This guest blog is from Hannah Ryder, Senior Economist at DFID, who discusses two new papers, from UNEP and the World Bank, which contribute to the growing body of evidence on green growth and give us some initial models for green growth pathways. To read Hannah's previous blog for CDKN, 'Is green growth just a fad? A review of the green growth leaders report' click here.

The end of the year is always a time for reflecting on what has gone well and hasn’t. 2011 has been my first full year at DFID, working on the topic of green growth – one of the hottest issues out there, and a focus of next year’s Rio+20Summit.

One of the first phrases I was exposed to in DFID was from a high-profile 2010 report that said: “There are no recipes for growth, just ingredients”. Over the past year, however, it’s increasingly struck me that for growth, a swimming analogy might be better than a cooking analogy. Many people and animals can swim, but there are particular shapes and techniques that mean you can get faster and more efficiently from A to B.  Most countries can grow – some haven’t – but what is the best shape and technique for growth?  And are there new shapes and techniques we’ve not discovered yet, particularly given climate change? Is green growth one of those techniques – just a different, new path to the same overarching goal?

The good news is that over 2011, relevant evidence on this question began to build, starting with two reports.

The first was a 600-plus page report from UNEP, released in November after 3 years of work and 3 months of consultation. Crucially, it included the results of a modelling exercise to simulate and compare an investment of 2% of global GDP into a “conventional” growth pathway, versus an investment of 2% of global GDP into a “green” growth pathway.  So, for example, under the “green growth” pathway, the model directed some of the investment that would have supported fossil-fuels or mining, towards agriculture and public transport, and so on.

While these kinds of models are very complex and veil a huge number of assumptions, UNEP’s findings were nevertheless really interesting. They found that after around 10 years, there was a higher rate of global GDP growth in the green scenario than in the conventional growth scenario. This was not a case of adjusting GDP to include natural capital or wellbeing which many countries are increasingly doing. No – just straightforward GDP projections.

Now, it is important to recognise that the UNEP modelling didn’t prove that developing countries – particularly low-income countries – were the direct beneficiaries of this extra growth.  But there are two reasons why benefits could be skewed towards developing countries.  First, developing countries, both middle and low-income, are currently experiencing the fastest rates of growth globally, so any conclusion about different paths to growth is likely to be most relevant to them.  Second, as set out in this paper and other research, most middle and low-income countries are considerably more dependent on natural resources than developed countries. Yet many resource-rich countries have grown more slowly than non-resource dependent countries. It’s therefore possible that directing more investment to protecting and maximising the benefits of natural resources over the long-term could deliver the most benefits to developing countries.

The second paper, from the World Bank, also released last month, provided a theoretical framework for these modelling results. The authors took a second look at typical arguments for conventional growth pathways – inspired by the "Environmental Kuznets Curve" – which usually imply that developing countries are best off "polluting now and cleaning up later".  They said this argument was weak because cleaning up will itself constrain future growth, and there are lots of growth benefits from being clean now that we don’t make the most of.  For example, if a country will eventually need high-density, resource-efficient cities to house its large urban population, it makes sense to start working towards it now rather than allowing cities to develop in sprawling, traffic-congested, air-polluted ways and then trying to shift them.

The authors also argued that conventional growth pathways ignore threats of environmental irreversibilities (such as loss of biodiversity – which can be a crucial source of medicine, for example) and the potential for technology shifts.  For instance, a conventional growth pathway would have continued to imply that developing countries should invest in land-based telephone infrastructure. Yet we now know – having seen the mobile phone revolution – that doing so would have been investing in an obsolete, and arguably dirtier technology. Who is to say what options might leapfrog those we see today?

These two 2011 papers have provided the first shoots of what I expect will be a growing body of evidence. As with swimming, I doubt we will ever come to one understanding that there is one best shape or technique for growth.  In addition, the papers didn’t provide practical, empirical evidence, nor did they tell us much about the direct relationship of conventional or green growth to poverty reduction.  But they were a start, and I have high hopes that a new initiative called the “Green Growth Knowledge Platform”, to be launched next year, in which DFID and CDKN will participate, will bring us closer to the answers. Who knows, in 2012, we might just discover a new form of swimming.

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Image: People crossing river in boat. Bangladesh. Courtesy of Thomas Sennett - World Bank