By: Mohamed El-Ashry

Dr. Mohamed El-Ashry is vice-chairman of AFED board of trustees and former CEO of the Global Environment Facility (GEF)

The conventional wisdom that “markets know best” has been undermined by reality, and skepticism is growing about continuing a business-as-usual strategy where GDP growth is the overwhelming priority. Economic growth in the 20th Century was based on amassing physical, financial, and human capital at the expense of natural capital and social risks. Recently there has been serious efforts and discussions around the world about green economy which entail changing development paradigms and reshaping economies to deliver improved human well-being and social equity.

Green economy can simply be defined as economy that can generate economic growth and improvements in people’s lives without harming the environment. Some, however, seem to fear that green economy only addresses two of the three pillars of sustainable development. We certainly need to pay increased attention to setting our economies on a green path but we should not lose focus on the social dimensions of sustainable development. Social equity and investment in people’s health and education are crucial to building more resilient and sustainable societies.

As the AFED report argues, green economy is characterized by attention to the vast potential to maximize resource productivity, especially energy and water, and reduce waste generation. In a green economy, investments are directed to the sustainable management of natural resources to maximize their economic and environmental productivity, and their capacity to create jobs and support the poor. In a green economy, participatory governance of natural resources is practiced with representation of key stakeholders, particularly those groups with weak institutional power.

Public policy will play a key role in enabling green economy goals and objectives. Making progress towards an Arab green economy will require a fundamental realignment of current public policies. In this regard, environmental and social goals must be accorded a level of priority similar to that for economic goals. The new approach should ensure that short-term economic benefits are not pursued at the expense of long-term social and environmental goals.

Although Arab countries have experienced rapid rates of economic growth over the past decade, those at the bottom of the pyramid have not shared in the benefits of the economic boon. Arab economies continue to be structurally weak. This is attributed to the lack of economic diversification, dependency on low value-added commodity products, and vulnerability to global market volatility. In that regard, the AFED report states: poverty remains persistent, unemployment is alarmingly high, water and food insecurity are a threat, and environmental degradation of the region’s natural resources is rampant.

These shortfalls undermine human development which is the stated priority of governments in the region. Due to high rates of population growth, fast industrialization, and urbanization, the pressures on Arab economies will mount as the demand for food, water, housing, electricity, municipal services, and transport escalates. Addressing these short falls will require a fundamental change in Arab economic development models and reforms of public policies to stimulate shifts in production, consumption, and investment patterns.

In the context of green economy, I believe that several transitions essential to the region’s sustainable development are needed. I would single out the following four:
1. An energy transition where energy is produced cleanly and used efficiently without aggravating regional and global environmental problems;
2. An economic transition to sustainable growth and a broader sharing of its benefits;
3. A resource transition to reliance on nature’s “income” and not depletion of its “capital;” and
4. A demographic transition to a stable population in the region.

Diligent and concerted efforts by governments, corporations, and professionals will be necessary to promote these and other transitions to a green economy. The AFED report describes clearly what is at stake for the region and its people, and calls attention to the economic, environmental, social, and political benefits of action. Such action will require leadership at the highest levels of government and business. Great visions and speeches alone are not what really matters the most. Vision without plans, and plans without action do not achieve much.

As earlier AFED reports have shown, the slow progress in improving environmental quality and pursuing sustainable development in the majority of the Arab countries is rooted in policy and institutional failures coupled with lack of public awareness and a poor knowledge base.

The need for building knowledge, sharing knowledge, and acting upon its implications is a key priority for all countries. Arab countries, as a group, lag other world regions in building a knowledge society. In the areas of education and training, scientific research, technological innovation, and knowledge driven business, the region falls short of countries at similar levels of development. Other regions continue to pull ahead. Yet, the Arab region must create, according to the World Bank, more than 80 million jobs over the next 15 years just to keep pace with population growth, let alone address chronic underdevelopment. To compete effectively in the global economy, and head off major social disruptions, the region must strengthen its science and technology capability and enhance the knowledge and creative potential of its people. In this regard, the business community has an important role to play as a key component of its social responsibility.

Finally, Arab economies today face a number of challenges and a choice between two futures. The brown economy future promises short-term growth in GDP while continuing to diminish the stocks of social and environmental capital. The green economy future on the other hand offers the prospect of stimulating economic development while ensuring improved social and environmental conditions. The AFED report lays the arguments for why Arab governments should want to invest in a green economy future. All things being equal, a green economy future offers the conditions for social stability, environmental sustainability, and economic prosperity.