In part two of CDKN’s exclusive new discussion series on green growth, our Executive Chairman Simon Maxwell seeks your views on what green growth means for developing countries. Simon has put together ten propositions on green growth, and will be answering your questions and comments on two of these propositions each week for the next four weeks. Visit Ten observations on climate change and growth to read the paper in full, and read last week's discussion here.  

In part one of this discussion series, we looked at the importance of growth for poor countries and the dual impact on growth from measures taken to reduce and adjust to climate change, and from climate change itself.

This week, Simon's propositions focus on the need to adopt a global perspective when considering the impact of climate change on growth, and when adopting climate compatible strategies.  Globalised economies and the global impacts of climate change will create winners and losers across the north and south, both in terms of growth and environmental impacts.  In response, countries need national response plans.  So far, these have too often been rigid and top-down rather than flexible and participatory.

A new generation of plans is developing, but it is too early to pass judgement on their effectiveness.  How these plans should address the question of green growth is a vital part of their formulation.

Here are this week’s propositions for debate:

3. A global perspective is needed

An important insight of work on climate compatible development is that the drivers of climate change impacts on growth can come from outside countries or develop within their borders, and may be positive as well as negative. The current global food price crisis provides an example. Simplifying somewhat, fires in Russia and floods in Australia, combined with the use of 100 megatonnes of corn for biofuels in the US, have contributed to world record food prices, which affect welfare, political stability and growth prospects around the world.

Thus, discussion of mitigation and adaptation policies conducted in a national context is misleading. Furthermore, climate change creates opportunities as well as threats. Two examples are lithium in Bolivia and solar cell production in China. Bolivia has an estimated 50% of the world’s reserve of lithium, needed for a new generation of low-carbon batteries for electric vehicles, found in brine deposits below the Uyuni salt flats. The Government has valued these at $US 1.8 trillion, and has plans to use the resource as the basis for development of battery and other downstream manufacturing.  China has developed a large solar cell industry, largely for export. China itself has installed capacity of about 220 MW, but one firm alone, Renesola, produced more than 1 GW in 2010 alone, entirely for export. This is a $US 1 billion business, contributing jobs, tax revenues, and foreign exchange to the Chinese economy.

These negative and positive cases illustrate the way in which climate change and climate-related policy will (a) shift production possibility frontiers which determine what outputs can be produced with what inputs, (b) change relative prices, and (c) create entirely new markets. It may be too strong to say that global production will be restructured, but the impacts are likely to be significant.

Simon suggests that responses to climate change may have positive impacts on growth, creating new markets, prices and production systems. Do you agree, and what do you think can or should be done to consolidate these impacts?

4. A climate compatible strategy needs to be at the heart of the response

Four conclusions follow from the previous discussion. First, climate change will change development options and pathways. Second, adjustment is likely to be disruptive, with winners and losers as between sectors, geographies, genders and generations. Third, a focus on mitigation and adaptation alone is unlikely to encompass the range of likely effects. And fourth, some kind of national strategy is necessary to manage change on the scale expected.

National strategies can be problematic. The current generation of climate-related plans are heir to a long tradition of national plans, ranging from the top down and strongly interventionist, to the lighter touch and more strategic. Examples include national development plans, like those found in India or China, integrated rural development programmes, food security strategies and plans, sustainable development strategies, structural adjustment programmes, poverty assessments and poverty reduction strategy papers, and MDG plans of action.

In the worst case, national strategies have been data-hungry, time-consuming to prepare, top-down in nature, often with analysis disconnected from action, and, where action is foreseen, inflexible. They have also often been vehicles for the interests of one Ministry or sector within Government, at the expense of others. They have consisted of a list of projects for donor funding, rather than addressing the incentive and regulatory framework. And private sector and civil society actors have been excluded. The worst case is sometimes described as ‘blueprint planning’.

In the best cases, national development planning has been an open, participatory and flexible process, led from the centre, starting with objectives, addressing both the regulatory framework and public expenditure, subject to flexible implementation, and with frequent monitoring and re-planning. It sometimes uses scenario planning, as a tool both to explore options, but also to build consensus. The best case is sometimes described as ‘process planning’, drawing more recently on the lessons of complexity theory.

Note that the style of plan is independent of the content. It would be easy but misleading to characterise blueprint plans as necessarily being associated with state-led, top-down development, and process plans as being associated with market-led options. Sadly, many market-friendly governments have fallen into the trap of blueprint planning.

Climate change planning has so far concentrated on two documents mandated by the UNFCCC: for mitigation, the NAMA, or Nationally Appropriate Mitigation Actions; for adaptation, the NAPA, or National Adaptation Programme of Action. These have begun to be superseded at national level by more comprehensive documents, like Low Carbon Development Plans, Low Carbon Growth Plans, or Climate Compatible Development Plans. In principle, these have the potential to deal with the wider development agenda.

There are too few of the new generation plans to reach unambiguous judgements about their quality. What, however, in terms of growth, should they aspire to achieve?

Simon suggests that climate change plans at a national level are vital, but may be problematic.  How do you think a new generation of national climate strategies should address the issue of growth, and help stimulate climate compatible development?