New ‘people and planet sensitive’ economy needed - now!

Through its focus on the greening of economic growth, international work recognises that different patterns of economic growth lead to different outcomes for ecological integrity and therefore for human well-being, and critically, for varying types of economic benefit. The idea that the ‘quality’ of economic growth differs depending on policy choices, and that all countries – including developing countries – can choose their development path, must be a basic principle underlying the work done in greening economies. However, a key issue that must be recognised, is that economic growth in and of itself, tends not to deliver benefits to broader society, but to a relatively small elite. Hence, when speaking of growth, it is critical to define what type of growth, and for whose benefit.

Quality of economic development, in the context of sustainable development, may mean different things for various countries and regions. In South Africa, as in Asia and the Pacific, overall, there has been a coincidence of rapidly expanding economies, poverty and substantial future consumption pressures; however, the natural resource base in Africa is wider than SE Asia. Thus, a focus on meeting human needs and improving wellbeing with the lowest possible ecological cost is more relevant in Asia and Pacific than in any other global region, but given the degradation and skewed land ownership patterns in South Africa, the same is relevant here.

Developing policies to promote and measure the eco-efficiency of economies, coupled with an improvement in benefit to the poor particularly, is therefore a key way to meet the most important challenge to sustainable development in this region: Reducing the pressure on the natural resource base while continuing to meet human needs. And how is eco-efficiency achieved in practice? There needs to be an emphasis on the difference between policies and institutions that work to improve environmental performance, and those that contribute in a meaningful way to improving environmental sustainability.

A focus only on improving environmental performance (that is, the end result, and mainly pollution control) results in end-of-pipe solutions – this is the current approach in South Africa. A key aspect of these ‘solutions’ is that they not only enhance ecological degradation, but tend to impact most negatively on the poor – for example, nearly all ‘landfills’ (properly called rubbish dumps, as they will all leak in the future!) are situated in or near poor, generally black, communities. Similarly, mines, waste incinerators and chemical-based farming, also tend to impact most negatively on workers and surrounding communities, as well as the public at large. At the same time, there is a need to take action to address the environmental sustainability of the economy where the biggest eco-efficiency gains can be achieved. The green economy approach provides the tools for this.

Many make the mistake of thinking that eco-efficiency has to do with birds and trees and bees and animals – however, eco-efficiency has massive potential positive impacts on human health, wealth and wellbeing. In short, sustainable and people-driven eco-efficiency translates into more benefit for more people, from fewer resources.

For example, increasing reusability of products and packaging leads to a quantum leap in decent work for unskilled and low-skilled people; organic food production not only avoids health impacts on workers and the poor, but also increases food security, nutrition, jobs and income per hectare and caters for a growing market.

Similarly, reforming and transforming production and consumption results in both reduced greenhouse gases, as well as making local economies (and particularly the poor) more resilient to climate change.

Reviews of progress on achieving the millennium development goals (MDGs) justify a growing uneasiness with prevailing economic growth patterns, evidenced in the media and by some research. Of course, the recent and ongoing ‘financial meltdown’ is impacting across the globe, and those economies that are most eco-efficient, tend to be the ones surviving the problem best, as they are able to provide for their needs at a local level. Only a few countries have managed to increase incomes at all levels of society. In most countries, the gap between rich and poor is growing, with South Africa unfortunately leading the pack (as measured by the GINI coefficient).

However, income inequality is only part of the picture. Gender-based inequalities in access to health care and rural-urban inequalities in relation to access and use of sustainable energy, water and sanitation are also highlighted by these reviews.

Despite economic growth since the advent of democracy in South Africa, the results have not delivered substantial benefit to the poor and previously marginalised, in the way it was originally hoped for. One key reason is that the ‘growth at all costs’ approach has come home to roost, as the famous ‘trickle down’ theory and others, have confirmed that the ‘growth only’ approach does not lead to significant improvement in the lives of the poor, and instead, has been responsible for the growth of the incomes of the rich.

The degradation of the natural resource base exacerbates the situation and makes it more difficult to advance towards achieving Goal 1 (eradicate extreme poverty and hunger) in a way that benefits all persons in society. There is continuing evidence of reduced natural capital in the form of declining air quality in many cities across the region, land degradation and desertification, shrinking natural forest cover and increasing water stress. The limitations of and continuing threat to natural capital compromise the ability of Governments to meet the still substantial needs for social and economic benefit.

Most importantly, current and projected patterns of consumption and production point to mounting future environmental and social pressures, pressures that not even the improvements in pollution control that sometimes accompany economic growth will be able to relieve. ‘Grow now, clean up later’ is no longer an option. Improving the ecological quality of economic development requires greater focus.

Fiscal policy and pricing is the ‘software’ of our economies and societies. Are fiscal policy and pricing ‘programmed’ for the kind of economic and social development that maximizes human wellbeing and minimises environmental impact, or do they promote economic growth at all costs? Do fiscal policy and pricing reward and facilitate investments made in natural capital commensurate with the ecosystem goods and services that this natural capital is expected to provide? And are negative impacts (external costs) internalised into products and services, such that they are correctly priced and provide reliable indicators of what is to be promoted, and what to be phased out?

Are current patterns of infrastructure development locking countries into resource-intensive, socially excluding lifestyles for decades into the future, or is there sufficient effort to develop infrastructure in a way that maximises service delivery and reduces environmental impact? Is balanced consumption being promoted as a means to improve human wellbeing, or as an end in itself? How can sustainable production and consumption choices be created to meet the demand of the growing numbers of conscious consumers, ignoring for the moment the need to supply the same to all? Are businesses able to transform their practices quickly enough to restore, rather than destroy, natural capital, and lead to positive social impacts? How can policy and implementation allow business and government to achieve this?

While there are some key ethical and moral issues attached to these questions, they serve to indicate (at the very least) the direction that the economy is or should be heading in.

Can current economic and pricing systems (the software of the economy) and the physical expressions of economic growth manifested in the trade in goods and services, as well as patterns of infrastructure development (the hardware of the economy) produce new environmental and social outcomes? It is unlikely, even with the best pollution and waste control measures in the world.

Where economic growth is determined by market forces, and market forces do not take into account (generally externalised) environmental and social costs, as well as environmental and social (human health) protection, upliftment of the poor is doomed. Climate change is the most prominent symptom of such market failure. Eco-tax reform (ETR) uses fiscal policy measures to steer economic burdens away from economically beneficial activities (such as employment) towards environmentally harmful activities (such as the generation of pollution). With this approach, decision-making at every level, by the individual in society up to the highest national government forum, is steered towards minimising the negative social and environmental impacts of economic development.

Sustainable infrastructure development is a critical focus of green economies. While infrastructure expands, it locks economies into specific patterns of resource use (such as energy) for decades into the future. In South Africa, as in Asia and the Pacific, where there is rapid urbanisation and significant shortfalls in almost every kind of infrastructure, investments in infrastructure may be turned into investments in environmental sustainability and an opportunity to build more sustainable economies. This has yet to be seen in South Africa, as the pattern (as evidenced by the 2010 mass construction programme) is still locked into unsustainable infrastructure. The key problem with current infrastructure-led development, is that the wrong questions are asked, leading to the ‘wrong’ solutions – for example, instead of continuing to add more lanes to roads for increased volumes of traffic to relieve congestion, the correct question would be ‘how do we change the local economy so that people drive less; lead to an improvement in decent, safe and efficient public transport; and reduce the load on roads?’

Another aspect of the hardware of an economy is the production and consumption of goods and services. The rate at which these goods and services are produced, and how they use environmental resources and services (as raw materials in their production, as inputs to their operation, or as waste sinks) are critical sources of environmental pressure. These pressures are growing with the rise of the consumer classes in many economies. The greening of business, while acknowledging the model is flawed and requires a transition to a genuinely Green economy, not necessarily based on a Green version of Capitalism, and sustainable consumption remain the core prerequisites for meeting both human welfare and environmental protection needs.

While the fore-going only begins to indicate the way forward, some key facts should be borne in mind: The planet is not short of resources – for example, if global food production was shared equitably, every woman, man and child would receive a kilo of grain and half a kilo of each of fresh food, and food such as milk, cheese, meat, etc. Enough to make most people fat!

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