The Green Economy: Assessing risks and opportunities Key facts and findings of the Green Economy & Trade Report

Trade in the World Economy Trade is a vital element of the global economy -World exports of goods and services grew at a rate of 5% per year , amounting to US$ 22.3 trillion in Merchandise and commercial services exports share of the world’s GDP doubled since 1970 up to 29.3% in In developing countries, this share reached peaks of 45% -Trade between developing countries is the most dynamic segment of global trade in the last decade, increasing from 39.2% of total developing country exports in 2002 to 50% in 2010 Greening trade is an imperative of our times -Expansion of trade → an unprecedented surge in resource consumption as well as significant increases in GHG emissions. To reverse these trends, trade must become more sustainable and responsible 3

Rio+20 Rio+20 reaffirmed trade as an engine for development and sustained economic growth. Focus shifted from potential risks of trade protectionism to the benefits for developing countries when implementing green economy policies UNEP aims to help developing countries capture trade opportunities arising from the implementation of sustainability standards, the integration in sustainable supply chains, and the exchange of EGS, while ensuring that these measures are neither used as trade barriers nor as green protectionist measures with trade partners and multilateral bodies 2

Green Economy & Trade report The report, Green Economy and Trade – Trends, Challenges and Opportunities, explores the nexus between international trade and the green economy 1 ForestsAgriculture Manufacturing Tourism Fisheries Renewable Energy Sustainable trade opportunities Trade related challenges National capacity

Green Economy & Trade report Sustainable or green trade: Trade that does not deplete natural resources, harm the environment or deteriorate social conditions while promoting economic growth Sustainable trade can be closely associated with the following elements: positive social, economic and environmental outcomes from the international exchange of goods and services the generation of economic values the reduction of poverty and inequalities the reduction of environmental impacts from trade-related economic activities the restoration of natural resources 6

Current Trends and Opportunities Developing countries, and especially LDCs, whose exports are still dominated by natural resource based products and raw materials, need to urgently diversify their economies While still representing only a small percentage of the global market, trade in certified products and in EGS is on the rise Developing countries are well-positioned to capitalize on the opportunities to integrate into international value chains for sustainable goods and services The transfer of environmentally sound technologies, through trade and investment-related channels, also promotes economic and social development 5

Economic Sector Analyses Agriculture Rio + 20: importance of agriculture for poverty reduction, food security, livelihoods and achievement of sustainable development Green trade opportunities: 7 Increased international competitiveness Accessing sustainable global supply chains, particularly through B2B certification of sustainable farming practices new markets from sustainably produced crops Organic Fair trade Agro-tourism Technical and management Support services

Economic Sector Analyses Agriculture Large multinational companies made sustainability commitments, which will further drive demand for sustainable agricultural and fishery products The organic agricultural market is projected to rise from US$ 62.9bn in 2011 to US$ 105bn in Increasing demand for sustainable and/or organic products (e.g. organic tea production increased by 2000% between ) The sustainable and socially equitable development of the Nepali tea industry is considered to be pivotal in poverty alleviation and the empowerment of rural women. The Nepali organic tea industry has the potential to significantly build rural employment. Expected growth in the overall sector is estimated to be 15-20% annually Infrastructure and training of workers to comply with Global G.A.P. requirements improve employment conditions at certified firms 7

Economic Sector Analyses Renewable Energy Rio+20: “the need to address the challenge of access to sustainable modern energy services for all...[including through] increased use of renewable energy sources and other low emission technologies” The use of RE could save an equivalent of gigatons of CO 2 emissions between 2010 and 2050 Global market in low-carbon and energy efficient technologies, projected to nearly triple to US$ 2.2 trillion by 2020 Developing countries can significantly increase their exports of renewable energy equipment (e.g. solar panels) and expand their potential to export electricity from renewable sources LDCs face the challenge of having to bridge the digital divide and technology gap in support of sustainable development and poverty eradication Investing in RE technologies also creates new employment opportunities. In 2010, more than 3.5 million people worldwide were estimated to be working, either directly or indirectly, in the RE sector 10

Economic Sector Analyses Tourism Rio+20 Outcome Document emphasizes that well-designed and managed tourism can make a significant contribution to the three dimensions of sustainable development, has close linkages to other sectors and can create decent jobs and generate trade opportunities Tourism generates large export revenues for developing countries and is a key driver of growth for the world economy (tourists account for >9% of global GDP, more than one billion tourists in 2012). In particular, tourism is becoming a significant industry for many LDCs with a direct link to poverty eradication Ecotourism, which focuses on nature-based activities, is the fastest growing sub-sector of the sustainable tourism industry Many developing countries have a comparative advantage in ecotourism, e.g. it is estimated that sustainable tourism in Nicaragua, a country that prominently focuses on its culture and natural environment, has an employment multiplier of two. For every job in the tourism sector, additional local employment is created with higher wages than national averages Countries need to preserve their natural environments to be attractive as tourism destinations On 21 Dec. 2012, the UN General Assembly adopted a resolution entitled calling on UN members to adopt policies that promote ecotourism, highlighting its “positive impact on income generation, job creation and education, and thus on the fight against poverty and hunger” 11

Challenges on the Way to Greener Trade Obstacles such as low levels of literacy, problems in accessing finance, poor transport services and economic infrastructure, and lack of support by public institutions, all hinder the ability of producers and service providers to comply with sustainability certification requirements The complexity of the requirements that producers and service providers have to meet to access sustainable value chains. These can include: food safety regulations sanitary and phyto-sanitary or technical requirements regulations governing organic products proliferation of private standards procurement policies Compliance with more requirements can be costly, notably for small and medium-sized enterprises, and can necessitate technologies and know-how that may not yet be available in developing countries 13

Enabling Conditions for Greening Trade I.Within-border supply-side measures, at the country level, to raise the international competitiveness of sustainable products and services produced by enterprises public investment in key economic infrastructure, technical assistance, targeted education and training programmes, and access to sustainable resources, such as electricity from renewable energy sources green investment = increase employment in the manufacturing sector. Investments allocated to energy efficiency are expected to create an additional m jobs by 2050 phasing out environmentally harmful subsidies; introduction of pricing policies that include environmental and social costs of production and consumption II.Cross-border cooperation to harness the potential for mutually beneficial sustainable trade among neighboring countries: improve physical infrastructure improve trade infrastructure, with a focus on trade facilitation of SPS promote harmonization and establish equivalences so that national regulatory frameworks do not become barriers to exports 12

Enabling Conditions for Greening Trade III.Matters related to the multilateral trading system to facilitate the beneficial integration of countries into the multilateral trading system of sustainable products and services by: building awareness and knowledge identifying common interests to promote sustainable practices and drive the policy reforms needed consulting and cooperating on practical measures encouraging progress in international frameworks, such as the WTO, to help liberalize trade in EGS, and provide other opportunities for collective action to address global challenges 12

Capacity building The report is a key output of UNEP’s Green Economy and Trade Opportunities Project (GE-TOP). In the next phase of GE-TOP, UNEP is committed to assisting governments and other stakeholders in identifying and creating sustainable trade opportunities, and transforming risks and challenges into new pathways to sustainable development and poverty eradication UNEP will focus on applying the report’s findings, in conjunction with partners, through quantitative and policy assessments at the national and sectoral level 12

Thank You Giles Chappell, Trade Expert Economics and Trade Branch, UNEP