Sustainable poverty reduction and green growth

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Ending poverty and achieving shared prosperity will require more than economic growth. It will require pro-poor policies to be sustainable.
 
The recently released Global Monitoring Report 2014/2015 focuses on the importance of sustainability as a means to enable countries to reach out to their poorest people over the medium term (to 2030) and long term (beyond 2030). 

Sustainability has several dimensions, which are all equally important and are all affected by climate change:

  • economic sustainability (maintaining productive capital and keeping debts at a manageable level),
  • social sustainability (securing political and social stability),
  • environmental sustainability becomes increasingly important in a world of finite natural resources, planetary boundaries, and growing disaster and climate change impacts.
Natural resource depletion, ecosystem degradation and pollution and climate change can have direct and indirect impacts on poverty and shared prosperity. First, the poor may be most affected by their impacts, as they often live in the most fragile areas and have the fewest resources to help them cope and adapt. Second, these challenges can undermine a country’s ability to sustain economic growth, which can make poverty eradication and increasing shared prosperity more complicated.
 
Countries face multiple, interlinked challenges from natural resource depletion, ecosystem degradation and pollution, and climate change that can be mutually reinforcing.
 
1. Natural resource depletion may become a threat to future growth, especially in resource-rich countries. Half of developing countries and more than 80% of Sub-Saharan Africa have negative changes in per capita wealth, which – among other things – is driven by the depletion of natural resources.
 
2. Water stress is an acute challenge resulting from ecosystem degradation and pollution, which can have immediate impacts on health and productivity.  Many countries in the Middle East and North Africa, Central Asia, and South Asia face significant water stress.
 
3. Climate risks are increasing and not only will impose additional burdens on people who are already vulnerable but could also reduce growth. The frequency and costs of disasters are growing in the developing world, particularly in East Asia & the Pacific. Even if their aggregate economic damages are limited, the poor could be disproportionally affected. Global CO2 emissions have grown. Under business-as-usual, the world would exceed its CO2 budget to stay below the 2°C target (i.e. to keep temperature increases to no more than 2°C above pre-industrial levels so as to prevent dangerous climate change).
 
We need urgent action.
 
When carefully designed, green growth strategies can tackle these challenges without undermining growth potential through reduced pollution and emissions,  improved management of the natural resources, more efficient use of resources,  and strengthened resilience while promoting sustainable growth and avoiding adverse impacts on the poor.
 
Green growth would require coordination across sectors such as water, agriculture, energy, and transport, together with a set of actions tailored to the country context. Priority should be to implement those options with the greatest urgency and the greatest local, immediate benefits.

In many developing countries, these could be actions that increase energy efficiency and provide low-carbon energy while also improving health, increasing agricultural productivity, securing access to basic services, and reducing disaster and climate risks.
 
While some green growth measures help the poor, others may require compensatory policies to limit any adverse impact. Some measures, such as introducing environmental taxes and removing fossil fuel subsidy bring significant environmental benefits and free enormous financial resources, which could then provide more effective, targeted support for the poor.
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Authors

Ulf Narloch

Jr Professional Officer, Climate Change Vice Presidency, World Bank

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