‘Green Growth’ – making it real.

I’m looking forward to seeing what the Pure Advantage group come up with later today when they launch their campaign “to deliver world-leading improvements to our economy, our environmental performance and the living standards of all New Zealanders”. 

I suspect it will be considerably more innovative and better informed than what we saw earlier this week from the government-appointed  Green Growth Advisory Group . Their discussion paper makes some  claims about the government’s ‘growth agenda’ that are plain wrong; it misses the point about some fairly fundamental issues around making the transition to a low carbon economy; and appears ill-informed about key parts of the economy, notably the Small Medium Enterprise (SME) sector.

We are told for example that ‘Natural capital – natural resources and ecological systems that provide services to society – is a core consideration in all policy making’.  Really?  Even the policies that involve a huge investment into mineral extraction, massive roading projects, a preference for urban sprawl rather than compact urban form?

The document notes that economies ‘will shift to more sustainable practices’, and that our ability to ‘anticipate and respond appropriately to these changes’ is of importance.  It is clearly news to the authors that ‘economies’ including high-value markets like Europe, North America and Japan are already making the shift, and New Zealand is proving to be a very slow follower instead of fulfilling our potential role as leader by example.

The paper seriously understates the economic risk posed by our failure to live up to our ‘clean and green’  brand, despite acknowledging the importance of authenticity (i.e. no greenwash!) and that our environmental stewardship is already under scrutiny internationally.

We are encouraged to reduce our GHG emissions intensity, but not our emissions in absolute terms.  There is no recognition that the government has an enormous ability to influence the behaviour of  economic players by rewarding those who are getting real about sustainability with government supply contracts – the existing approach to procurement, having sustainability as one ‘tick box’ along with many others, is just inadequate.

The assumptions made about SMEs, and the ‘advice’ offered to them, reflects how badly out of touch this government is with the sector, where a lot of work is already being done that is  motivated by a very clear understanding of the imperatives to move to a more sustainable footing. (Maybe the government’s failure to have even one member attend the recent Small Business summit is symptomatic of this lack of engagement.)

15 Comments Posted

  1. Ryan

    I was responding to Samiam, by invitation.

    The people who invented the GNP/GDP cautioned against using it as a general measure. It is useful as a measure of economic activity (not growth), and it is (by itself) rather useless as a measure of the well being, growth or “wealth” of a society.


    Since its creation, economists who are familiar with GDP and SNA meth-
    odology have emphasized that GDP is a measure of economic activity, not
    economic well-being. In 1934, Simon Kuznets, the chief architect of the
    United States national accounting system, cautioned against equating GDP
    growth with economic or social well-being.

    The social costs have to be attributed and subtracted from this measure and are not, and never have been. It is “well defined” only in the same sense as kilometers are well defined… but kilometers alone are incapable of being used to measure speed.

    Which makes the policy-makers and the media a pack of fools and/or liars, but in neither case is that any sort of news 🙂

    My argument then, is that the definitions of economics have to be more explicit. This is my argument in general, as I regard the faulty definition of money the chief reason why Economics, for all its brilliant theoreticians and efforts to understand what happens in national economies, is not a science. The fundamental unit of measure is ill-defined. It could do better.


  2. Sprout – I take your point. Dollars provide the common unit of measurement, but it is usually dollars benchmarked at a particular year (e.g. 2000 dollars). What I was getting at is the fact that inflation is accounted for in conventional measures of growth. (If the same number of goods and services are produced but prices double, then the value of goods and services has gone up. But this would not be considered growth.)

    BJChip – what we are talking about is how growth is measured by national statistical offices, as this is what policy-makers, the media etc., are referring to when they make statements about economic growth. GDP is a well-defined concept, and the UN provides guidelines to nations on how to measure it. So, (1) it’s not my definition, but a definition that came about from years of debate amongst Western experts, and (2) I’m not going into the details of the defintion here. Google “SNA 2008” if you’re interested…



  3. Ryan -as regards number 1 it must be the value that is used as a measure rather than quantity because the economy is measured in dollars not the the quantity of products produced. You can also have an increase in services through voluntary efforts and this isn’t recognized in current measurements.

  4. Economic Growth is going to be different things depending on who you ask, and what measurement system they use. In effect your inability to pin this down is a GOOD thing because there isn’t a single straight answer in the pack. Feel free to use your own definition without detailing what it means, that is what most people do 🙂

    I might define it as a “net” growth in the goods and services produced per capita and require the “net” to include a reduction for non-renewable energy consumption, as well as a reduction for environmental damage and “quality of life” reductions and reductions for debt passed on to future generations. In other words, it cannot be counted as a gain if it comes because one shut down a library, reduced a medical benefit, entails borrowed money or burns a lot of lignite. Most folks don’t reckon those costs, so they are happy with GDP or similar measures. I’d have to think this through a bit to be sure I got the limitations I want on it, but growth the way I reckon it, is difficult to achieve and scarce in the world the way the economists insist on running it.


  5. Sprout – I would add two things:
    1. its not an increase in value of goods and services that constitutes growth, but an increase in the quantity of goods and services produced.
    2. “green thinking” entails recognizing the way in which the environment contributes to economic output (“goods and services” in your parlance). Think ecosystem services and alike.

    It is also important to recognize that goods produced from recycled materials or renewable materials (e.g. vegetation) would not be using-up finite resources…. Thus an increase in output need not be bad for sustainability.

  6. It’s a shame that Pure Advantage “case studies” consist almost entirely of boutique luxury goods, and that their statements about Denmark’s wind industry are factually incorrect. (Denmark is not a “success story” because it exports wind. It exports wind power to Norway at virtually no cost because it produces power when the country doesn’t need it)

  7. Samian- the most common definition determines that economic growth occurs when there is an increase in value of goods and services produced during a given period. When the value or return from the sale of goods and services decreases over a period of time it constitutes a recession. Is this what you meant?

    Green thinking says that an increase in the returns from the sale of goods generally means an increase in the quantity produced and given that most resources are finite this would be unsustainable. It is possible to increase prosperity without relying on continual growth.

  8. Sort of like that Murphy’s Law corollary – “All great discoveries are the result of a mistake. The better the funding the longer it takes to make the mistake”

    – eh?

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