William Y.

Brown Nathan Hultman Bruce Jones Homi Kharas Joshua Meltzer Mark Muro Devashree Saha Allison Shapiro Katherine Sierra Davi Steven

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Acknowledgements: *he Brookin2s "nstitution is a private non-pro3it or2anization. "ts mission is to con uct hi2h-4ualit56 in epen ent research an 6 7ase on that research6 to provi e innovative6 practical recommen ations 3or polic5makers an the pu7lic. *he conclusions an recommen ations o3 an5 Brookin2s pu7lication are solel5 those o3 its author8s96 an o not re3lect the views o3 the "nstitution6 its mana2ement6 or its other scholars. Support 3or this pu7lication was 2enerousl5 provi e 75 the ,overnment o3 Norwa5. Brookin2s reco2nizes that the value it provi es is in its a7solute commitment to 4ualit56 in epen ence an impact. Activities supporte 75 its onors re3lect this commitment an the anal5sis an recommen ations are not etermine or in3luence 75 an5 onation.

Cover photo: This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 nported !icense.

(#N*0N*S
"ntroduction ............................................................................................................................. ...: Twent# $ears !ater: %ill &reen &rowth be the &ame Changer ....................................................; Needed 'or (ustainable Development) Katherine Sierra6 Senior <ellow6 ,lo7al 0conom5 an Development6 Brookin2s "nstitution &reen &rowth "nnovation in Developing Countries .....................................................................= Nathan Hultman6 Non-resi ent <ellow6 ,lo7al 0conom5 an Development6 Brookin2s "nstitution Allison Shapiro6 .niversit5 o3 Michi2an 0r7 "nstitute 3or ,lo7al Sustaina7le 0nterprise The (ustainable Development &oals: *Curse o' the (e+uel, or *Adopt- Adapt- "mprove,) ... .. 11 Homi Kharas6 Deput5 Director6 ,lo7al 0conom5 an Development6 Brookin2s "nstitution Davi Steven6 Non-resi ent <ellow6 (enter o3 "nternational (ooperation6 New York .niversit5 The "nternational .ramework 'or (ustainable Development and &lobal /rder .......................... 1: Bruce Jones6 Director6 Mana2in2 ,lo7al #r er6 Brookin2s "nstitution &reen &rowth and "nternational Trade ...................................................................................... 1> Joshua Meltzer6 <ellow6 ,lo7al 0conom5 an Development6 Brookin2s "nstitution &reen &rowth and the (ub-National Development "mperative ................................................. 1? Mark Muro6 Senior <ellow an /olic5 Director6 Metropolitan /olic56 Brookin2s "nstitution Devashree Saha6 Senior /olic5 Anal5st6 Metropolitan /olic5 /ro2ram6 Brookin2s "nstitution Natural Capital 0esources ..................................................................................................... .. %% William Y. Brown6 Non-resi ent Senior <ellow6 ,lo7al 0conom5 an Development6 Brookin2s "nstitution

"N*!#D.(*"#N
0epresentatives 'rom world governments- civil societ# and the private sector will gather in 0io de 1aneiro on 1une 2022 to address the man# environmental challenges 'acing the global communit#. The 0io320 (ummit will mark the 20th anniversar# o' the 4552 nited Nations Con'erence on 6nvironment and Development- and although man# gains have been achieved over the past two decades- the climate change agenda continues to move at a glacial pace while at the same time climate risks are increasing. As the 0io320 approaches- the challenge will be to reenergi7e international will 'or meaning'ul progress in addressing climate change- achieving sustainable growth and developmentand protecting the environment. The nited Nations Con'erence on (ustainable Development 8.N(SD96 or !io$%&6 has i enti3ie seven ke5 priorit5 areas 'or discussion: decent 8obs- energ#- sustainable cities- 'ood securit# and sustainable agriculture- water- oceans and disaster readiness. &reen growth as a pathwa# 'or sustainable development has been proposed as an element to integrate these priorities. /ther issues to be discussed include establishing a new development agenda to replace the 9illennium Development &oals :set to e;pire in 204<= with the Sustaina7le Development ,oals6 an 3in in2 new sources 3or climate an sustaina7le evelopment 3inancin2. 1oining the debate on the challenges and e;pectations 'or the 0io320 (ummit- e;perts 'rom the >rookings "nstitution e;plore the critical issues and o''er polic# recommendations 'or leaders to consider in order to promote sustainable growth in both the developed and developing world. Katherine Sierra outlines wh# green growth is important and how it can be leveraged b# the international communit# to bolster the global growth- but e;plains how the outcomes 'rom 0io320 will be driven b# bottom-up initiatives and organi7ations- o'ten ahead o' national governments or international consensus.

!io$%&' (oalitions Drivin2 Bottom-.p (han2e

Nathan Hultman an Allison Shapiro address how innovations in technolog# can be used to help least developed countries move onto sustainable development science 'oundationstra8ectories through regional business innations

cubators- and dedicated 'unds to de-risk investment and encourage intellectual propert# sharing. Homi Kharas and Davi Steven argue that the (ustainable

Development &oals need several #ears o' negotiation and development in order to avoid *the curse o' the se+uel, and that 0io320 should onl# launch the process and not determine the goals themselves. Bruce Jones describes how the international 'ramework 'or implementing 0io320?s action items must be re'ormed in order to achieve success through the creation o' a new (ustainable Development or adaptation o' the (ocial Council. Joshua Meltzer calls 'or more international cooperation to reduce trade barriers described in the %T/ Doha round- however- he e;plains that countries have the right to act unilaterall# in achieving emissions sus cannot be reached. Mark Muro an 'orce dustrial matchingoutputDevashree Saha e;amine how cities technical and social innovation and adoptioninreductions i' consen.N. Council on .N. 6conomic and

and regions are increasingl# the chie' locus o' labor opportunit#making them

the ke# drivers o' green economies and domestic green growth policies. William Brown e;plains the importance o' natural capi-

tal- like ecos#stems- oceans and biodiversit#- being incorporated into the economic planning o' governments and private enterprise- and calls on 0io320 participant nations to mandate consideration o' natural capital in national wealth accounting.

*W0N*Y Y0A!S )A*0!' W")) ,!00N ,!#W*H B0 *H0 ,AM0 (HAN,0! N00D0D <#! S.S*A"NAB)0 D0+0)#/M0N*@
Katherine Sierra

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"n 1une world leaders will meet in 0io de 1aneiro 'or the 20th anniversar# o' the 4552 nited Nations Con'erence on 6nvironment and Development@the 6arth (ummit@in an attempt to provide new political momentum 'or sustainable development. At 0io320- the# will 3ace a vastl5 terrain i33erent an more i33icult

"nternational climate negotiations continue to move at a glacial pace and other environmental treaties and agreements are under-delivering. The 200B economic crisis continues to impact the economies o' the consuming political agendas. These trends have thus prompted new wa#s o' thinkwhen the5 3irst met %& ing about green growth as a pathwa# 'or sustainable development. This green growth agenda looks to meet the world?s environmental and social challenges- using technolog# and innovation as ke# levers to drive 8ob creation and economic growth. "n particular- new technological advances@particularl# the rise o' in'ormation and communication technologies@are beginning to signal wa#s in which trans'ormative change- i' supported b# the right set o' policies- could meet the sustainable development challenge. Additionall#- new coalitions between government- business- academia and civil societ# are starting to take action- not waiting 'or global or national consensus. nited e3icits States6 0urope an Japan with Ao7s6 e7t an

than the5 encountere 5ears a2o.

Aopulation growth and urbani7ation is putting pressure on the environment and social s#stems. &rowing energ# demands and competition 'or land use thwart e''orts to reduce greenhouse gas emissions. The "nternational 6nerg# Agenc# warns that the world is on a path toward a temperature increase o' more than 3.< degrees Celsius over pre-industrial levels- which is dangerousl# over the 2 degree Celsius goal set b# climate negotiators. Competition 'or water is straining natural s#stems while the impacts o' a changing climate are alread# being e;perienced- with the poorest the most vulnerable. The abilit# o' international institutions and cooperation to solve man# o' these issues is under strain as well.

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&reen growth advocates call 'or strategies that emphasize e33icienc5 an pro uctivit5 as important 3oun ational goals. Demand management policies that price energ# an water at levels re3lective o3 eCternalities are nee e 6 starting with removal o' 'ossil 'uel subsidies and the implementation o' policies that price carbon. &reen growth?s e33icienc5 2oal will 7e critical as we la5 the neCt 2eneration o' in'rastructure to support an additional 3 billion people who will be living in cities b# 20<0- mostl# in Asia and A'rica. 9ore compact and denser cities will re+uire lower in'rastructure and energ# costs per capita as densit# rises- and will need to take advantage o' cleaner mass transit solutions that reduce local pollution- with attendant health 7ene3its. +aluation o3 natural capital in economic accounts will help polic#makers make better trade-o''s between hard in'rastructure investments and solutions that use ecos#stems to provide services- such as 'resh water sources and natural bu''ers against water related disasters. 9arket mechanisms- such a basin-wide water marketscan provide the signals needed to manage resources@especiall# in water stressed regions. %hile these policies have been in the sustainable development toolkit 'or decades- the# have not been widel# implemented. &reen growth strategies aim to make these policies more attractive b# leveraging new technologies to lower costs and trans'orm business models. 0enewable energ# technologies are the most o'ten discussed- but breakthroughs and advances in in'ormation and communications technologies :"CT= ma# be as important. 9unicipal leaders are e;perimenting with *smart cit#, s#stems that use "CT to mana2e water an transportation s5stems more e33icientl5 while reducing resource use. (mart grids can help mana2e the 3low o3 renewa7le ener25 into the 2ri 6 an can also make distributed energ# s#stems possible. "nnovations in irrigation s#stem technolog# can help meet the growing demand 'or 'ood while also removing a ma8or source o' ine33icienc5 in a2ricultural ener25 an water use. Developers are eCperimentin2 in usin2 ener25 e33icienc5 an local renewable energ# generation technologies to create 7eroemission commercial buildings and housing.
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/roper pricin2 re2imes6 as part o3 the e33icienc5 2oal6 will also be a critical element in driving the innovation agenda.

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Actions could include: public and private investment in research and developmentC strategies that nurture coalitions between research institutions and entrepreneurs- like business incubation centers and an enabling environment 'or venture capitalC policies like targeted- transitional subsidies to help innovations move out o' the *valle# o' death, or the part o' the innovation c#cle between invention and commerciali7ation where new technologies o'ten 'alterC and especiall# 'or evelopin2 countries6 3inancial mechanisms to help commerciali7e investments in new technologies b# backstopping initial risks as a wa# o' promoting earl# adopters. The green growth agenda is still in an earl# stage o' development. "ts concepts are being tested in a 'ew national conte;tswith Dorea being the most notable e;ample. "nternational organi7ations like the /rgani7ation 'or 6conomic Cooperation and Development :/6CD=- the nited Nations 6nvironment Arogram : N6A= and most recentl# the %orld >ank with its latest report *"nclusive &reen &rowth,- are articulating the case 'or green growth. The &lobal &reen &rowth "nstitutean international think tank based in Dorea- was created to promote these concepts b# supporting the development o' national strategies and related capacit# building. %hile these global plat'orms are important- the most e;citing new elements are being driven b# a 'resh generation o' local leaders and multi-stakeholder coalitions. These include the C-E0 Cities Climate !eadership &roup- a coalition o' cities 'rom developed and emerging economies who are committed to taking action. New public-private 3inancin2 mo els are 7ein2 evelope such as the Joint "nitiative on rban (ustainabilit#- which is being launched b# the nited (tates and >ra7il to bring together investors an cities to secure innovative 3inancin2 3or sustainable in'rastructure investments. The (ustainable 6nerg# 'or All "nitiative- a global coalition between o' governmentbusiness and civil societ# under the auspices o' the .N. (ecretar# &eneral is looking 'or breakthrough action on energ# access 'or the poor- renewable energ# and energ# e33icienc5. A common threa is the wa5 in which these coalitions are capitali7ing on new green technologiesC creating new business models that give incentives to the private sector to 3in innovative sustaina7le evelopment solutionsC and using limited public 'unds to leverage private investment an 3inance.

!ecommen ations 3or !io$%&

0io320 is not e;pected to result in a set o' concrete deliverables. "ndeed- negotiations so 'ar have been disappointing and the dra't outcome document lacks ambition. Delegates ma# begin a process to develop sustainable development goals as discussed b# Fomi Dharas and David (teven later in the packet- but the goals themselves still nee si2ni3icant iscussion 7e3ore the5 are 3orme . The main outcome ma# well be the energ# created b# concrete bottom-up initiatives that will be 'ormall# introduced at the con'erence and will be driven b# coalitions who are not waiting 'or a global solution. The (ustainable 6nerg# 'or All initiative hope'ull# will be endorsedthe t#pe o' coalition which >ruce 1ones discusses in his chapter on building a new international 'ramework 'or development. These t#pes o' coalitions are not based necessaril# on international consensus on one wa# 'orward- but rather bringing together the man# di''erent initiatives alread# in e;istence. (imilarl#- issues related to green growth will also lack tangible outcomes. Fowever- at 0io320- leaders should encourage the green growth agenda b# signaling support in a 'ew ke# areas:
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And- as argued b# 9ark 9uro and Devashree (aha in their chapter- with the generational opportunit# to change the emissions tra8ector# o' cities given rapid urbani7ation- and the importance o' cities as drivers o3 innovation6 3inancial mechanisms to meet the lar2e sub-national needs 'or green in'rastructure investment should be given priorit#. "nvestin2 in innovation. !eaders in both developed and emerging economies can pledge to step up investment in research and development in their own countries- while also investing to build research and development capacit# in least developed countries. As outlined b# Nathan Fultman and Alison (hapiro in the ne;t essa#- this could be through a combination o' direct support to research through competitive grants- while also e;tending to development o' innovation capacities via business incubation centers and 3inancial mechanisms to support venture capital in least developed countries. And 'urther liberali7ation o' trade 'or environmental goods and services- as discussed b# 1oshua 9elt7er- can also support di''usion and impact o' new technologies.

/ricin2 natural resources . %hile 0io320 cannot be a substitute 'or climate negotiations- leaders can signal the importance o' climate negotiators in making progress towards setting national :i' not global= policies that set a price on carbon- either through a ta; or market mechanism. !eaders should also commit to implementing the &-20 agreement to eliminate 'ossil 'uel subsidies. 9oves to introduce natural capital accounting into economic accounts- as discussed b# %illiam >rown in this volume- should be accompanied b# concrete pledges b# willing countries and companies.

)evera2in2 international 3inance. !eaders should direct ke# multilateral 'unders- like the multilateral development banks and speciali7ed 'unds like the &reen Climate .und- to direct their 'unding to countr#-driven green growth investments. 9ultilateral and bilateral 'unders should be asked to more aggressivel# support the innovation agenda b# leveraging private
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sector action through mechanisms that reduce risk.

*he Brookin2s "nstitution B

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Nathan Hultman an Allison Shapiro

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%e are at a promising moment in the development o' international polic# 'or green growth and innovation. Despite the ambitious and well-intentioned aspirations o' past meetings- over one billion people still do not have access to electricit#C water availabilit# and sanitation is improved but not close to universalC and E billion people live at the >ase o' the A#ramid :>/A= on less than G5 per da#. .urthermore- the world is not on a pathwa# to arrest the climate crisis. Climate impacts are alread# being 'eltwith the greatest vulnerabilities in the developing world. At the same time- the e;tended global economic recession has 7rou2ht 3iscal austerit5 in #0(D countries6 which has limited public sector?s abilit# to respond. .rom this turbulence- however- have sur'aced new conceptuali7ations o' development that highlight the role o' innovation and new technologies and processes as wa#s to encourage economic growth while simultaneousl# transitioning onto a cleaner- more sustainable global economic pathwa#. The world has renewed impetus- there'ore- to build the capacit# 'or green growth innovation into our international and national educational- industrial- governance6 an 3iscal in3rastructures. *he nee 3or polic5 an

market innovation 'or environmentall# sustainable development is clear@but the means are comple;. The challenges o' the 24st centur# re+uire all countries to move towards cleaner economic tra8ectories while improving the +ualit# o' li'e o' the world?s poorest.

/olic5 (onsi erations

/ne critical vehicle 'or reaching these development- economic- and environmental goals is technological change. Althou2h not su33icient in isolation6 technolo2ical innovation will continue to advance us toward goals in human health- natural resource sustainabilit#- and social e+uit#. As a result o' more widespread economic development in recent decades- global capacit# 'or research and development is evolving broadl# across the developed world and emerging economies. Conse+uentl#- the di''usion o' technological knowledge and devices is shi'ting awa# 'rom a uni irectional north-to-south 3low to a more networke global innovation ecos#stem. Fowever- we are reall# onl# at the initial stages o' changeand building on this progress will re+uire action to encourage new ideas and to ensure that those ideas can reach- and

!io$%&' (oalitions Drivin2 Bottom-.p (han2e

even trans'orm- the market. The challenge o' transitioning onto cleaner evelopment pathwa5s is particularl5 i33icult 'or developing countries- whose need 'or rapid economic growth o'ten outweighs the importance o' sustainable or Hclean? growth. This is one area in which international aid needs to better support developing countries as the# design and implement their green growth strategies. 9an# polic# and intellectual propert# :"A= tools e;ist to spur technological innovation- although the# var# widel# across countries. "n a ition6 ozens o3 3inancial pro ucts have also been created to di''use and reduce risk in technolo25 investment. *he most e33ective ones re3lect all o3 the 'ollowing 'actors:
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vestment. "nnovative 3inancial pro ucts can levera2e public investments b# de-risking private capital. 6;amples inclu e 3irst loss 3un s6 soverei2n risk insurance6 collateralize loans with 3leCi7le interest rates depending on pro8ect outcomes- etc. There are man#

all

!elevance to the challen2es o3 2reen 2rowth at levels o3 in ustr5. The ideal international architecture will be able to support breakthrough technolog# development at small- medium- and large scales.

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(apa7ilit5 o3 stimulatin2 7oth hi2h-tech an low-tech innovations. "nnovations that a apt eCistin2 technolo2ies to speci3ic conteCts or that enhance their ease o3 use could be the ke# to meeting man# !DCs? clean development needs. Aolicies to stimulate this absorptive capacit# would increase the +ualit# o' sciencetechnolog#- and innovation in higher education- retain talent in-countr#- stimulate technolog# *discover#, at all levels o' innovation :'rom household through the research laboratories=- and to promote econom#-wide openness to new technologies.

Support 3or innovation across the technolo25 value chain. Technolog# deplo#ment can be encouraged throu2h 3inancial support6 lo2istical support 3or suppl5 chain development and securit#- and consumer marketing to improve market penetration. This includes substantial investment in business advisor# services to attract international venture capital and to take success'ul start-ups to 'ull commercial scale.
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"nclusive 3inancial innovation to e-risk private inEE

'unds that are supporting this ob8ective- like the &reen Climate .und o' the Climate "nvestment .unds. The &reen Technolog# .und- recentl# approved as part o' the nited Nations .ramework Convention on Climate Change : N.CCC= negotiations- will likel# 'ocus on this as well- possibl# through its private sector 'acilit#. >ut most 'unding has gone to support deplo#ment o' proven technologies into developing countries. !ittle 'ocus has been on providing de-risking support 'or earlier stages o' the research and development demonstration and deplo#ment :0DDID= continuum.
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the N.CCC Tech 9echanism- C&"A0- Clean 6nerg# 9inisterial- the &reen Climate .und- and "n'odev Climate "nnovation Centers. "t will be important to understand not onl# the gaps in services provided b# these organi7ations but also which programs have been most success'ul so the# can be replicated in other countries and to other sectors.
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Attractiveness to investors6 polic5makers6 an evelopin2 countries "n this era o3 3iscal austerit56 it will be essential to create an in'rastructure with su'3icient incentives to levera2e pu7lic 3inancin2 3rom developed countries

.rom these criteria- three categories o' programs o''er the most likel# value 'or a renewed international initiative to support green growth innovation: regional science 'oundations- national business incubators- and dedicated 'unds to de-risk entrepreneurial investments and stimulate the sharing o' intellectual propert# :"A=. These three approaches would- moreover- be more power'ul i' deplo#ed simultaneousl# because the# address di''erent elements o' the innovation ecos#stem.

A e value to eCistin2 institutions. "t is essential to design a new architecture that compliments e;isting international initiatives aimed at stimulating clean technolog# 0DDID. (ome such initiatives include

!ecommen ations 3or !io$%&

Fundreds o' international initiatives e;ist to promote natural resource sustainabilit# and povert# alleviation in developing countries. Fowever- there remain ma8or gaps in international collaboration. The 0io320 meeting pro-

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vides an almost unparalleled opportunit# 'or e;panding the narrative o' sustainable development to include the enhancement and restructuring o' innovation. The 0io meeting should establish a new international green innovation partnership to hasten the pace and scale o' innovation- stimulate international venture capital marketsand broaden international cooperation across public and private partnerships 'or 0DDID. (uch a partnership could build on the work o' e;isting institutions and be supported b# a network o' regional science 'oundations- national business incubators- and investment de-risking 'unds. This new approach would both build capacit# 'or technolog# development and adoptionand encourage private sector engagement in developing countr# research and innovation 'or green growth. !e2ional Science <oun ations. 0egional science 'oundations are envisioned as intergovernmental agencies charged with setting regional science priorities- including but not limited to green growth- and deplo#ing 'unds provided b# both member governments and international aid donors to meet these priorities. (uch 'oundations would encourage greater south-south collaboration and applied research into all t#pes o' innovation. .unding would cover research grants- scholarships- 'ellowships- peer-reviewed publications- and cooperativeFeCtension pro2rams with non-pro3its an 3irms workin2 in priorit5 areas as etermine 75 the 'oundation. (uch institutions would also support the regular meeting o' scholars- practitioners- and 'unding recipients via research conventions- polic# advisor# meetings- and other opportunities to share in'ormation and network. Aossible models include the .(. National (cience .oundation- the 6uropean (cience .oundation- and the Third %orld Academ# o' (ciences- among others. &rant criteria could encourage capacit# building and collaboration b# re+uiring researchers to partner with peers at other leading research institutions.
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National Business "ncu7ators. To support technolog# deplo#ment and enterprise development- national business incubators could be established to provide business advisor# support- including a 'ull suite o' business advisor# services and network 'acilitation to
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in-countr# entrepreneurs and start-ups working in all sectors. (uch organi7ations would directl# address the need to bridge research and commerciali7ation b# entrepreneurs in the private sector. The incubators would be responsible 'or identi'#ing and conducting outreach to promising entrepreneurs and start-up companies as well as providing a host o' business advisor# services to them. (ervices the# could provide include but are not limited to: business plan support- networking 'acilitation- access to international venture capital an suppl5 chains6 pitch trainin26 3inance trainin26 access to market research6 o33ice space6 3acilitation o3 technolog# trans'er- and negotiation o' "A licenses. "ncubators could support and enhance the pipeline +ualit# o' e;isting green technolog# trans'er mechanisms such as the N.CCC Technolog# and Clean Development 9echanisms. Aossible models include the "n'odev Climate "nnovation Centers- C"6T6C in >ra7il- C"66 in "ndia- and universit# technolog# trans3er o33ices such as those at the Massachusetts "nstitute o' Technolog# and (tan'ord niversit#.
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De icate <un s to De-!isk "nvestment an 0ncoura2e "/ Sharin2. !arge dedicated 'unds can encourage private investment in developing countr# pro8ects or in companies that meet speci3ie social an environmental criteriaC in addition the# can provide incentives to "A developers to share patent and technolog# implementation in'ormation. A risk capital 'und woul provi e evelopment-oriente 3inancial instruments to investors and pro8ect developers 'or companies interested in deplo#ing innovative technologies. .inancial instruments include but are not limited to concessional loans6 soverei2n 2uarantee loans6 3irst loss 'unds- partial credit or risk guarantees- and e+uit# or +uasie+uit# investments.

*H0 S.S*A"NAB)0 D0+0)#/M0N* ,#A)S' G(urse o3 the Se4uelH or GA opt6 A apt6 "mproveH@
Homi Kharas an Davi Steven

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The 9illennium Development &oals :9D&s= set targets and indicators 'or a global development partnership through 204<. At one level- the 9D&s have been an enormous success. The# have remained relevant and at the center o' the global development discourse 'or over a eca e6 the5 have mo7ilize si2ni3icant new resources 'or development- and the# have aligned the e''orts o' a diverse range o' actors 'rom governments to businesses and non-pro3it or2anizations alon2 seven main evelopment outcomes. %hile there are man# criticisms o' the goals and skeptics who argue that the recent rapid decline in povert# cannot be attributed to the 9D&s- 'ew other international economic agreements have achieved more 'or the most vulnerable. Thus it is natural to suggest a successor 'ramework to the 9D&s. (ome have called 'or 9D&s to be replaced with (ustainable Development &oals :(D&s=- which would be 'ocused on a much broader set o' problems to tackle e;treme povert#. (upporters o' the (D&s believe the# can be a 3la2ship elivera7le 3rom the !io$%& Summit6 the 3irst ma8or international 'orum where this new idea will be discussed. >ut will the (D&s su''er 'rom the Hcurse o' the se-

+uel? and 'ail to improve on the original 9D& 'ramework) /r can the# adapt e;perience gained over the past decade and appl# it to a much more challenging set o' tasks) And i' the curse o' the se+uel is to be avoided- what process will surmount si2ni3icant political o7stacles to achievin2 consensus while ensuring e''ective learning takes place)

/olic5 (onsi erations

The (ecretar# &eneral o' the nited Nations has alread# argued that the (D&s should be universal :applicable to all countries- rather than 8ust to the poorest= and comprehensive :covering the core interlinked issues o' economic development that is sociall# 8ust and environmentall# sustainable=. That is a tall order- taking the .N. into territor# that is both comple; and highl# politicall# contentious. The challenge is to esi2n SD,s that re3lect the man5 imensions o3 sustainable development and are simple and 'ocused enough to 3rame the 7roa evelopment iscourse with su33icient power to catal#7e meaning'ul implementation. /ne problem is how to ensure that the (D&s are relevant to all countries. %hen the 9D&s were endorsedthe prospect o3 si2ni3icant new resources 7ein2 part o3

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!io$%&' (oalitions Drivin2 Bottom-.p (han2e

the package :9D& B= motivated developing countries to sign up. .or their part- advanced countries were encouraged b# the commitment to more concrete results :9D&s 4-J= in e;change 'or their aid. "n each casepoliticians were able to return home 'rom 9onterre# 8where the a2reement was 3inall5 reache in %&&%9 with speci3ic i eas a7out how to Imo7ilize 3inancial resources and achieve the national and international economic conditions, needed to meet the 9D&s. Toda#- it is harder to construct a package that has something 'or ever#one. The advanced countries are showing signs o' aid 'atigue and ma# prove reluctant to bind their own societies to global goals. 9iddle income countries are also reluctant to orient development pathwa#s to international norms6 pre3errin2 to maintain maCimum 3leCibilit# 'or domestic polic#. !ow income countries worr# that the discussions on (D&s could dilute the 'ocus on reducing povert#. (ome are also wondering how +uantitative international targets can be reconciled with the +ualitative improvements in peacekeeping- statebuilding and the strengthened institutions needed to underpin povert# reduction. $et there is hope that countries will be brought together b# a shared sense that the world toda# 'aces risks that re+uire a new commitment to collective action and global solutions. Transnational threats like natural disasters'ood price spikes and energ# shortages are directl# related to local problems such as economic instabilit#- a lack o' 8obs- especiall# 'or the #oung- and urban blight. 9an# topics once believed to be purel# national in scope- such as income distribution- have become international in their impact thanks to new research linking ine4ualit5 to cre it 7ooms an 3inancial crises. (urrent growth tra8ectories- meanwhile- continue to threaten the climate an other planetar5 7oun aries that e3ine Ha sa'e operating space? 'or humanit#. The world?s leaders could potentiall# use the (D&s as a vehicle to articulate a new vision that links global challenges and domestic angst- makes a case 'or how adopting global norms can improve the lives o' citi7ens at home- and sets out practical steps that will help build a development model that is viable over the medium and long-term. The biggest hurdles to sustainable de-

velopment paths are political6 not 3inancial or techni cal. Thus- the (D&s must be 'ramed in a wa# that is use'ul politicall# and that serves to connect individual citi7ens- wherever the# live- to the great challenges o' our da#. This would suggest a 'ocus on: :i= areas such as energ#'ood- oceans- and biodiversit# where global risks are pressing and collective action is essential i' we are to ma;imi7e human wel'are while respecting environmental limits- and where new +uantitative targets have the potential to create new 'ocus and momentum :climate ma# be added i' agreements are reached under the .N<((( process9J 8ii9 topics where there is si2ni3icant potential 'or innovation :green growth- sustainable cities- and disaster preparedness- 'or e;ample= and where learning and dissemination can be accelerated with voluntar# pledges o' solidarit#C and :iii= construction o' a global sa'et# net that will build on the 9D&s- b# protecting the most vulnerable and increasing the stabilit# o3 3ra2ile states6 an where 3inancial trans3ers a2ainst speci3ic criteria are 3easi7le. The (D&s must also mobili7e and be relevant to the large number o' diverse actors that are needed to tackle sustainable development challenges. The 9D&s were success'ul because the# 'ocused m#riad development e''orts onto a 'ew ma8or a;es. Toda#- there are even more development actors who must *own, the (D&s i' the# are to be success'ul: the private business sector- international and local N&/s- ma#ors and local government o33icials6 parliamentarians6 tra e union mem7ers6 'aith organi7ations and concerned citi7ens- philanthropists and celebrities. These actors have di''erent interests and perspectives on development. (ome 'ocus on the multi-dimensional nature o' povert# and the prospect that it is now 'easible to ream 3or the 3irst time o3 era icatin2 a7solute povert5 within a generation. /thers take a human rights perspective as the basic 'rame and are motivated b# core moral principles- such as ensuring all children are health#- well'ed- properl# educated- and live in secure and stable societies. 6nvironmentalists- meanwhile- are 'ocused both on damage to natural s#stems and the potential impact on the poorest. Aerhaps most important@and least engaged as

blocks

#et@is the private sector- whose investment decisions are the main determinant o' the nature- speed- and sustainabilit# o' 'uture development tra8ectories. 0econciling these disparate perspectives will not be eas#. "t calls 'or a broad and inclusive dialogue- with ample space 'or prioriti7ation within di''erent countries and in ke# sectors such as energ#- water- or agriculture. "t re+uires Hwhole-o'-government? support 'or the (D&s- with 9inistries o' .inance brought to the center o' the debate- 9inistries o' .oreign A''airs developing new capacit# to build consensus across borders- and other government departments :6nvironment- 6nerg#"ndustr# etc.= participating in an integrated e''ort. The international s#stem will also need to e;periment with mechanisms 'or creating- incentivi7ing- and holding accountable new t#pes o' partnership- and especiall# those that re+uire real commitment 'rom ma8or corporate interests. Autting all this together is a tall order. Fere again- there are lessons to be drawn 'rom the 9D& process. ># the time o' the 9onterre# (ummit in 2002- there had alread# been considerable technical and political momentum behind these global development goals. "n 4550- the %orld Development 0eport had recommended halving global povert#- while the 4550 %orld (ummit 'or Children 'ormulated a set o' seven goals endorsed b# governments- relevant .N. agencies- development banks and a large number o' N,#s. *he MD,s6 in their 3inal 3orm6 were erive 3rom consolidating these earl# discussions and endorsementsrather than as a single process starting 'rom scratch. 0C postit would seem that the most success'ul 9D&s were those that had been sub8ected to inclusive and pro'essional consultations over a long time span- and which also had committe political champions within in3luential 2overnments.

!ecommen ations 3or !io$%&

%hat then can be e;pected 'rom 0io320 to advance the agenda on the (D&s) %e have three recommendations:
EE

0n orse a process 3or arrivin2 at the SD,s that 7rin2s to2ether 7uil in2 7locks over time6 rather than attemptin2 to 3orce a premature consensus in the short-term. At least two such building

to contributeC categori7e and monitor implementationJ an 3inall5 evaluate an are alread# in place. The (ustainable 6nerg# 'or All initiative has technical depth and real political support- and has proposed three ob8ectives 'or 2030: universal access to modern energ# servicesC dou7lin2 the rate o3 ener25 e33icienc5 improvementsJ and doubling the share o' renewable energ# in the energ# another building block- with the potential to move 'rom relative targets to those that aim to Hget to 7ero? b# 2030 on a new set o' povert# targets.
EE EE

isseminate lessons

and best practices. A proposal 'or a HCompendium o3 (ommitments? coul 7ut onl5 i3 it provi es a su33icientl5 stron2 7asis 3or en couraging accountabilit# and 'or providing recognition 'or success'ul innovations. 0m7ark on a process capa7le o3 7uil in2 7roa political support 3or a post-%&1; 3ramework. At best0io 320 will onl# launch a new process. A Figh !evel Aanel will then need to take up the baton- doing the hard work o' developing concrete options 'or new goalssponsoring deliberations on these options at international- regional- and local levels- and beginning the process o' building support 'rom political- businessand civil societ# leaders. The panel can hope to provide a 'oundation 'or agreement over the ne;t #ear or 4B months. (ustained leadership will then be needed 'rom a critical mass o' &-20 countries- including risin2 an eveloping countries such as the gJ3- which brings together 3ra2ile an con3lict-a33ecte states6 3rom campai2ners6 and 'rom the business communit#. The task is alread# an urgent one. The 9D&s took a do7en #ears to agree upon. Their replacement needs to be in place in less than a +uarter o' that time. esta7lishe powers6 3rom in3luential 3ul3ill these 3unctions6

mi;. The

9D&s

are

themselves

0ncoura2e innovation an create incentives 3or new partnerships 3or sustaina7le &reen growthsustainable cities and agendas can bring together governments- businesses and civil societ# in novel wa#s and these coalitions are spawning approaches. A mechanism is needed to accumulate pledges a vast arra# o' e;perimental evelopment. other

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,lo7al 1K

*H0 "N*0!NA*"#NA) <!AM0W#!K <#! S.S*A"NAB)0 D0+0)#/M0N* AND ,)#BA) #!D0!

Bruce Jones

<ramin2 the "ssue

"n the past 20 #ears- hundreds o' millions have been li'ted out o' povert# and into the ranks o' the middle classes. Aositive changes in A'rica herald the potential 'or more progress- and over time- the Arab (pring ma# create still 'urther opportunities to integrate hundreds o' millions more citi7ens into productive economic activit#. %ith success comes new challenges. Central among them is a global governance +uestion: how can we make sure the emerging economies and the ne;t wave o' developing economies reach their potential while not reaching past the basic ph#sical limits our planet) 9an# o' these countries do not sit at the top tables that deal with climate negotiations :the &-20- the 9a8or 6conomies .orum=- and #et have vital stakes in their outcomes. This is a sweeping- inclusive challenge that will help e3ine international or er in the comin2 era.

lenge per eCcellence. Two governance proposals have dominated discussion in the lead up to 0io320@the creation o' a new Council on (ustainable Development at the .N.- or adaptation o' the .N.?s 6conomic and (ocial Council. >oth have their adherents- and some versions o' either could add value to the .N.?s work. >ut both are- at best- at the margins o' the problem. The ma8or problem the .N. 'aces in this arena is the inconsistenc# in which parts o' government pa# attention to its decisions- and the e;tent to which the public and the private sector are a''ected b# signals sent or decisions made in the .N. This varies 'rom bod# to bod# and issue to issue. Decisions b# the .N. (ecurit# Council carr# the 'orce o' international law- and carr# political weight in most capitals. %hile man# &eneral Assembl# decisions are but dust in the wind- the bod# does has the advantage o' universalit# and wellprepared outcomes can have a deep normative impactespeciall# when leaders are involved@as illustrated b# the 9illennium Development &oals. 6C/(/C and the .N.?s various Commission?s en8o# neither advantage.

/olic5 (onsi erations

%hen the scale o' this challenge is understood- it becomes evident wh# this is the global governance chal-

1:

!io$%&' (oalitions Drivin2 Bottom-.p (han2e

Their decisions generate attention onl# in development and environment ministries o' capitals- and even thenonl# to a modest degree. .inance ministries- energ# ministries- and trade negotiators rarel# pa# attention to 6C/(/C outcomes. 9an# private sector actors have never heard o' it. The public barel# knows it e;ists. $et most o' the decisions that will shape pathwa#s towards or awa# 'rom a sustainable 'uture will be made b# primaril# b# individual citi7ens- private economic actorsand the economic arms o' government.

0eduction o' 6missions :&A06=. %hile drawing on lessons 'rom earl# &ATT negotiations- Talbott and Antholis? proposals 'or a &A06 mechanism bridges inclusion with 'ocus- b# starting with core economies but being open to all countries as the# meet criteria on standards and per'ormance. %ith care'ul design- this could create real incentives 'or countries to coordinate their e''orts to cut carbon.

The second is a bottom-up- multi-stakeholder processes to align norms- regulation- technolog# and investThis is an uncom'ortable realit# 'or countries that hold ment@a process the .N. has used in its Figh-level dear the notion that the .N.- not 8ust the >retton %oods Aanel on (ustainable 6nerg# 'or All :(6EA!!.= There are institutions- should have a ma8or voice in international some 3laws in the S0:A)) process6 an some economic issues. >ut even in those countries@>ra7il partici and "ndia have traditionall# been at the vanguard o' pants have +uestioned the 'easibilit# o' some o' the inithis ar2umentLtheir own ministries o3 3inance are tial ideas@but it?s earl# da#s- and the process is being 3ar worked on with a shoestring budget. %ith sustainedmore 'ocused on getting better representation at the "9. creative engagement- well supported b# government and in shaping the decisions o' the &-20 and the 9a8or and industr#- processes like (6EA!! could make a sub6conomies .orum. There is no reason to believe that stantial di''erence in charting new pathwa#s- and drivan# .N.-based intergovernmental mechanism would ing bottom-up goals- which could then be taken up in have an5 i33erent impact on the core 3inancial authoritative wa#s. an planning tools o' the ma8or emitters and ma8or econo"n this as in man# areas- we need an iterative process. mies- established or emerging. /' course- an adaptation The largest economies :essentiall# the &-20= have to be o' 6C/(/C?s mechanisms could do a better 8ob than able to negotiate a credible deal to govern the B0-plus is currentl# done at coordinating a sustainabilit# agenpercent o' global economic activit# the# control- through da across .N. agencies. Fowever- the .N. agencies a &A06 mechanism or similar measure. >ut the# should themselves are onl# minor or modest pla#ers in all o' o so transparentl5 an maintain an in3ormation 3low to this- e;cept in the smallest economies whose activities wider bodies like N.CCC and the &eneral Assembl#. matter least to global sustainabilit#. Those more inclusive bodies can articulate broad principles- and give voice to smaller economies and those pa#ing the price o' environmentall# unsustainable growth. "n'ormal mechanisms like (6EA!! can shape pathwa#s in ever more intensive consultation with the energ# sector an the 3inancial communit5. *he most in3luential an committed states can 'orge connections between these processes where necessar#. The .N. can pla# a use'ul normative role in all o' this. 0io 320 could do a power o' good b# calling attention to in'ormal processes like (6EA!! and making more space 'or them in the international arena. %ell-cra'ted goals 'or sustainable development could send an important normative signal@but onl# i' the# are care'ull# prepared and developed 'rom the ground up through genuine

!ecommen ations 3or !io$%&

There are two other approaches to address this challenge: one the .N. is unlikel# to embrace- but ma# hold genuine answersC and one where the .N. itsel' is carving out an important lead. .or #ears- some countries have e;plored the idea o' a %orld 6nvironment /rgani7ation- inspired b# the earl# &eneral Agreement on Tari''s and Trade :&ATT=. "n most proposals- this has been viewed as an all-inclusive bod#C a concept that has moral merit- but is unlikel# to get o'' the ground. A more practical version has been e;plored b# >rookings "nstitution?s (trobe Talbott and %illiam Antholis: the idea o' a &eneral Agreement on

*he Brookin2s "nstitution B

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0conom5 an Development /ro2ram

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interaction with the private and public sector. 0io 320 can?t conclude that process- but it can kick start it. The search 'or e''ective governance shouldn?t push us to static inter-governmental 'orums- especiall# not ones that link parts o' government that have weak roles in economic activit5. !ather6 we nee 3leCi7le networks 'or interacting with the public and the private sectorto drive credible standards- knowledge production- and investment. This isn?t what the .N. is known 'or- but it?s what it?s going to have to learn i' it?s to make a genuine contribution to the most comple; global governance challenge o' our time.

1D

!io$%&' (oalitions Drivin2 Bottom-.p (han2e

,!00N ,!#W*H AND "N*0!NA*"#NA) *!AD0

Joshua Meltzer

<ramin2 the "ssue

A ke# 'ocus o' 0io320 will be on achieving green growth through policies that promote environmentall# sustainable economic growth. "nternational trade is a ke# driver o' economic growth and can have important implications 'or the environment. The interaction between international trade- economic growth and the environment was addressed in the 4552 0io Declaration- which states that trade measures to achieve environmental goals shoul not lea to ar7itrar5 an unAusti3ia7le iscrimination- and encourages countries to avoid taking unilateral action to address environmental challenges outside the 8urisdiction o' the importing countr# and to address transboundar# or global environmental problems based on international consensus. These principles remain relevant toda#. >ut what has changed is the urgenc# o' the environmental challenges such as climate change- loss o' biodiversit# and the unsustaina7le eCploitation o3 3ish stocks. At the same time progress towards resolving these issues through multilateral negotiations has become even harder- as evidenced b# the limited movement in the .N. climate change negotiations and the %orld Trade /rgani7ation Doha 0ound.

Countries continue seeking to resolve these global environmental issues in re2ional 3orums6 such as Asia-/aci3ic 6conomic Cooperation :AA6C= or the &-20. Additionall# trade liberali7ation is now being pursued under 'ree trade agreements :.TAs= that include new rules to address the interaction between trade and the environment. The 'ailure to resolve these global environmental challenges through negotiation has also led to countries acting unilaterall#.

/olic5 (onsi erations

The impact o' international trade on the environment is comple;. Trade drives economic growth- a ke# element o' green growth and sustainable development. Fowevereconomic growth can e;acerbate environmental harmswhether it be through increased greenhouse gas emissions- de'orestation or loss o' biodiversit#. At the same time- trade liberali7ation can help improve environmental health where it leads to increased competition- a more e33icient use o3 resources an supports transitions towar s cleaner and more services orientated economies. Trade can also lead to improved environmental health b# e;panding access to environmental goods and services

*he Brookin2s "nstitution B 0conom5 an Development /ro2ram

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1=

!io$%&' (oalitions Drivin2 Bottom-.p (han2e

that support more e33icient an environmentall5 3rien l5 production processes. As a result- reducing trade barriers to environmental goods and services has been part o' the %T/ Doha 0ound. Additionall#- at the AA6C meeting in Fawaii in November 2044- the 24 AA6C members agreed to reduce tari''s on green goods. 0egional and bilateral 'ree trade agreements are another opportunit# to reduce trade barriers and develop new rules to promote green goods and services. Trade and green growth policies also interact when countries condition or limit access to their markets to achieve environmental goals. This can arise when a countr# seeks to ensure that the price o3 a 2oo re3lects its omestic environmental harms- and adopts border measures to ensure that these costs are also re3lecte in the price o3 imports. "n the absence o' international action to address global environmental challenges such as climate change- unilateral action b# countries to reduce their greenhouse gas emissions ma# include trade measures that appl# the costs o' climate change regulation to imports. This is re+uired to avoid carbon leakage- which arises when industr# seeks to avoid climate change regulations b# relocating to countries that have adopted less costl# :or no= climate change measures. %here industr# continues to emit carbon there is no net reduction in global greenhouse gas emissions. 6;tending the price o' carbon to imports can avoid this outcome. The use o' trade measures to achieve environmental goals- however- needs to be balanced against the role o' international trade as a driver o' economic growth and development.

!ecommen ations 3or !io$%&

&reen growth links the goals o' economic growth and development with environmental protection in sustainable wa#s. "nternational trade can both drive economic growth and help countries achieve their environmental goals. 0estrictions on international trade can also be used to incentivi7e international action on global environmental challenges. 6ncouraging international trade as a mechanism o' development while recogni7ing that countries will use trade restrictions to achieve environmental goals involves

a 7alance that is re3lecte in the rules o3 the Worl *ra e /rgani7ation. 0io320 provides an opportunit# to recogni7e the wa#s in which international trade can contribute to green growth b# agreeing the 'ollowing principles:
EE

Countries should recogni7e that green growth re+uires a balance between promoting trade as a driver o' economic growth while recogni7ing the legitimate use o' trade measures to achieve environmental goals. !ea33irmation o3 /rinciple 1% o3 the 1??% !io Declara tion woul su33ice to capture this eCchan2e. Countries should also recogni7e that reducing trade barriers to green goods and services supports green 2rowth 2oals an commit to 3in in2 wa5s to achieve this 2oal. (ountries shoul rea33irm the 2oal in the %T/ Doha 0ound o' reducing trade barriers to environmental goods and services. "nternational cooperation to address global environmental harms should be encouraged where possible. >ut countries should recogni7e the legitimac# o' unilateral action b# countries to address global environmental harms such as climate change.

EE

EE

EE

(ountries shoul commit to 3in in2 wa5s o3 avoi in2 subsidies that distort trade and harm the environmentsuch as those that lea to over-3ishin2

,!00N ,!#W*H AND *H0 S.B-NA*"#NA) D0+0)#/M0N* "M/0!A*"+0

Mark Muro an Devashree Saha

<ramin2 the "ssue

Nations all over the world 'ace challenging new economic and environmental realities characteri7ed b# sharpening resource constraints and growing economic and environmental uncertainties. Con'ronting these challenges is increasingl# driving nations to pursue a strateg# o' *green 2rowthIL e3ine as economic pro2ress that 3osters environmentall# sustainable- low carbon- and sociall# inclusive development. Do7ens o' the world?s nations 'rom China and "ndia to >ra7il and 9e;ico are now turning their 'ocus to 'ostering *clean, economic growth and cleantech economic development as a matter o' national priorit#. Fowever- while the national 'ocus on clean econom# is a welcome development- more and more evidence suggests that the new 'ocus too o'ten remains divorced 'rom the true locus o' clean econom# development: the world?s urban economies. National governments- in this respect- have o'ten not onl# ignored the spatial elements o' green growth but have also 'ailed to take into account cities? and cit#-regions? e;isting contributions. $et to be success'ul- green growth planning needs to become an iterative process- one that adapts to local and regional developments over time and responds to the needs o' the

local and regional stakeholders who in the end guide the *real, econom#. All o' which points to the need 'or a new- sub-national 'ocus in international green growth interventions. 9ore and more o' the most sophisticated nations and industries are recogni7ing the importance o' working at the cit# and regional level to achieve green growth- and as it happensthe 0io320 con'erence o''ers an important moment 'or e;tending and implementing such an emphasis.

/olic5 (onsi erations

The 'acts o' world urbani7ation- as well as the dri't o' leading-edge economic theor#- are thrusting the power o' sub-national problem solving into the 'oreground o' green growth and clean econom# discussions. 0apid world urbani7ation underscores the importance o' cities and regions in meeting green growth goals. 9ore than hal' o' the world?s population now resides in urban areas- a share that is e;pected to reach J0 percent b# 20<0. ># the end o' the ne;t decade there will be nearl# <00 cities o' more than a million people- including several *megacities, such as 9umbai- Tok#o- (hanghai- New

*he Brookin2s "nstitution B 0conom5 an Development /ro2ram

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%&

!io$%&' (oalitions Drivin2 Bottom-.p (han2e

$ork- and 9e;ico Cit# with populations e;ceeding 20 million each. 9egacities like these are literall# *where it?s at, in the emerging world order. Fow these sub-national megacities and regions manage their growth will hugel# a''ect the sustainabilit# o' the world?s nations. And here it should be said that these urbani7ed areas@large and small@serve as their nations? principle economic engines. .or e;ample- these regions are increasingl# the chie' locus o' labor 'orce matching- technical innovation and adoption- industrial output- and social opportunit#. .or instance- the largest 400 metropolitan areas in the nited (tates produce three-+uarters o' the nation?s &DA. (imilarl56 in evelope Asia-/aci3ic countries %: metropolitan areas account 'or KE percent o' both their countries? total population and &DA. Add in that environmental problems are both created and solved in these locations and it becomes clear that cities and regions are integral to the transition to a global clean econom#. &enerall# accepted economic theor# 'urther supports the logic o' cit#- and region-scale action. 0egions and clustersL2eo2raphic concentrations o3 interconnecte 3irms and supporting or coordinating organi7ations@draw together the uni+ue variations and speciali7ations that de3ine pro uctive local economies an 3ocus attention on the m#riad o' actors and the d#namics o' their interactions- which also give rise to new innovations and 8obs. Fot spots o' productivit# and collaboration as well as competition- regions and industr# clusters are the locations most likel# to deliver the ne;t clean econom# that will advance environmental sustainabilit# and economic prosperit# at once. (tudies 'rom the .(. support this contention and reveal how national *clean, or *green, economies- 'ar 'rom being placeless- are in realit# e;tremel# place-based and mani3est themselves in varie con3i2urations. #ur recent stud# *(i7ing the Clean 6conom#: A National and 0egional &reen 1obs Assessment, 'ound that while the American *clean econom#, permeates ever# corner o' the national econom# it varies widel# in si7e and shape- region b# region- in response to di''erent market and polic# d#namics. (imilar stories abound in the rest o' the world. 0egional cluster development is an important theme o' China?s 42th .ive-$ear Alan 'or its clean energ# industr#. (even Chinese

provinces@1iangsu- Febei- Lhe8iang- 1iang;i- Fenan(ichuan- and "nner 9ongolia@have leveraged their regional resource advantages and e;isting industrial bases to emerge as regional industrial centers 'or China?s rapidl# growing solar photovoltaic industr#. And meanwhile cleantech clusters are sprouting up all across 6urope and North America- such as the Copenhagen Cleantech Cluster- !ahti Cleantech Cluster- Amsterdam 6cocluster- CleanT6CF (an Diego- and 6cotech Muebec- all o' which are geared towards positioning their regions to take their place in the new clean econom#. And there is good reason 'or the regional cast o' these green growth stratagems. Muite simpl#- the clean or green econom# per'orms best where strong industr# clusters pack 3irms an relevant supportin2 actors ensel5 to2ether in discreet local regions. Along these lines- our .(. stud# *(i7ing the Clean 6conom#, noted that companies that are clustered near those in similar or related industries grew at a rate 4.E percent 'aster each #ear than more isolated companies. 6;amples highlighting this d#namic include 'uel cells in >oston- wind in Chicago- pro'essional environmental services in Houston6 an solar /+ in !os Angeles. "n like 'ashion- &erman#?s (a;on#-Anhalt has one o' the world?s 'aster growing cluster o' solar cell companiesLearnin2 it the nickname ISolar +alle5ILwith nearl# 40 percent o' solar cells produce globall# coming 'rom this region. "n short- national competitiveness in green growth will emanate most e''ectivel# 'rom the sub-national urban areas that are increasingl# the world?s hubs o' such development. Nations that want to pursue such growth amid the unsettled realities o' the current world order will there'ore succeed best i' the# intervene at least partiall# at the subnational level.

!ecommen ations 3or !io$%&

.ortunatel# man# cities and regions are alread# at the center o' making the transition towards a clean econom#. .rom Aaris to 1akarta- Copenhagen to (ingapore- and Chicago to (ao Aaulo- a growing reali7ation is taking hold among local and regional leaders that the well-being o' their regions is closel# tied to their promotion o' a green growth agenda. The C-E0 Climate !eadership &roup- 'or

instance- resides at the 'ore'ront o' designing and implementing meaning'ul and sustainable strategies that will reduce their cities? carbon and water 'ootprints while also creating 8obs and growing their economies. This momentum nee s to 7e a33irme an carrie 3orwar an the !io$%& eli7erations o33er a si2nal moment 3or that a33irmation. Along these lines both national and sub-national governments should consider embracing a number possible action steps 'or advancing green growth through regional strategies. "n this connection- the# should:
EE

<acilitate the evelopment o3 2reen re2ional clusters. Aro;imit# and complementarities within these clusters would help generate the critical mass to attractgrow- and sustain clean econom# industries 0Cplore innovative 3inancin2 mechanisms6 including ones with a regional linkage- to meet the massive investment needed 'or green growth strategies. %ith public budgets under strong pressure ever#where- leveraging private investment will pla# a crucial role in the transition to green growth <oster 2reen innovation b# devoting more 'unding 'or research and addressing barriers to earl#-stage commercial deplo#ment. Cities and regions themselves remain the world?s signal 'orums 'or the acceleration o' technolog# development and di''usion. Their innovative power should be leveraged through the care'ul structuring o' place-based partnerships among universities- sub-national governments- and the private sector.

EE

* e B o k 2 " t u o

EE

EE

" enti35 potential an actual polic5 impacts at the local an re2ional level b# incorporating social- economic- and environmental metrics that can be measured over time and also enable comparisons across cities and regions.

B /ro2ram

,lo7al 0conom5 an Development %1

NA*.!A) (A/"*A) !0S#.!(0S

William Y. Brown
%% !io$%&' (oalitions Drivin2 Bottom-.p (han2e

<ramin2 the "ssue

.orests- wetlands- savannah- coral ree's and other natural ecos5stems 2enerate pro ucts like woo 6 3ish6 hi e6 an 3i7ers6 7ut also provi e important services. Wetlan s6 3or e;ample- recharge groundwater- limit pollution into rivers and seas- lessen storm impacts on land- and are breedin2 2roun s 3or 3ish6 mollusks6 an crustaceans consume b# people. .orests se+uester carbon that otherwise would warm the 6arth: No growth is *green, i' it degrades these ecos#stem 'unctions. (ome economists consider natural ecos#stems to be economic *capital,@durable goods that are used in the manu'acture o' products or services but not used up b# production. (uch *natural capital, is di''erent 'rom what is usuall# meant b# economic capital because it is not manmade and it will not depreciate i' its inherent regenerating capacit# is uncompromised. Natural capital is also di''erent because the goods and services provided ma# be 'reel# available rather than dedicate to the pro uction o3 particular enterprises. Marine 3ish have been available to whoever could catch them- and 2roun water rechar2e 75 a wetlan ma5 7ene3it istant populations and not the owner who drains the swamp 'or agriculture. The opportunities 'or traged# o' the commons

and distorted markets pose a central +uestion 'or polic# on natural capital. Can the value o' ecos#stem goods and services be 'ull# integrated into the economic planning o' governments and the business plans o' private enterprise)

/olic5 (onsi erations

Natural capital is currentl# more a concept 'or governments- development agencies- academics- and civil societ# than a mainstream element o' economics or business. That ecos#stems provide valuable goods and services is not in dispute- and various international initiatives include them in national asset measures. The %orld >ank determines national wealth based on ecolog#- education- and resource depletion as well as economics. The .N. developed a s#stem 'or comparing national environmental and economic statistics- the (#stem o' 6nvironmental-6conomic Accounts :(66A= that builds on the (#stem o' National Accounts :(NA=- an internationall# agreed standard set o' recommendations on how to compile measures o' economic activit#. The %orld >ank is currentl# advancing a partnership it calls IWealth Accountin2 an +aluation o3 0cos5stem ServicesI or WA+0S6 an an entire new 3iel o3 research has developed to elucidate the value o' ecos#stem services. These and private group initiatives- such as

and mainstream economists and business-people disagree onincluding: the *Natural Capital Declaration, are part o' the discussion running up to the 0io320 meeting. Fowever- the usual approach 'or conserving natural ecos#stems has been regulation and land purchase through programs whose mandates do not include integrated economic planning. 9ost national environmental statutes were propelle 75 hi2h-pro3ile concerns over pollution :e.g. clean water- clean air=- loss o' biodiversit# :e.g. endangered species protection=- and general environmental +ualit# :e.g. environmental impact assessments=. The same can be said 'or multilateral conventions 'or climate change- biodiversit#- endangered species- and waste shipments. 6conomic assessment and devices 'or economic e33icienc5 are increasin2l5 3eatures o3 environmental regulation- such as tradable pollution rights- but these 'eatures are ancillar# to the policies o' the underl#ing enabling regimes. 9oreover- economic and business per'ormance is not generall# measured with re'erence to natural capital e;cept when it is an auditable institutional asset or liabilit5. !ecent 2overnment actions to a ress 3iscal crises6 3or e;ample- paid little attention to the environment- treating its protection more as an impediment than a path to economic recover#. Commercial enterprises remain cemente to conventional measures o3 pro3it an loss. "n ee 6 investors in publicl# traded companies are legall# entitled to management that ma;imi7es their returns. >usinesses have ma e si2ni3icant investments in environmental an social responsibilit#- but most business leaders in private woul acknowle 2e that pro3it is the ultimate measure o3 success and o' their own tenure.

!ecommen ations 3or !io$%&

The 0io320 participant nations should mandate consideration o' natural capital in national wealth accounting and economic planning. "mplementation o' (66A is particularl5 si2ni3icant 7ecause it has 7een approve 75 the ..N. 'or global use. Those implementing the 0io320 mandate should 'ocus on the issues that lead international development advocates

statements other than as currentl# addressed as auditable assets or liabilities o' the enterprise- and can accountin2 stan ar s 7e mo i3ie 3or this purpose@
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Fow might measures o' natural capital be inte2rate into customar# anal#ses and actions on monetar5 an 3iscal polic56 or rapi responses to reces sion or in3lation@ (an natural capital 7e a resse in 7usiness 3inancial

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%hat would investors accept- and what are businesses re+uired b# law to seek) Fow does regulation- as a means to conserve natural capital- stand in the conte;t o' *green growth, and interests in non-regulator# integration into economic planning)

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*he Brookin2s "nstitution B 0conom5 an Development /ro2ram

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