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The green economy is defined as an economy that results in reducing environmental risks and ecological scarcities, and that aims for sustainable development without degrading the environment. It is closely related with ecological economics, but has a more politically applied focus.
A feature distinguishing it from prior economic regimes is the direct valuation of natural capital and ecological services as having economic value (see The Economics of Ecosystems and Biodiversity and Bank of Natural Capital) and a full cost accounting regime in which costs externalized onto society via ecosystems are reliably traced back to, and accounted for as liabilities of, the entity that does the harm or neglects an asset.
Green Sticker and ecolabel practices have emerged as consumer facing measurements of friendliness to the environment and sustainable development. Many industries are starting to adopt these standards as a viable way to promote their greening practices in a globalizing economy. Green economy and the related field of ecological economics share many of their perspectives with feminist economics, including the focus on sustainability, nature, justice and care values.
"Green" economists and economics
"Green economics" is loosely defined as any theory of economics by which an economy is considered to be component of the ecosystem in which it resides (after Lynn Margulis). A holistic approach to the subject is typical, such that economic ideas are commingled with any number of other subjects, depending on the particular theorist. Proponents of feminism, postmodernism, the ecology movement, peace movement, Green politics, green anarchism and anti-globalization movement have used the term to describe very different ideas, all external to some equally ill-defined "mainstream" economics.
The use of the term is further ambiguated by the political distinction of Green parties which are formally organized and claim the capital-G "Green" term as a unique and distinguishing mark. It is thus preferable to refer to a loose school of "'green economists"' who generally advocate shifts towards a green economy, biomimicry and a fuller accounting for biodiversity. (see The Economics of Ecosystems and Biodiversity especially for current authoritative international work towards these goals and Bank of Natural Capital for a layperson's presentation of these.)
Some economists view green economics as a branch or subfield of more established schools. For instance, it is regarded as classical economics where the traditional land is generalized to natural capital and has some attributes in common with labor and physical capital (since natural capital assets like rivers directly substitute for man-made ones such as canals). Or, it is viewed as Marxist economics with nature represented as a form of Lumpenproletariat, an exploited base of non-human workers providing surplus value to the human economy, or as a branch of neoclassical economics in which the price of life for developing vs. developed nations is held steady at a ratio reflecting a balance of power and that of non-human life is very low.
An increasing commitment by the UNEP (and national governments such as the UK) to the ideas of natural capital and full cost accounting under the banner 'green economy' could blur distinctions between the schools and redefine them all as variations of "green economics". As of 2010 the Bretton Woods institutions (notably the World Bank and International Monetary Fund (via its "Green Fund" initiative) responsible for global monetary policy have stated a clear intention to move towards biodiversity valuation and a more official and universal biodiversity finance. Taking these into account targeting not less but radically zero emission and waste is what is promoted by the Zero Emissions Research and Initiatives.
Karl Burkart defines a green economy as based on six main sectors:
- Renewable energy
- Green buildings
- Sustainable transport
- Water management
- Waste management
- Land management
The International Chamber of Commerce (ICC) representing global business defines green economy as “an economy in which economic growth and environmental responsibility work together in a mutually reinforcing fashion while supporting progress on social development”.
In 2012, the ICC published the Green Economy Roadmap, containing contributions from experts from around the globe brought together in a two-year consultation process. The Roadmap represents a comprehensive and multidisciplinary effort to clarify and frame the concept of “green economy”. It highlights the essential role of business in bringing solutions to common global challenges. It sets out the following 10 conditions which relate to business/intra-industry and collaborative action for a transition towards a green economy:
- Open and competitive markets
- Metrics, accounting, and reporting
- Finance and investment
- Life cycle approach
- Resource efficiency and decoupling
- Education and skills
- Governance and partnership
- Integrated policy and decision-making
The Global Green Economy Index™ (GGEI),  measures the green economic performance of 60 countries and 70 cities as judged by expert practitioners and third party indicators and datasets. The 2014 GGEI results rank these countries and cities on four primary dimensions:
- Leadership & Climate Change and the extent to which national leaders are champions for green issues and addressing climate change on the local and international stage
- Efficiency Sectors and how well each country performs at greening its building, transportation, tourism and energy sectors
- Markets & Investment and the perceived and actual opportunities for renewable energy and cleantech investment and the climate for innovation and commercialization of green products and services in each country
- Environment & Natural Capital and the extent to which countries protect their environmental assets and use natural capital efficiently
Because the market failure related to environmental and climate protection as a result of external costs, high future commercial rates and associated high initial costs for research, development, and marketing of green energy sources and green products prevents firms from being voluntarily interested in reducing environment-unfriendly activities (Reinhardt, 1999; King and Lenox, 2002; Wagner, 203; Wagner, et al., 2005), the green economy may need government subsidies as market incentives to motivate firms to invest and produce green products and services. The German Renewable Energy Act, legislations of many other member states of the European Union and the American Recovery and Reinvestment Act of 2009, all provide such market incentives. However, other writers, including Amory Lovins, Hunter Lovins, and Paul Hawken, authors of Natural Capitalism: Creating the Next Industrial Revolution, and Jay Conrad Levinson and Shel Horowitz, authors of Guerrilla Marketing Goes Green, argue that green strategies can be highly profitable for corporations that understand the business case for sustainability and can market green products and services beyond the traditional green consumer.
A number of organisations and individuals have criticised aspects of the 'Green Economy', particularly the mainstream conceptions of it based on using price mechanisms to protect nature, arguing that this will extend corporate control into new areas from forestry to water. The research organisation ETC Group argues that the corporate emphasis on bio-economy "will spur even greater convergence of corporate power and unleash the most massive resource grab in more than 500 years." Venezuelan professor Edgardo Lander says that the UNEP's report, Towards a Green Economy, while well-intentioned "ignores the fact that the capacity of existing political systems to establish regulations and restrictions to the free operation of the markets – even when a large majority of the population call for them – is seriously limited by the political and financial power of the corporations." Ulrich Hoffmann, in a paper for UNCTAD also says that the focus on Green Economy and "green growth" in particular, "based on an evolutionary (and often reductionist) approach will not be sufficient to cope with the complexities of climate change" and "may rather give much false hope and excuses to do nothing really fundamental that can bring about a U-turn of global greenhouse gas emissions. Clive Spash, an ecological economist, has criticised the use of economic growth to address environmental losses, and argued that the Green Economy, as advocated by the UN, is not a new approach at all and is actually a diversion from the real drivers of environmental crisis. He has also criticised the UN's project on the economics of ecosystems and biodiversity (TEEB), and the basis for valuing ecosystems services in monetary terms.
- Alternative energy indexes
- Chemical Leasing
- Circular Economy
- Ecological Economics
- Ecology of contexts
- Embodied energy
- Embodied water
- Energy accounting
- Energy economics
- Energy policy
- Energy quality
- Environmental economics
- Environmental ethics
- Feed-in tariff
- Free-market environmentalism
- Green accounting
- Human development theory
- Human ecology
- ISO 14000
- Industrial ecology
- Land value tax
- List of Green topics
- Market Governance Mechanisms
- Natural capital
- Natural resource economics
- Passive solar building design
- Pigovian tax
- Renewable energy commercialization
- Renewable heat
- Restoration economy
- Sustainable design
- Clean Tech Nation
- The Economics of Ecosystems and Biodiversity (TEEB)
- World energy resources and consumption
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