What is Green and Inclusive Growth? :: Jordan Schwartz


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  • Sprawl means… high cost of urban services spread over long distances.High commuting times and distances, emissions, stress and environmental health impacts“Path dependency” or “Lock in”: Once that footprint is down, it is hard to reverse.
  • Sprawl means… high cost of urban services spread over long distances.High commuting times and distances, emissions, stress and environmental health impacts“Path dependency” or “Lock in”: Once that footprint is down, it is hard to reverse.
  • Brazilian cities show that the smaller, fastest growing cities are also those with most sprawl.This is where pricing, incentives and behaviors need to change before lock-in sets in.
  • LAC already has the highest rates of automobile ownership outside of the OECD…
  • Make physical capital more resilient to depreciation/destruction
  • Mexico, subsidies for energy used in irrigation amounting to nearly [1] percent of GDP are causing excess ground water withdrawals and the depletion of key aquifers. India suffers from the same problem, in addition to spending some 2 percent of GDP on a fertilizer subsidy excessively weighted in favor of nitrogen that is causing serious pollution problems. But fixing this is not easy…. Complex political economy means feasibility needs to be balanced against costs For example cost of meeting water gap in India in 2030 is either 6 bn or 40 bn depending on whether you do it by land reform (cheap but politically difficult) or by desalination (expensive but easier).
  • The issue also is aspiration of the emerging middle class towards an unsustainable model of living…. How to convince individuals that large houses in the suburbs and individual car commute in a large car is not a right nor a desirable standard of success…By the way these are Suburban homes in Shenyang, Liaoning Province in NE China. (National Geograhic: http://ngm.nationalgeographic.com/2008/05/china/aerials/img/8-suburb-homes-714.jpg). Not in California
  • Antigua and Barbuda: combination of wind (other renewables) and coal – savings US$20 millionBarbados: Introduce natural gas and combine with wind (other renewables) – savings US$900 million Dominica: no alternatively fossil fuel solutions – geothermal export – savings US$600 millionDominican Republic: coal/LNG and wind (other renewables) – savings US$700 millionGrenada: coal and wind (other renewables) – savings US$50 million
  • The main reason often invoked for keeping subsidies is that it will hurt the poor most…This data shows that subsidies are not targeted well.Urban services, such as water and sanitation, are even harder to target than electricity subsidies. The bottom quintile in LAC’s urban population does not have sanitation access and ¾’s of that bottom quintile do not have HH connections for water supply. Very few water utilities cover their own Operating & Maintenance Costs, Depreciation of Assets, let alone new investment costs. That means that government transfers to most of LAC’s water utilities are regressive! But an important point: often the poor cannot switch away from harmful behavior for lack of resources – well targeted subsidies and programs are needed. Replacing fuel subsidies with better targeted safety nets helps the poor; simply removing subsidies does not. But, Ojo! IMF report also estimates that a fairly well run social safety net, with 15% running cost and 20 % leakage to non poor costs $1.50 to transfer $1 to the poor…. From an IMF review of 20 countries in Africa, Asia, the Middle East and Latin America.Based on Arze del Granadom, davidCoady and Robert Gillingham “ The unequal benefits of fuel subsidies: a review of evidence for developing countries” IMF WP/10/02 table 5 and p13.
  • What is Green and Inclusive Growth? :: Jordan Schwartz

    1. 1. What is Green and Inclusive Growth? Caribbean Growth Forum June 18, 2012
    2. 2. CONTENTS • Sustainable development and green growth • Urban challenges in LAC – an example of inclusive green growth challenges • Inclusive green growth in practice • The green energy challenges Caribbean
    3. 3. A BAD ENVIRONMENT IS COSTLY Cost of Environmental Degradation (% of GDP equivalent) Average Source: Country Environmental Analyses, World Bank 3
    4. 4. GREEN GROWTH IS… … economic growth that is environmentally sustainable. • Not a new paradigm, but aims to operationalize sustainable development • An approach for countries to achieve robust growth without locking themselves into unsustainable patterns • Not inherently inclusive, hence the need for specific policies to ensure the poor benefit
    5. 5. GREEN GROWTH IS… 1. Clean 2. Efficient 3. Resilient But it also has to be Inclusive
    6. 6. GREEN GROWTH IS… Clean Efficient Resilient Inclusive …but • What does this mean for policy makers? • For setting investment priorities? • For choosing among trade-offs?
    7. 7. Since Rio, Latin America and Caribbean has served as the world’s laboratory for inclusive green growth • From Payments for Environmental Services to high production agriculture… • From community-driven slum upgrading to the world’s most extensive use of Bus Rapid Transit… • From the first regional catastrophic risk insurance facility to the lowest carbon energy matrix of the developing world. But how do we mainstream?
    8. 8. Sectoral Policies, Regulations, Investments, Incentives and Behavioral Changes
    9. 9. URBAN AND INFRASTRUCTURE SERVICES: Key Objectives for Green and Inclusive Growth
    10. 10. LAC Regional Challenges Percentage Urban Population LAC 90 40 1950 2020
    11. 11. URBAN FOOTPRINT Exhausting land, straining service delivery Kingston Atlanta c.700,000 people (2011) 480 km2 Barcelona
    12. 12. URBAN FOOTPRINT Exhausting land, straining service delivery Kingston Atlanta Population equalized with Barcelona Barcelona
    13. 13. URBAN FOOTPRINT Population Growth 2000-2008 SMALL AND GROWING ARE ALSO SPRAWLING FASTER Brazilian Cities Sprawl Index (2000)
    15. 15. …and growth in automobile ownership is skyrocketing Vehicles per thousand people LAC 300 Road congestion in Mexico City
    16. 16. BOLSTERING RESILIENCE protecting physical capital and enhancing competitiveness 16
    17. 17. The challenges political economy entrenched behaviors limited and traditional financing
    18. 18. THE REAL CHALLENGES: Political acceptability and governance failures 18
    19. 19. THE REAL CHALLENGES: Social acceptability and entrenched behaviors 19
    20. 20. ENERGY Key Objectives for Green and Inclusive Growth Clean Energy Efficient Resilient Resilient Inclusive A low carbon com posit ion of t echnology and f uel m ix in generat ion capacit y. Increased ef f iciency in product ion, supply and use of energy. Increased syst em resilience, f or inst ance t hrough int er connect ion. Provide universal access at af f ordable prices.
    21. 21.  Average annual growth of 3.6 percent throughout 2028  Doubling of demand between 2009 and 2028  Individual country growth rates vary between 2.4 and 7.9 percent per year  Peak demand will grow in  * Dominican Republic from 2,300 MW in 2009  to 4,400 MW in 2028  * Jamaica from 680 MW to 1,500 MW 21
    22. 22. Country Antigua and Barbuda Barbados Dominica Dominican Republic Grenada Haiti Jamaica Diesel X X X X X X X Martinique St. Kitts Nevis St. Lucia St. Vincent and the Grenadines Trinidad and Tobago X X X X X Heavy Fuel Oil X X Natural Gas X X Coal Other X Bagasse Hydro 20% Hydro X X X Bagasse, Wind X X Geotherm X X
    23. 23. Other 47 Hydro 551 Medium Speed Diesel 650 Low Speed Diesel 1115 Steam Turbine 900 Gas Turbine 692 0 200 400 600 23 800 1000 1200
    24. 24. Energy Affordability - Cost Savings by moving from Base Case to Integrated Approach through 2028 Integrated Scenario Interconnection / Renewables Scenario Fossil Fuel Scenario US$4.4 Billion US$2.6 Billion US$2.5 Billion Base Case Scenario 24
    25. 25. Green Energy - Investment Requirements (Million US$) Integrated Scenario Antigua and Barbuda 107 Barbados 140 Dominica 818 Dominican Republic 6,200 Grenada 194 Haiti 360 Jamaica 1,937 St. Kitts 2 Nevis 1,913 St. Lucia 61 St. Vincent and the Grenadines 195 TOTAL 11,926 Production Cost Savings 14,500 14
    26. 26. INCLUSIVE POLICIES - INCLUDE SMARTER SUBSIDIES AND TRANSFERS Average distribution of energy consumption subsidy benefits across 20 countries Richer 20% population 43% of benefits Poorer 20% population 7% of benefits 26
    27. 27. Looking Forward Caribbean countries face huge challenges to meet growing energy demand and diversify energy mix Relying on diesel and HFO is the most costly solution No silver bullet but requires a combination of fossil fuels and renewables to meet future demand Pipeline gas, LNG, geothermal, wind should play a much more prominent role in future generation mix The speed of renewables development will influence future demand for fossil fuel requirements 27
    28. 28. Looking Forward Integrating power systems, building submarine cable connections and sub-regional power markets are win-win solutions Investment requirements are large but production costs saving are huge A variety of private, public and IFI support will be necessary Requires countries to improve legal, regulatory and institutional framework and cross-country cooperation 28