Confronting inequality: from brown to green growth?

Written by Niels Keijzer – European Centre for Development Policy Management

Like poverty, inequality is multidimensional. Limits to political freedom, access to land, migration and environmental aspects all contribute to income inequality and exacerbate its effects. Discussions at the Rio+20 summit last June focused on these interlinkages and on ways to achieve greater integration among the 3 pillars of sustainable development – the economic, the social and the environmental. The High-Level Panel organised by the European Think Tanks Group during next week’s European Development Days will look into how the European Union could help address the existing gaps through its development cooperation and beyond.

While the Outcome Document adopted at the Rio +20 summit – officially called the UN Conference on Sustainable Development – will not claim a prominent place in history books, the preparatory process functioned as a strong incubator and catalyst for both research and practice on how to make global development more inclusive and sustainable.

Among the research outputs produced in the run-up to the Rio+20 conference is this year’s European Report on Development (ERD), which was launched in May and looks into the management of water, land and energy. The report examines the constraints on each of these key resources, the interrelationships between them and considers how better, more integrated, resource management could promote economic growth in the poorest developing countries – growth that is both environmentally sustainable and socially inclusive.

The ERD 2012, entitled ‘Confronting Scarcity’, points to the urgent need to radically transform approaches to managing water, energy and land. Current methods often deal with these 3 resources as if they were in splendid isolation from one another. But they are not. A radical change is needed to satisfy the fast growing demand for water, energy and land without transgressing environmental limits or tipping points. It would involve institutional change and cooperation between the public and private sectors, both in the North and in the South.

The EU’s new development proposal, the ‘Agenda for Change’, that was endorsed by EU ministers responsible for development cooperation in June this year, seemed to recognise this sense of urgency as far as the use of the EU’s Official Development Assistance budget is concerned: ‘Development is not sustainable if it damages the environment, biodiversity and natural resources and increases the exposure/vulnerability to natural disasters. EU development policy should promote a ‘green economy’ that can generate growth, create jobs and help reduce poverty by valuing and investing in natural capital, including through supporting market opportunities for cleaner technologies, energy and resource efficiency, low-carbon development while stimulating innovation, the use of ICT, and reducing unsustainable use of natural resources. It should also contribute to improving the resilience of developing countries to the consequences of climate change.’ (Emphasis as per the original)

It is commendable that the EU emphasises that development cooperation has to face the challenge of promoting sustainable development. This intention should however be seen in light of the understanding that development cooperation can only play a catalysing role. The EU’s 2012 Accountability Report on Development, which analyses how the EU and its Member States are delivering on their cooperation pledges, reflects this.

Development cooperation can help promote efforts to transform ‘brown’ economies into green ones when developing country and European policies are intent and equipped to do so – but it is not in a position to redirect or repair such policies when they do not. The European Union can support poorer countries through internal policies on production and consumption, as a major trade and investment partner, as a major donor, through contributions to global (environmental) governance, and policy coherence.

Europe has a major impact on the global management of natural resources and is responsible for one-sixth of the global environmental footprint. It is clear that if the whole world consumed as Europeans do, the pressures this would create for land, water and energy would spin out of control sooner or later. The EU should apply its Agenda for Change to itself. But slow progress in implementing the ‘Europe 2020’ growth strategy’s focus on a resource-efficient Union shows that this is difficult and that promoting short-term economic growth takes precedence over ensuring this growth is green and inclusive.

Since the early 1990s, the EU has committed itself to promote Policy Coherence for Development, i.e. to take account of the interests of low-income countries within national and European policy processes and decisions. Although the EU tried to push for an ambitious outcome document during the UN Conference on Sustainable Development in Rio, it is clear that it will be infinitely more persuasive through the quality of its actions than through the quality of its policy positions. A strong EU track record in promoting green growth at home is also one key condition for being effective in furthering this in third countries by means of its development cooperation policy.