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Green Growth

Danielle Resnick and James Thurlow

The concept of ‘green growth’ is one which has understandable political currency, highlighted by its prominence in this year’s Rio+20 meeting hosted by the United Nations Conference on Sustainable Development. In promising to reconcile the goals of low-carbon and sustainable development with other valued outcomes—such as job creation, poverty reduction, and economic growth—it appears to offer a win-win solution for confronting the growing threat of climate change. This is the tenor of many recent reports on the concept, such as the Organization for Economic Co-operation and Development’s Towards Green Growth (2011) or the United Nations Environment Programme’s Towards a Green Economy:  Pathways to Sustainable Development and Poverty Eradication: A Synthesis for Policy Makers (2011). 

In our recent article on ‘The Political Economy of Green Growth: Cases from Southern Africa’, we question how ‘win-win’ green growth actually is, and argue that it may pose more trade-offs than is readily acknowledged when scaled up into national development strategies. Specifically, reducing carbon emissions remains a key component of green growth strategies but achieving this often requires countries to deviate from the course recommended by traditional development theory, as well as from their current development trajectory The high short-term costs of green growth agendas can have a similar political impact as the structural adjustment programmes of the previous decades, which generated substantial anti-reform coalitions that often included both powerful interest groups as well as the poor. Using case studies of South Africa, Malawi, and Mozambique, we argue that the same reality confronts the green growth agenda in the absence of concurrent interventions by donors to protect those who stand to lose from the implementation of these reforms.

Electricity and coal in South Africa

South Africa’s growth strategy has historically relied on exploitation of its substantial coal deposits, state investment in the energy sector, and subsidized electricity prices. Coal accounts for almost all of the country’s electricity supply, which needs to double over the next two decades in order to meet growing demand, and close service delivery gaps. Clearly a coal-based development strategy is incompatible with the green growth agenda. South Africa‘s per capita emission levels are already similar to those of the European Union, despite its per capita incomes being three times lower. The South African government recognizes the importance of tackling climate change, and has committed to almost halving national emissions by 2025 (relative to a ‘business-as-usual’ emissions trajectory).

Moving away from coal-fired electricity will incur both economic costs, and political resistance. Renewable energy sources are more expensive than coal, and it is estimated that in order to achieve its emissions target South Africa will need to invest an additional US$63 billion on top of the US$108 billion cost of a ‘business-as-usual’ plan. There is also the opportunity cost of not utilizing the remaining 120 years of coal reserves. Alongside the plan to reduce coal for producing electricity, the government recently announced its intention to introduce a carbon tax, with revenues possibly amounting to as much as five per cent of national income. Taken together, these initiatives will require substantial restructuring of the South African economy.

Experience suggests that adopting this green growth strategy will generate significant political opposition from important stakeholders. Some South African businesses are concerned about losing export competitiveness; labor unions in the mining sector are worried about job loses; and civil society groups concerned with measures that raise energy prices for the poor. Increases in electricity tariffs in 2008 led to nationwide demonstrations, and similar protests are expected when more stringent environmental policies are introduced, particularly the carbon tax. A green growth strategy is therefore not a win-win proposition for South Africa, at least not in the short run, when political opposition could easily dampen or delay environmental reforms.

Food and fertilizers in Malawi

Where South Africa’s comparative advantage lies in its coal deposits, Malawi’s is in its favourable agro-ecological conditions. However, land scarcity means that to take advantage of these conditions, farming practices must use land intensively, which often leads to soil degradation. To address these problems, and to try and ensure Malawi’s food security, the former president introduced the Farm Input Subsidy Programme (FISP) in 2005. The programme’s main component is a fertilizer subsidy, which has already demonstrated a notable impact on maize production. This has left Malawi with a surplus crop that it has begun exporting to Zimbabwe, and donating to Lesotho and Swaziland.

While FISP in many ways responds to calls for a green revolution in Africa, there are a number of ways in which fertilizer is detrimental to the environment. Fertilizers are the largest single source of agricultural emissions and can stimulate the release of nitrous oxide, which contributes to global warming at a rate 300 times greater than that of carbon dioxide. Furthermore, fertilizers can have a negative impact on water supplies, both because fertilized land requires more watering and thus places pressure on scarce resources, and because fertilizer can increase the level of toxin in groundwater, thereby affecting both fish stocks and human health.

There are alternative approaches that Malawi could adopt, such as promoting organic fertilizers or inter-cropping. However, it is unrealistic to expect these approaches to replace fertilizer subsidies in the short term. More significantly, fertilizer subsidies are incredibly popular amongst small hold farmers and as well as political parties. It is clear that adopting a green growth development strategy that reduces the importance of fertilizer subsidies would both be politically unpalatable and reduce poor farmers’ access to a critical farm input.

Land clearing for biofuels in Mozambique

In contrast to Malawi, Mozambique has an abundance of land, with only 12 per cent currently under cultivation. The recent slowdown in poverty reduction has highlighted the need for agricultural growth, and the potential benefits of large-scale biofuels production. In addition to spurring rural development, biofuels could reduce Mozambique’s reliance on oil imports. It is estimated that the current biofuel industry could create as many of 150,000 jobs and reduce fuel imports by US$682 million a year.

However, biofuels pose a number of threats to the environment. Since over 70 per cent of the total land area is covered with vegetation, large amounts of land will need to be cleared in order for Mozambique to establish a domestic biofuels industry. Deforestation already generates 14 per cent of global greenhouse gas emissions, and so while biofuels themselves may be more environmentally friendly than fossil fuels their benefits could be more than offset by emissions from clearing land for feedstock production.

Pressures to reduce rural poverty make biofuel outgrower schemes for smallholder farmers an attractive option for Mozambique. However, an alternative approach, more in line with the concept of green growth, would be to encourage large-scale plantations, since they tend to be less land intensive and so require less land clearing. As in South Africa and Malawi, the adoption of a green growth strategy requires deviating from other important development goals, and again it is the poor who are likely to be the losers in the short term from environmental reforms.

Conclusion

The provision of electricity, food, and fuel are key development priorities in Africa. To achieve these priorities, South Africa, Malawi, and Mozambique have relied on exploiting their comparative advantages to benefit the poor, despite environmental drawbacks. Implementing Green Growth reforms therefore will have distributional consequences and, in turn, significant political implications for governments in developing countries. Thus, while greater stewardship of the environment is undoubtedly an important objective for the international community, the win-win rhetoric around the specific concept of green growth often obscures the domestic economic and political trade-offs that such reforms ultimately will entail.

This article forms part of a special Rio+20 edition of the journal Public Administration and Development organized by the United Nations University’s Institute for Advanced Studies. Articles can be freely downloaded at http://onlinelibrary.wiley.com/doi/10.1002/pad.v32.3/issuetoc.

Danielle Resnick and James Thurlow are both UNU-WIDER Research Fellows.

WIDERAngle newsletter
June-July 2012
ISSN 1238-9544

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