Earth Day Insight: On the ground tilling new economic growth to reduce emissions

Today is Earth Day 2014. What better day to reflect on the direction of efforts around the world to reduce air pollution?

A slew of environmentally focused articles and opinion pieces have sprouted recently, as is the usual pattern for this time of year, and a theme – one that you’ve heard CCAP expound a lot – has emerged: Attacking climate change needn’t hurt economic growth. In fact, bottom-up solutions devised by local governments can be a transformative win-win for everyone involved.

Paul Krugman, an op-ed columnist for the New York Times, gave the clearest explanation of this view in “Salvation Gets Cheap,” on April 17. He discusses the recent Intergovernmental Panel on Climate Change report.

He writes: “Even as the report calls for drastic action to limit emissions of greenhouse gases, it asserts that the economic impact of such drastic action would be surprisingly small. In fact, even under the most ambitious goals the assessment considers, the estimated reduction in economic growth would basically amount to a rounding error, around 0.06 percent per year.”

Technology, Krugman says, has allowed for vast advances in renewable energy production and at a much lower cost than was anticipated. The result is that the expense of reducing greenhouse gas emissions, which was once thought to be prohibitive, is in fact affordable and, in that way, extremely desirable.  We agree and will continue to say so.

Still, the New York Times editorial board on April 20 noted at some length how difficult it has been, and likely will continue to be, for the international community to dictate reductions in air pollution in the coming years. They are, sadly, correct. As we have said, 2014 will determine whether serious money will finally be deployed to address the problem. Key meetings this year of the Green Climate Fund Board and a United Nations gathering of heads of state in September will be the steppingstones to success or failure on the global scene.

We remain optimistic that the groundwork will be laid for a great deal of financing of climate change mitigation efforts. But for these to work, as the Times’ editorial suggests, top-down dictation of methods and means may not be the most productive course of action. Rather, bottom-up ideas enhanced by big picture insight and  financial partnerships between developed and developing countries that catalyze private sector investment are the ones that have the greatest likelihood of success.

As you know, a partnership between Germany and the United Kingdom has already announced $90 million in funding for developing countries’ Nationally Appropriate Mitigation Actions, or NAMAs, and two more rounds of this funding are planned in the next year alone.

These are prototypical bottom-up programs that are designed and implemented by countries that seek win-win solutions. In Colombia, South America, for example, one NAMA would develop areas around mass transit facilities to create vibrant neighborhoods. People can walk, live, work and shop without relying on cars. The heightened use of mass transit and the reduction in use of private vehicles reduces air pollution and also has an economic benefit. Jobs are created and businesses flourish, housing is built for a range of income levels, and local governments capture the value of the increased tax base in these transit hubs – arguably a true win-win-win.

These types of policy actions by the countries themselves, combined with financial mechanisms that make it possible for the private sector to make money doing these good deeds, is the future of climate change mitigation. Say good-bye to the old days of top-down solutions. We’re going to build bottom-up in a wide variety of places.

We’re seeing real enthusiasm in Chile, Peru, Vietnam, and the Philippines, as well Colombia, and it’s spreading to most middle income developing countries. Local leaders understand that climate change mitigation can be a part of development policy, poverty reduction, health protection and, yes, economic growth. That’s what we have come to agree about on this Earth Day.

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