Towards a Green Growth Strategy for Bangladesh. Sadiq Ahmed Policy Research Institute, Bangladesh

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1 Towards a Green Growth Strategy for Bangladesh Sadiq Ahmed Policy Research Institute, Bangladesh

2 Elements of a Green Growth Strategy for Bangladesh The elements of a Green Growth Strategy for Bangladesh draws on: The Development Context Bangladesh s current development performance. Sustainable Development Challenges Climate Change and other environmental factors Current Policies and Governance surrounding sustainable development Vision 2041 This includes other major national strategy documents like the Delta Plan 2100 and their core goals Determinants of the Green Growth Strategy Moving forward 2

3 The Development Context Excellent track record of economic growth, human development and poverty reduction. Achieved lower middle income status in 2015, aspires upper middle income country status by However, progress with environmental protection weak. Development Indicator Base Year Present GDP Growth rate (% per year) 4.0 ( average) 6.7 ( average) Per Capita GNP ($) 90 (1975) 1602 (2017) Poverty (% headcount) (1977) 24 (2016) Life Expectancy (no. of years) 46 (1974) 70 (2013) Infant mortality (per 1000) 130 (1975) 31 (2013) Total fertility rate (%) 5.8 ( ) 2.3 ( ) Adult literacy rate (%) 22 (1974) 61 (2013) Primary school enrollment (Net %) 67.5 (1973) 97.7 (2014) 3

4 Sustainable Development Challenges High Vulnerability to Natural Disasters Bangladesh ranked 5 th most vulnerable country amongst 171 nations. Flooding, cyclones & storm surges, salinity, river bank erosion, and water logging are integral part of the Bangladesh natural environment. Increasing Climate Change Risks- sea-level rise, rising temperatures, and changing monsoon pattern threatens to exacerbate the natural hazards. Adverse impact of climate change on several sectors can be severe. Risks to Agriculture: Food security will be adversely impacted by rising temperatures, SLR and increased salinity Risks to forest resources and ecosystems: increased temperature, SLR and increased cyclone intensity will affect both forests and species Loss of land, physical assets and health risks: rising sea levels could permanently submerge dry land, increasing disasters will negatively affect national infrastructure, and health hazards will intensify from additional pollution in land and water reserves 4

5 Sustainable Development Challenges Degradation of Forest Resources Forests, a valuable natural resource, has already decreased severely over time. Bangladesh is ranked at bottom 186 out of 192 countries in per capita forest cover. Indonesia Thailand Vietnam China Nepal Sri Lanka India Pakistan Bangladesh

6 Sustainable Development Challenges Falling Land Availability and Land Degradation Land per capita continues to decrease while demand rising. Growing population pressure, salinity, river erosion and water logging have caused severe land degradation and loss of productivity. Major Determinants of Land Degradation (%) Other natural factors 7 Waterlogging 3 Salinization 4 Deforestation 6 River bank erosion Water erosion 7 7 Organic matter depletion 32 Soil fertility decline

7 Sustainable Development Challenges Loss of Biodiversity Loss of forest, land degradation, sea and river water pollution, indiscriminate filling of water bodies, unsustainable use of ground water and fishery resources, and unsustainable ways of shrimp farming have taken a huge toll on the degradation of the eco-system and consequent loss of bio-diversity. Protection of Habitat and Biodiversity Rankings (176 countries) Malaysia Thailand Sri Lanka China South Africa Nepal Vietnam Pakistan Bangladesh India

8 Sustainable Development Challenges Urban Air Pollution - Owing to unregulated use of air pollutants, the urban air environment in Bangladesh is amongst the most polluted in the world. Dhaka is the 4 th most polluted city in the world amongst 202 countries by the WHO measure. Air Quality, annual average, µg/m3 PM 2.5 Delhi Karachi Dhaka Cairo Beijing Mumbai Jakarta Shanghai Guangzhou Mexico City Seoul Manila Jakarta Sao Paulo New York Tokyo Osaka

9 Sustainable Development Challenges Several factors contribute to outdoor air pollution: use of fossil fuel for energy; emissions from industrial plants, especially brick kilns; emissions from transport vehicles; and gaseous releases from improper treatment and disposal of solid and liquid wastes. Fossil fuel subsidies negatively impact the environment encourages use of carbon-emitting fossil fuel; discourages investments in renewables 9

10 Sustainable Development Challenges Water Quality Surface water is heavily polluted through land based activities; industrial effluents, agrochemicals, faecal pollution and oil spillage Location of industries along major rivers with no effective waste preventive measures cause severe river pollution. Ground water is heavily contaminated by arsenic; 60 out of 64 districts Urban Flooding & Waterlogging Major cause is poor drainage resulting in large economic losses 10

11 Sustainable Development Challenges Overall Environmental Performance: According to the CIESIN-YCELP 2014 Environmental Performance Index, Bangladesh is ranked 169 out of 178 countries Somalia Bangladesh India Pakistan Nepal Vietnam China Thailand South Africa Sri Lanka Malaysia

12 Percent Sustainable Development Challenges Impact on Growth: indicative projections show that the combined effects of moderate climate change (BAU) could cause an average GDP growth loss of about 1.3 % per year between FY2017 and FY BAU Scenario Policy Scenario FY16 FY20 FY25 FY26 FY30 FY31 FY35 FY36 FY40 FY41 12

13 Sustainable Development Challenges Implications for Poverty Reduction Under the BAU Scenario Bangladesh will fail to achieve its target to eliminate extreme poverty by FY Extreme Poverty BAU Extreme Poverty Policy Scenario Moderate Poverty BAU Moderate Poverty Policy Scenario FY16 FY20 FY25 FY26 FY30 FY31 FY35 FY36 FY40 FY41 13

14 Existing Policies and Governance Environmental Laws, Regulations and Policies Impressive array but weak implementation. Strategic Focus Lacking, despite numerous policies What is the strategic focus and how laws, regulations and programmes relate to that is unclear. Incentive policies for environmental management is missing Governance and Institutional Arrangements Inadequate coordination across agencies and capacity constraints are major issues Finance Challenges Insufficient allocation of the budget to environment related ministries affects both capacity and implementation 14

15 2041 Perspective Plan Vision: An Opportunity The agenda for green growth daunting, but not impossible. The 2041 Perspective Plan (PP 2041) provides a major opportunity to jump start the green growth agenda and step up the policies, programs, institutional reforms and financing to reconcile growth and poverty targets with environmental protection. Core objectives and targets of PP 2041 include: Eliminate absolute poverty Substantially increase expenditure on core environmental spending Cities that are flood free with proper drainage Slum free urban population Clean air and water Increased forest coverage & habitat and biodiversity protection 15

16 Determinants of Green Growth Strategy A. Integrating Environmental Considerations Integrating environment into the growth agenda is imperative for better environmental management. Green growth strategy will also reduce poverty. Green growth strategy can help growth through: Increasing the availability of capital that replaces non-renewable natural resources (e.g. renewable energy). Increasing productivity of capital (offsetting land degradation; avoiding losses from natural disasters; reducing health care costs). Through technical progress that increases the production efficiency of natural resources. Investments in environmental protection become a factor of production same as physical and human capital Political economy challenge: identify macroeconomic and sectoral policies, institutions and programmes that internalize environment as an integral part of the growth process and poverty reduction strategies. 16

17 Implications for Macroeconomic and Sectoral Policies Determinants of Green Growth Strategy Integration of environment in the Macroeconomic Framework - The costs of environmental degradation should be explicitly recognized in the Base Scenario of the 2041 PP Macroeconomic Framework and offsetting measures incorporated in the Policy Scenario. Adoption of the Delta Plan - BDP2100 includes major policies, investment programmes and institutional reforms that if implemented properly will address the sources of long-term climate change vulnerability Fiscal Policy to manage Air & Water Pollution Integrate fiscal policy into management of air and water pollution by adopting beneficiary pays and polluter pays principles. Removing Fuel Subsidies & Introducing Green Taxes for Fossil Fuels This would reduce emissions and free up resources for renewables Emissions Taxes for Industries Strengthen measurement of emissions and introduce taxes to provide incentives for industries to invest in cleaner technology Sustainable Management of Forestry Resources Strengthen database to improve planning of forest investments based on demand and supply forecasts. Consider tax/subsidy policy to facilitate sustainable extraction and replanting. 17

18 Implications for Institutional Reforms Strengthening Environmental Coordination Ensure coordination of environmental policies/programs across ministries by implementing the recommendations of the NSDS to establish a Sustainable Development Monitoring Council (SDMC) and Sustainable Development Board (SDB). Strengthening MOEF Increased budget and capacity building are integral Strengthening the Delta Management Institutions Effectiveness of these institutions are also needed for environmental management. Determinants of Green Growth Strategy Decentralization of Environmental Management - Roles and responsibilities should be defined from top to bottom including local and community organisations. Strengthening Environmental Concerns in Planning and Budgeting Integrating environmental concerns into budgetary management is essential for a green growth strategy. 18

19 Financing Options Determinants of Green Growth Strategy Private Financing Options (i) incentives for private supply of environmental services (forestry; fisheries; eco-tourism; water supply; waste management); (ii) regulatory measures to motivate private investment in clean energy and emission control technology; and (iii) PPP arrangements (clean up of rural water bodies; rural water and sanitation; public toilet and bathing facilities) Public Financing Options (1) stronger tax mobilization; and (2) institution of beneficiary pays and polluter pays principles (proper pricing of water and energy; green tax on fossil fuel) Harnessing the GCF Bangladesh must fast-track GCF readiness by meeting the necessary criteria and standards Tapping Other International Climate Funds Set up a dedicated wing at ERD that can effectively coordinate and access other international climate funds like Adaptation Fund, LDCF, CIF, FIP, GEF, REDD, NAMA etc. 19

20 Determinants of Green Growth Strategy Projected Financing Plan for Core Environmental Programs under PP 2041 Financing Options (% of GDP) FY2017 (Base Year) FY2031 FY2041 Tax Resources Cost Recovery (Beneficiary pays principle) Green Taxes (Polluter pays principle) Foreign Financing including Green Climate Fund Total Financing