Les Cahiers de la Chaire Economie du Climat Green Growth: From Intention to Implementation

Since the end of World War II, the global economy has grown at a rate enabling GDP per capita to be doubled every twenty-five years. From 1973, growth has been redistributed, beginning with the rise of the emerging economies, in a correction of the protracted concentration of wealth in western countries and Japan. Fears that the scarcity of raw materials would impede this process have proven groundless. However, the impacts of population growth and economic expansion have the potential to disrupt important regulatory functions of global ecological systemes. Green growth involves transforming the production and consumption processes in order to maintain or restore these regulatory functions of the planet’s natural capital. Growth economists have clearly described how technical progress can surmount the barrier of natural resources scarcity. Models of green growth require that environmental factors be treated differently: they form natural capital that is an essential factor of production and not merely an externality. It seems that the growth process is eventually halted if sufficient investment is not directed toward this capital. But the implementation of this investment erodes the return from other factors of production in play, thereby raising new questions of distribution and equity. In practice, the transition to green growth depends on advances being made in four areas: widening the concept of efficiency, thereby triggering new clusters of innovation; energy transitions, which anticipate and reflect the increasing scarcity of fossil fuels and whose rate and methods must be guided primarily by climate risk; inclusion of the value of natural capital in economic life; and a revision of the scale of risks within the financial system whose innovations for allocating resources at low cost to green growth would be greatly facilitated by effective pricing of environmental pollution