According to the United Nations Environment Program (UNEP), a green economy is one “whose growth in income and employment is driven by public and private investments that reduce carbon emissions and pollution, enhance energy and resource efficiency, and prevent the loss of biodiversity and ecosystem services.”
The term was popularized in advance of the Rio+20 Earth Summit to refer to mechanisms that seek to put an economic value on ecosystems. For example, an influential report on The Economics of Ecosystems Biodiversity (TEEB) found that current accounting systems gave an “effective ‘zero’ price” to the loss and degradation of ecosystems and biodiversity. Evaluating “natural capital” as an asset could help private companies and government decision-makers factor in the costs of nature more effectively, according to proponents of this approach.
The “green economy” agenda met with significant opposition at Rio+20 and in other forums. Critics have noted that the creation of ecological commoditiesis part of a wider economic trend towards financialization,with the financial sector (and trading divisions of energy firms) seeking to profit from new sources of financial speculation. Treating ecosystems as commodities means that their protection is dependent upon a cost-benefit analysis that it is cheaper to conserve than to destroy them. Carbon marketcrashes (in the case of both the EU ETS and CDM) and the early experience of REDDon voluntary carbon markets make this a very real danger: the current price structure tips the scales heavily in favour of continued destruction. Critics of the green economy contend that the issue is not simply one of persistently low prices, but the fact that the price mechanism creates perverse incentives and fails to incentivize ecosystem conservation, while at the same time undermining the rights of local populations and Indigenous Peoples.
Although the term “green economy” has become most associated with ecosystems markets, other uses continue to circulate. Rather than translating biodiversity into commodities, the “green economy” can be a starting point for rethinking the principles of economics and finance in light of environmental concerns. For example, Rio+20 also discussed measures to supplant the centrality of Gross Domestic Product (GDP) as a measure of economic or policy performance, on the grounds that it is a poor measure of human well-being or environmental sustainability. Efforts to move beyond GDP reflect a broader definition of the green economy.