Abstract
By linking environmental quality to economic growth, green growth is emerging as a new paradigm for urban policies. The paper discusses a policy package for green growth of cities and regional economies, made of four interlocking pillars: a) greener public services and purchasing behavior, b) eco-efficiency of industrial production, c) consumer awareness and demand incentives, d) support for research and innovative applications of green technologies. Urban green growth strategies are more likely to succeed if they account for policy interventions in each of these four domains. Prioritization among the different interventions needs to be based on an accurate screening of possible complementarities among the four pillars. Within the strategy, interventions in one domain unlock positive developments in other domains. Synergies and possibilities for leverage do exist at the local level, as well as potentials for policy experimentation. More knowledge of how the local economy works and a strong capacity to pursue interdepartmental and multi-level programs are essential requisite to seize the employment and growth potentials of the low-carbon transition.
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Notes
The share of people living in urban areas is growing worldwide, mostly as a consequence of the continuous expansion of mega-cities in emerging countries. In China and India, urbanisation is regarded as a critical component of the development process and the two countries have ambitious goals to build a vast network of new cities to fuel their industrialisation goals (Song and Ding 2007). In the next two decades, China will create nearly 30 new cities of 1 million inhabitants; India is expected to add 26 cities of this size during the same period (Seto 2009).
Under the perspective of individual cities seeking to improve their competitiveness, it would be particularly important to understand in which sectors of the green economy the “first movers” will have a long run cost advantage. Sharp learning by doing effects, if proven, would represent a powerful argument for a more pro-active agenda of green economic policies at the regional level. If average costs decline with cumulative experience, localities engaging in green investments can maintain a productivity advantage in the long run even with respect to competitors with good imitation capacities.
The role of regions and cities in the green recovery process has been acknowledged in different stimulus packages. For example, the American Recovery and Reinvestment Act includes USD 3.2 billion to fund the Energy Efficiency and the Conservation Block Grants (EECBG), a program conceived by the Conference of Mayors to implement climate change mitigation strategies in cities. The program will devote resources for energy efficiency for utilities and buildings, credits for the implementation and maintenance of renewable energy supplies, training programs for careers in energy efficiency and renewable energy.
Life cycle costing (LCC) is a structured approach that can be used to produce a spend profile of the product or service over its anticipated life-span. The results of an LCC analysis can be used to assist management in the decision-making process where there is a choice of options. See www.ogc.gov.uk/implementing_plans_introduction_life_cycle_costing_.asp.
In Europe, green power purchasing and utility green pricing have existed since the late 1990s, and have achieved good results in particular in the Netherlands, Finland, Germany, Switzerland, and the United Kingdom. In Japan, there were an estimated 60 000 green power consumer-participants by early 2005. Green power in Japan initially developed through voluntary community organizations, like the Seikatsu Club Hokkaido. A review of the experience of green pricing programs in the US until 2000 concludes that success, in terms of consumers’ participation and increases in supply capacities, is determined by: product design (e.g. multiple products to appeal to different market segments), value creation (e.g. participation raises personal recognition and civic pride), product pricing (e.g. premiums are cost-based and transparently invested in new renewable energy development), and program implementation (e.g. how the product is marketed) (Swezey and Bird 2001).
A recent research on a cross section of countries (Kellenberg 2009) shows that industries more likely to locate in localities with looser environmental regulation are not necessarily “the dirtiest” industries. Rather, more ‘footloose’ industries such as electronic and appliance manufacturers are more adversely affected by stringent environmental policy. Interestingly, it appears that the enforcement of environmental policy is more of a deterrent to inward investments than the level of the regulation itself. This might indicate that even if political coordination leads countries or regions to agree on common level of regulations, still the playing field might not be leveled due to local strategic behavior in enforcement.
Although landfilling and incineration involve larger volumes, recycling now generates more revenue of the waste management industry since great economic value is bound up in discarded products and equipment. Worldwide estimates of employment in recycling are not available as we lack reliable estimates from several developing economies where recycling is growing fast. Recent estimates for the United States find that recycling generates revenues of $236 billion annually and offers employment to 1.1 million people at 56,000 public and private facilities (UNEP 2009).
. Individuals look at their local environment when making consumption choices. The spatial clustering of purchases of hybrid vehicles and of LEED registered buildings in US provides insight into the role of imitation in preferences. Kahn and Vaughn (2009) find that initial hybrid penetration in California occurred predominantly in census tracks with greater than average environmental preference, as measured by the percentage of registered green party voters.
An Innovation Vouchers Subsidy Scheme was introduced for the first time by the Dutch Ministry of Economic Affairs and then experimented in several OECD countries. Innovation vouchers were proposed as a key instrument for facilitating university-SME collaborations by Terry Cutler in the report for the Review of the Australian National Innovation System (Cutler and Company Pty Ltd (2008)), In Cutler’s proposal of a voucher program, each voucher would be worth up to $15,000 and would be used to fund collaboration between the small firms and a public sector research organisation. The program would link 5000 firms per year with public research agencies at a cost of $50–$75 million per year. The voucher programs can be easily scaled-down at the sub-national level, targeted on energy efficiency innovations and applied by municipal departments in charge of innovation and business support.
For reasons of space, this paper does not discuss the critical issue of the financing of green growth strategies undertaken at the local level. As local governments often lack the revenue streams needed to put in place new investments, measures to stimulate green growth might put additional pressure on city budgets and increase the need for additional resources. Acting on green growth in cities might require new financial instruments, and capacity of cities to benefit from the mechanisms put in place to create carbon offsets. Urban usage of carbon offset mechanism has been marginal so far. For further details on this crucial issue, see (OECD 2010b)
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Paper submitted to the 3rd International Wuppertal Colloquium on “Sustainable Growth and Resource Productivity – Harnessing Industry and Policy Towards Eco-Innovation”. I thank Alexis Roberts, Lamia Kamal-Chaoui, Fredrich Kahrl, and Joaquim Oliveira Martins for useful comments and suggestions.
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Piacentini, M. Rationale and policies for the green growth of cities and regional economies. Int Econ Econ Policy 9, 129–146 (2012). https://doi.org/10.1007/s10368-012-0209-4
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DOI: https://doi.org/10.1007/s10368-012-0209-4