Quantitative assessment measures for developing

Green Economy/SCP strategic policies

What is the Green Economy/Sustainable Consumption and Production?

Customized definition, depending on country context and needs

As a result, various models could be used to analyze it, some are static and some dynamic.

Available options covering economy, environment and society: Indicators, Input-Output, Social Accounting

Matrix (SAM), Geographic Information System (GIS);

Econometrics, optimization, system dynamics.

What is the gap (opportunity) for a Green Economy model?

Need to support policy formulation and evaluation

Need to assess policies and investments according to their impact across sectors (improving the performance of the system, rather than focusing on single indicators).

Whats behind the Green Economy/SCP model?

A correct (although simplified) representation of reality demands careful consideration of : Policy

What interventions are being examined? What are the expected impacts?

Structure How is the problem being influenced by (and/or

impacting) the system? Science/Knowledge

What do we know about the problem? What is causing it, and how?

PoliciesInvestment

(e.g.,capitalinvestmentinREandEEforextracapacityandretrofits)

Mandatesandtargets(e.g.,REandEEstandards,deforestation

andreforestationtargets)

Subsidies(e.g.,feedintariffsforenergy,taxrebates,paymentsforecosystem

services)

Scenarios Climatechange,energyprices,conflicts,peakoil,worldeconomicgrowth,etc.

Structure

Socialsectors Economicsectors Environmentalsectors

PopulationEducation

Infrastructure(e.g.transport)Employment

Incomedistribution

Production(GDP)Technology

HouseholdsaccountsGovernmentaccounts

Investment(publicandprivate)BalanceandfinancingGovernmentdebtBalanceofpaymentInternationaltrade

LandallocationanduseWaterdemandandsupplyEnergydemandandsupply(bysectorandenergysource)GHGandotheremissions

(sourcesandsinks)Footprint

Society

Economy Environment

Whatsbehind

the GreenEconomymodel?

Resourceefficiency

Approach methodology

Whats behind the Green Economy model?

The Green Economy Model should represent reality The modeling exercise should be tailored around

a set of specific issues and a geographical context.

As issues and local contexts are unique, integrated models need to be customized.

Model the problem, not the whole the system Model = a simplification of reality System = collection of parts that interact with one

another to function as a whole

Policy Context Challenges and Solutions

1. Narrow focus cross-sectoral model

2. Reports, little flexibility to test assumptions fast simulation, with user interface

3. Research organizations have agendas objective structural representation

4. Policy makers have agendas broad stakeholder involvement

Green Economy scenarios

Themodelingworkincludesbiophysicalandeconomic variables

forhuman,economicandnaturalcapital,and

canestimate:

Avoidedcosts(e.g.,reducedfishlandingsfromover exploitationofmarineresourcesandcoralbleaching,and

resultingavoidedemploymentlosses)

Addedbenefits(e.g.,higherbiodiversityandproduction ofNTFP,ecotourismrevenuesandemploymentfrom

forestconservation).

Approach methodology

Resourceefficiency

Approach methodology

pib

investissement

+

emploi

+

stabilitepolitique

climat desaffaires

+

+procedure administrative +

legislation fiscale

fiscalite

+-

+

+

education

productivitede l'emploi+

-+

+

terreagricole

+changementclimatique

securite+

+

-

investissementadaptation climatique

+productivite

agricole

+ -

population

+

+-

espaceurbain

+

-

foret-

biodiversite

+- -

+

Example: Madagascar

Example: Seychelles

gdp

tourismindustry

fisheries

++

average price pernight

+

occupancyrate-

+

state of the naturalenvironment +

quality and cost ofhotel infrastructure

quality ofservices

++

cost ofoperation

-

construction+

security

+

climatechange

-

planning andregulation

-

impact ofconstruction onthe environment -

transportinfrastructure

quality andavailability of public

infrastructure+

++

+ touristarrivals

+-

social stability

+

+tourism industry

revenues

+

+

share of revenuessubject to

domestic taxation

+

external economicperformance +

indirectcontribution oftourism to gdp

+

+

availability oflocal manpower

other recurrentcosts

cost ofservices

+

training

availability oflocal quality

training

+

+

+reliance on

foreign manpower

-

+-+

salary of localemployees+

quality of hrmanagement

+

+-

productivity oflocal manpower

+

+

+

+

+

consumptionof inputs

cost ofsupply

++

+

-

technology

consumption ofintermediate

inputs

+

+

-

awarenessraising-

-

-ecotourismandentertainment

+income

consumption

+

+

taxation

-

investment

+-

+

savings

+- -

-

+

-

++

employment

+ +

-

cost and accessto credit

-

+water,

energy,land ...

financialservices

+

+

cost of operation- fisheries

-

fisheryrevenues

+

fishprice

domesticfish catch

-+

turnaroundtime

+ fleet size

workersproductivity

++

+

subsidy (tax removed)+

internationalfish catch

-

licensing

+

+

cost oflandings+

+

byproductsynergies

+

The Modeling Process

1. Definition of the problem (define the boundaries);

2. Formulation of dynamic assumptions(causes and effects);

3. Creation of a simulation model (stock and flows);

4. Validation of the model5. Formulation and evaluation of policies

System thinking is a discipline for seeing wholes.

It is a framework for seeing interrelationships rather than things, for seeing patterns of change rather than static 'snapshots'...

Today systems thinking is needed more than ever because we are becoming overwhelmed

by complexity.

System Thinking (ST)

Examples of analysis results

Comparisonofscenariosforselected sectorsandactions

Sector BAU Scenariosa Green Scenarios Agriculture: Yield increase

Higher utilization of chemical fertilizers

Expansion of conservation agriculture, using organic fertilizers, among others

Energy:Expansion of power generating capacity

Thermal generation (fossil fuels) Renewable energy power generation

Fisheries: Increase production

Expansion of the vessel fleet, pushing catch in the short term

Reduction of the vessel fleet, investing in stock management to increase catch in the medium and longer term

Forestry: Increase production Increase deforestation

Curb deforestation and invest in reforestation (expanding planted forests)

Water:Manage supply and demand

Increase water supply through higher withdrawal

Invest in water efficiency measures, water management (including ecosystem services) and desalination

a Refers to BAU1 and BAU2 with additional investments allocated to match existing patterns.

Results: Growth and Sustainability

Short term: Brown scenarios, then Green and BAU Higher growth fueled by resource extraction, cheap short term

options -BAU-. Medium/long term: Green scenarios, then Brown and

BAU. Higher growth driven by resource efficiency, which reduces

costs and secures longer term availability of key production inputs for the future.

Higher longer term resilience in Green scenarios; Clear cross sector synergies allow to reach a positive

ROI for Green cases (3:1), higher than Brown in the medium and long term.

Results: in a nutshell (G2 vs. B2)

Results:GDPGrowth (CCrelatedcostsarenotincluded)

Results:EcologicalFootprint (2050values,footprintcomponentsrelativeto2010)

Results:NaturalResourceStocks andtheEconomy

Results:Fisheries(Fishstockrelativeto1970)

Results:Forestry

Results:Water

Results:CO2

Emissions(relativetoBAU)

Employment Job creation in both Green and Brown cases,

vs. BAU; In Green scenarios:

Considerable gain in energy and other green sectors/investments (e.g. transport);

Decline (vs. Brown), from resource conservation; Decline (vs. BAU), driven by overall social

development and productivity increases, for macro sectors (e.g. services);

Green investments have considerable potential for short term job creation and longer term resilience.

Results:EnergyEmployment

Summaryofthe economicanalysis

Mountains- Investments: for

reaching the stated expansion of organic farming land area.

- Employment: additional employment is calculated for GE and BAU scenarios (assuming similar organic farming land expansion under BAU).

- Value added: calculated for different GE scenarios, compared to BAU (assuming similar organic farming land expansion under BAU).

Cumulative net value added is calculated by subtracting investments and adding additional wages from new jobs.

Summaryofthe economicanalysis

Mountains(2)

Summary of the economic analysis -

Energy- Investments: for reaching

the stated RE and EE targets, and avoided investment in coal power generation (relative to BAU).

- Avoided costs: savings on electricity consumption (due to EE) and coal use (due to EE and RE).

- Income creation: the employment generated leads to more income, and it can be considered an indirect benefit.

The net investment required is therefore calculated using the capital expenditure (policy-driven), avoided costs, additional savings and income created.

Summaryoftheeconomic analysis Energy(2)

What is the Green Economy/Sustainable Consumption and Production?What is the gap (opportunity) for a Green Economy model?Whats behind the Green Economy/SCP model? 5 6Whats behind the Green Economy model?Policy Context Challenges and SolutionsGreen Economy scenarios 10 11Example: MadagascarExample: SeychellesThe Modeling ProcessSystem Thinking (ST)Examples of analysis results 17Results: Growth and SustainabilityResults: in a nutshell (G2 vs. B2) 20 21 22 23 24 25 26Employment 28 29 30Summary of the economic analysis - Energy 32