Fiscal and Trade Policy Drivers

1. Fiscal and Trade Policy Drivers Steven Stone Chief, Economics and Trade Branch

2. Modeling Enabling Conditions Agriculture Building Cities Energy Finance Forest Manufacturing Tourism Transport Waste Water

3. Green Economy: Approach and Focus Enabling Conditions • APPROACH • FOCUS • Selecting and driving transformation in key sectors - critical or highly material for greening the global economy • On enabling conditions (finance, subsidies, taxes, regulations, and related reforms that achieve GE objective) • taxes, regulations • finance • subsidies UNEP – GREEN ECONOMY INITIATIVE UNEP – GREEN ECONOMY INITIATIVE

4. Fisheries • Business as usual is not an option: State of fish stocks Source: Froese and Pauly (2004) UNEP – GREEN ECONOMY INITIATIVE UNEP – GREEN ECONOMY INITIATIVE

5. Fisheries Managing Transition • Example: Fisheries sector Types of subsidies – leave $ 8 bio ‘good’ subsidies: MPA’s, fleet buyback, skills training • Investments • Reversing harmful subsidies • Fiscal policies • Strengthening political consensus Source: Sumeila et al (2006) UNEP – Green Economy Initiative

6. Fisheries • Distribution of fishing effort around Georges Bank closed areas Source: Fogarty & Botsford, (2007) , Oceanography 20 (3); pp 112-123 73% of the US haddock catch are taken within 5 km of a fishery closed area, off the New England Coast. UNEP – GREEN ECONOMY INITIATIVE UNEP – GREEN ECONOMY INITIATIVE

7. Green economy: What leaders are saying “What is critical for Barbados and other small island developing states is that the green economy debate recognizes our structural vulnerabilities, offers a model to assist us in further realizing our sustainable development aspirations and creates the institutional platform that enables us to participate in innovative partnerships to help save the planet.” H.E. Freundel Stuart , Prime Minister of Barbados, 28 March 2012 “China will honor its commitment to growing a green economy and promoting the conservation culture. … The key is to combine economic growth, equality and of course the protection, preservation or even the rehabilitation of natural resources or natural capital.” H.E. Hu Jintao, President of China, 12 November 2011 “It seems to me that structural economic transformation and green development in Africa not only go together but are virtually inseparable.”  H.E. Meles Zenawi, Late Prime Minister of Ethiopia, 25 November 2011 “Our green economic mantra is pro-growth, pro-job, pro-poor, pro-environment – and of course pro-business….The success of this program (REDD+ Initiative) is critical to our success in pursuing a green economy. Therefore, let me once again invite all captains of industries here to contribute to the creation of a green economy and low-carbon future.” H.E. Susilo Bambang Yuhoyono President of Indonesia, 28 April 2011 7

8. Green economy: What leaders are saying “If we want to solve financial and environmental crises, we need to find a solution for both – and that solution involves green growth - sustainable growth.” H.E. Felipe Calderón, Former President of Mexico, January 2011 “We have spoken a great deal about using cleaner sources of energy. Today we reaffirm that commitment and determination to move towards a low-carbon economy.” H.E. Jacob Zuma, President of South Africa, 5 December 2011 “The challenge of attaining a green economy and sustainable society is huge, but there is no alternative. …We need a better common understanding of green economy, and Rio+20 could get us closer to such an understanding.” H.E. Fredrik Reinfeldt, Prime Minister of Sweden, 11 May 2011

9. Rio+20 Outcomes on Green Economy Support for those countries wishing to transform their economies through sharing knowledge, best practices, and capacity development Going “beyond GDP” Sustainability reporting Sustainable Development Goals

10. UNEP, UNDP, ILO, Governments, National Institutions UNEP, WB, OECD, GGGI Green Growth Knowledge Platform Advisory Services UNEP working with 40 Agencies in the UN system ILO, ITUC, IOE, UNEP Green Jobs Initiative Inter-agency Partnerships Networking with Civil Society and Private Sector GEC, GGGF, UN Global Compact PAGE – Partnership for Action on Green Economy • Green Economy • Report • Demonstrating that Greening • is a new engine for growth, • addressing hurdles & • enabling conditions • TEEB • ecosystems & biodiversity, • capturing these values, and GEC Green Economy Coalition ITUC International Trade Union Confederation GGGF Global Green Growth Forum OECD Organization of Economic Cooperation & Development GGGI Global Green Growth Institute UNDP United Nations Development Programme ILO International Labour Organization WB World Bank IOE International Organization of Employers

11. Advisory Services Countries

12. Green Economy and Trade – assessing risks and opportunities • GE Transition not without challenges, particularly for poor • Previous studies focused on potential risks, including related to trade protectionism • GE needs to be implemented in a fair, open and transparent manner to mitigate risks • BUT, number of trade opportunitiesthat can create and strengthen developing countries’ capacity to benefit from a transition to a GE and contribute to poverty reduction

13. Preliminary findings –Selected Sectors • GE transitions can create economic benefits, particularly for developing countries, to expand their presence in export markets for sustainable food, products and services • Green trade opportunities also exist in terms of value-additionrelationships, e.g. through certification • Due to growing wealth and changing consumer preferences, and growth of cross-border trade, demand for sustainable goods and services is likely to further increase • GE shift can also yield significant environmental and social benefits

14. Agriculture Strong comparative advantage for many developing countries, inter alia: suitable climatic conditions and rich biodiversity less contaminated soils Organic: 2010: $59 billion > 2015: $105 billion most production is in developing countries (> 75%), most consumption in developed countries (> 95%) development of regional organic trade (e.g. South America) increasing demand for value-added organic products (e.g. juices, spices) Higher price premiums Improved trade balances: use of local, instead of costly imported, inputs and increased exports of sustainable agrifood products

15. Fisheries Demand for certified fish products (such as eco-label products) has gained momentum Sustainable procurement policies of large international food firms are likely to further drive demand Processing: developing countries yet to exploit additional gains with product certification: Growth areas include frozen organic fish and sustainable aquaculture Tourism: recreational fishing, whale watching, scuba diving, etc.

16. Forests Developing Countries Trade and Export opportunities in the forest industry include: certified timber recycled timber non-timber forest products (NTFPs): food items, pharmaceutical ingredients and cosmetic products, etc. forest tourism Currently, demand outstrips supply

17. Manufacturing Switching to more efficient manufacturing will save energy and resources and enable developing countries to produce goods for export at a lower price -> increased competitiveness Potential to generate new business from remanufacturing: -> technology and knowledge transfer, increased employment and exports Eco-labels to market sustainably manufactured products -> growing demand in developed countries New greener products, e.g. energy efficient products like light bulbs -> new market opportunities

18. Renewable Energy Growing export opportunities for raw materials and components for renewable energy supply products (e.g. solar panels, wind turbines) Entry into supply chains through trade in intermediate goods key opportunity for developing countries (encouraged by government policies, such as feed-in tariffs) Exports of renewable energy: many developing countries have abundant renewable energy resources (potential to export), including solar energy, wind power, geothermal energy, biomass and hydro Potential opportunities for sustainable second-generation biofuels

19. Wrap- Up: What are the key policy drivers? On the domestic level… Providingsupport to exporters to meet standardsin international markets Creating, maintaining and enforcing astringent domestic standards Changing fiscal policy (e.g. phasing out environmentally harmful subsidies) and employing new market-based instruments (e.g. green public procurement) Promoting innovation (i.a. investment in education and training, support for R&D)

20. On the international level? Concluding the WTO Doha Round on: (i) reduction of tariffs and non-tariff barriers to trade in EGS (ii) discipline of fisheries and agriculture subsidies Creating an agreement on a joint effort to bring new technologies more quickly to the market (open innovation schemes, international R&D, publicly backed patent pools, etc.) Harmonising or granting equivalency of standards – ensure that different standard schemes for sustainable producers do not exclude developing country producers Promoting public awareness to increase consumer demand for sustainable food, products, and services

21. Questions for Discussion How to ramp up and effectively support those countries showing leadership in low income countries? How to best leverage financing for green investments in today’s economies? How to begin creating trust at the international level in facing collective challenges?

22. Thank you! steven.stone@unep.org