Right now, presidents, prime ministers, scientists and civil society leaders are meeting in Rio de Janeiro, Brazil, to assess progress since a previous landmark gathering in the same place 20 years ago and to try to put the World on a sustainable path. A green economy is one of two key topics to be discussed.
What are the messages we believe leaders should not lose sight of during the lengthy Rio discussions?
Message 1: There is no green versus growth, but green and growth
For the last several decades this myth has been very prevalent: You have to give up green if you want to grow, green is for the good times, and in times of the recession, environmental concerns take a back seat. One major reason this claim is no longer an option is the upward pattern of resource prices.
In the 20th century the population quadrupled, as did economic output, and demand for fossil fuels and water increased by 16 and nine percent respectively. At the same time, the resource price index fell by 50 percent. The first decade of the 21st century swiftly reversed this trend, and relative to the beginning of 20th century, in 2010 the index rose by 147 percent, (and still rising) – all mitigated by some $1.1 trillion annual resource subsidies globally (according to McKinsey).
All this is a result of a combination of factors: rising demand and population, decreasing sources of supply, volatility of supply as most fossil fuel deposits are located in conflict prone locations. If we continue on this path, by 2050 we would need three times more resources. This is simply no longer an option – which brings us to the second crisis:
The world is also at a tipping point when it comes to the loss of vital ecosystems and extreme events – both connected to the changing climate. Some 60 percent of ecosystem services that underpin our economies and life on earth have been degraded, some beyond the point of return.
Recently published research in the Journal of Nature for the first time compared effects of biodiversity loss to other human-caused environmental changes. The conclusion is that loss of biodiversity affects ecosystems at levels comparable to those of pollution and global warming. This means that the environment’s ability to provide clean water, food and stable climate is seriously undermining the quality of life and human development globally.
This is all the more striking considering that people living in poverty depend on ecosystem services for up to three quarters of their income. In terms of disasters, in November last year, the Intergovernmental Panel on Climate Change published the first scientific proof (pdf) that the changing climate results in an increase in frequency and intensity of extreme weather events.
Our region experienced some $70 billion disaster-related losses during the last two decades (From Transition to Transformation: Sustainable and Inclusive Development in Europe and Central Asia).
But, as McKinsey’s report also argues, improvements in resource productivity can offset 30 percent of demand by 2030 and save $2.9 trillion in current prices, or a stunning $3.7 trillion after removing the subsidies and incorporating carbon finance.
The European Bank for Reconstruction and Development (EBRD) estimates that it is 1,000 to 10,000 times more cost effective to save than to generate a new kilowatt of energy. By increasing productivity and using less, we conserve more, we emit less pollution, and we pay less money. We clearly need to move towards resource efficiency. Europe 2020 and its Roadmap for Resource Efficient Europe provide clear guidance.
Message 2: Addressing environmental concerns directly addresses economic problems.
This trend of rising prices is hurting countries that are dependent on external resources and energy-intensive and resource-intensive industries. And there are very few places in the world that don’t fall in either one or both categories – Montenegro falls in both. This means that addressing environmental concerns directly addresses the economic and social problems we are facing today.
So, what can we do concretely?
- Help citizens or struggling businesses cope with falling incomes and demand
Reducing their energy and water bills through efficiency measures support domestic businesses in a range of sectors. UNDP research shows that minimal investments in basic energy efficiency measures on a household level (3,800 euros) can lead to up to 60 percent savings on energy bills with job creation ranging from energy audits, architectural designs for retrofitting, construction and monitoring and evaluation.
In this regard, the Government itself can be the leader. By improving efficiency of energy consumption within the public sector, the Government will create substantial savings that can be diverted to business development, health and education and set standards.
Our research shows that in the region of Durmitor mountain alone there are 26 business clusters in tourism, wood production and agribusinesses employing nearly 1,500 people, and significant potential to connect our south with the northern region, opening up new jobs and reducing unemployment rate. (Out of 1.5 million tourists that came last year, only five to seven percent visited the north.)
- Help the Government to diversify revenue base
One option is investment in family owned and other small businesses that produce locally and generate national jobs in sustainable tourism, food production and forestry. Montenegro currently has some 10 percent of its territory under protection, while the commitments in various international and national strategies are likely to bring this number up to almost one quarter of the territory.
UNDP research shows that in 2010, protected areas generated 68 million euros, or 2.2 percent of gross domestic product (GDP) – 106 euros per capita through tourism and recreational activities, water supply, and watershed and flood protection. Tourists and recreational visitors are willing to pay an additional 19 million euros a year more for a variety of business services that are currently underused, such as guided tours. Relative to other types of tourism, nature and eco-based tourism help to drive local development, where tourist money remains in local communities.
- Help the Government mitigate the price shocks of oil and gas
This requires investment in domestic clean energy sources that in the case of Montenegro means exploring immense potential for hydropower (preferably in a sustainable, small scale manner) in the north, biomass, and solar energy. Close to 100 percent of surface water reservoirs and hydro-electric generation potential and 71 percent of timber mass is located in the north, while the central and southern regions have solar power potential that equals European leaders Barcelona and Rome.
Globally, total clean energy generating capacity in 2011 grew by 83.5 gigawatts to 565 gigawatts, or over 50 percent more than the installed nuclear power capacity. All countries in Southeast Europe – including Montenegro – are party to the treaty that established the Energy Community. The key objective: institute an open national and regional energy market that provides for cross-border trade and integration in the EU internal energy market.
According to the timetable of the treaty, by 2015 when the liberalization of the market is scheduled, all countries in Southeast Europe will be buying and selling energy on an open market.
This has significant impact on energy prices, which in the region currently stand well below the European Union (EU) average. So, not addressing inefficiencies in energy use carries real and immediate risks to both citizens and businesses in the region. While 95 percent of all clean energy investment is concentrated in the G20 countries, the Rio flagship Sustainable Energy For All initiative, led by the United Nations Secretary-General, aims to provide incentives for investment in renewable energy and energy efficiency in developing countries – a great opportunity for Montenegro, which is piloting this initiative.
Message 3: Countries that move first have an advantage.
The challenge of the century for Montenegro is to make resources go further – to do more with less. In order to be competitive economically, in order to create decent jobs and invest in health and education for its citizens, and in order to safeguard the unique natural resources it has been blessed with, Montenegro should aggressively address and cut inefficiencies, invest in clean energy production, local food production and the tourism industry.
This, however, needs to be complemented by investing in health and education in order to produce an educated population with qualified workers that can support a sustainable future for Montenegro.
Many say that the countries that are first to position themselves on the low carbon and resource efficient path, who strengthen resilience of their ecosystems, economies and communities, will enjoy a unique advantage.
Montenegro is in a position to make a decision to be among first-movers, to leapfrog ahead, and not repeat the inefficient development of some other countries. That would be fully in line with its declaration as an Ecological State. The work of the United Nations on green economy screening, the Sustainable Energy for All initiative and Europe 2020 provide good guidance how to do it.
Concluding, let us just emphasize once again:
Montenegro’s economic development is fully reliant on a dynamic and healthy environment with economic growth depending on natural resources:
- The success of our tourism sector is contingent on a healthy and dynamic environment, clean water, fresh air, and pristine nature;
- Our energy sector is reliant on renewable sources for over 70 percent of the country’s total production; and
- We increasingly rely on our national food production and agriculture.
For some countries, a green economy is a matter of choice. For Montenegro it is a necessity.
Rastislav Vrbensky is the United Nations Resident Coordinator and UNDP Resident Representative in Montenegro; and Milica Begović Radojević leads UNDP work in the area of economy and environment in Montenegro.
Originally published in Pobjeda, a daily newspaper in Montenegro.