Much clean growth possible in developing world: UNCTAD

KATHMAMDU: The stress of the global financial crisis — as well as concerns about climate change and food prices — should be used by developing countries to shift towards “clean” growth, a new UNCTAD report recommends. It says such progress is possible and affordable with existing technology, based on the right strategy and incentives.

UNCTAD’s Trade and Environment Review 2009/2010[1] (TER 09/10), released today, contends that while conventional wisdom holds that economic crises are times for belt-tightening and cost-cutting, the opposite is true in the current case. The urgency of the crisis gives governments of the world’s poorer nations the chance to re-direct resources to economic growth that is more economically efficient, better for the environment, more socially equitable, and more promising over the long term.

Because so little has been done in such nations, the TER notes, huge gains can be realized in improving energy efficiency, enhancing sustainable agricultural methods, and stimulating the use of rural, “off-grid” renewable energy. If approached intelligently, such improvements should yield savings that pay for themselves or even generate quick profits. In addition, shifting to “clean” growth should create jobs, the report says. But to make this progress happen, governments must eliminate market barriers and policies that prevent the flow of capital into these promising sectors.

The study maintains that large improvements in energy efficiency can be achieved in many low-income and least developed countries “at negative net cost.” For example, efficient building technologies may be applied using local materials, in many cases reducing heating and related costs.

According to studies by the European Commission, better energy efficiency can result in yearly savings of up to 1,000 for an average EU household. “Green” buildings are not much more expensive than normal construction in many developing counties, since they pay off in the form of reduced energy bills. Materials for insulation and ventilation, for example, are often available locally. The construction of energy-efficient buildings, the retrofitting of existing buildings, and the manufacture of energy-efficient building components are expected to grow worldwide by six per cent annually. Most new jobs in the sector will be created locally, often in small enterprises (the construction sector already accounts for 5-10 per cent of all employment at national level). Energy efficiency programmes are thus especially promising for underdeveloped regions and areas with high unemployment, the report says.

Payback periods for such energy-efficient investment in developing countries would generally be shorter than in developed countries, because there is more potential for replacing inefficient equipment, the study notes.

Similar opportunities exist in sustainable agriculture, opened up by alternative production methods, developments in technology, and changing consumer preferences, the report says. It recommends that governments encourage the use of various forms of sustainable agriculture, including organic farming, low external input sustainable agriculture, or integrated pest management that minimizes the use of agro-chemicals.

Organic farming, for example, is good for the environment and often fits the circumstances of smallholder farmers who make up the majority of food producers in the developing world. Such farmers in many cases can’t afford fertilizer or pesticides and are used to functioning without them. Organic produce sells for higher prices, and recent Food and Agriculture Organization (FAO) research has shown that when organic farming is combined with reduced tillage techniques, farming can become almost climate-neutral.

According to UNCTAD research, farms that engage in certified organic production in East Africa were significantly more profitable than comparable groups of farms engaged in conventional production. In contrast to the experience of developed countries, organic conversion in many African countries is associated with increases, rather than reductions, in yield.

UNCTAD has made 35 specific recommendations on overcoming institutional, economic and political obstacles to organic farming. Many are low-cost measures. The report recommends that publicly funded research and extension work should be shifted towards “sustainable ecosystem-based agriculture.”