for 15% of such global emissions.

It is clear that for more people to enjoy better standards of wellbeing, at the same time as promoting sustainability, enhanced innovation is needed to reduce consumption of physical materials and damage to sensitive ecologies and resources. Some small states and cities in the developing world, as I have recently seen at research institutes in China, are leading the way in a number of directions, including world class, low emission transportation such as high-speed electric trains, low energy and low cost housing with new building materials and solar collectors, low energy and minimal water use in agriculture, and bio-energy (including mixing human and animal wastes in village bio-reactors).

Communications technology is equally vital for reducing natural risks and for sharing of information between urban and agricultural communities and advice centres. This is being demonstrated now in Manila and remote mountain districts in India. At a continental scale, developing countries have a record of establishing innovative energy and water networks, although transportation and trade networks have emerged more slowly. The famous American architect and inventor of space-domes, Buckminster Fuller had a vision of a world electricity network. This is becoming closer as Europe, Russia and China are linking together, and other Asian countries are planning to join.

For the developed world, a key challenge is finding how best to share knowledge about the many aspects of green growth with developing countries. As countries of the north now experience some of the natural risks that are common in developing countries, such as flooding, they are talking about how to learn about adapting their infrastructure, housing and communications to such frequent events .

And just as important is how to convince more decision makers, especially finance ministries, that economic development needs to be based upon optimum, long-term use of natural resources while preserving and enhancing the natural environment.

There remains scope for improvement, but the increased popularity of green growth underlines that more people in the developing world are now listening. This is especially so as these arguments begin to be framed in terms of surveying, exploiting and investing in 'natural capital' – a term endorsed by the UN Biodiversity Convention.

The international finance institutions, including the World Bank, then need to direct their investments to ensure the natural capital, such as the Amazon rainforest in Bolivia, are preserved rather than being considered as less value than oil exploration, which will rapidly destroy rain forests.

National governments, including the UK's, are now formally including natural capital in their accounting. This is beginning to be replicated in the private sector too.

Taken overall, it is clear that green growth represents a key, emerging development field, and that China will probably be the crucial test bed. Whether this approach is widely adopted and proves successful will have vital implications not just for the developing world, but also global environmental sustainability.

Julian Hunt is a visiting professor at Delft University of Technology, and vice chair of Globe International. He is also a member of the House of Lords. Follow @DelftUniversity and @IntlGlobe on Twitter

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