Now or Never - Achieving High Quality
Greening Growth
Diji Chandrasekharan Behr
June 7, 2019
Achieving Quality Growth
Enabling Productive Firms and Jobs
Keeping Growth Going
Delivering Productive Infrastructure
Making Growth Inclusive Addressing remaining human capital gaps
Ensuring sustainable management of natural
resources
Greening Growth
Fostering climate smart growth
Greening Growth 2
Ensuring sustainable management of natural
resources
Greening Growth
Fostering climate smart growth
Greening Growth 3
Key Messages
• Unsustainable exploitation of natural assets creates a drag on growth
directly (lowering resource sector outputs) and indirectly (through
interaction with other forms of capital).
• Sustaining growth requires smarter use and better management of
Vietnam’s natural assets and environment. Growth models have focused on
private capital (firms), public capital (infrastructure) and human capital
(people). Sustaining growth will require attention to natural capital (i.e.,
renewable, non-renewables and the environment) which provide the basis
for growth and better living standards.
• A whole-economy approach to greener growth is necessary to sustain
long-term growth – shifts within and between sectors towards greener
policies, products, services, technologies, practices and markets; innovation
for raising productivity; sharper policy instruments; incentives for improved
environmental performance.
Greening Growth 4
Need for Greener Growth is Recognized in Vietnam
• 2016-2020 Socio-Economic Development Plan (SEDP):
• One of the primary objectives: Actively cope with climate change, prevent and cope with
natural disasters, enhance the management of natural resources and environment
protection
• SEDP 2016-2020 – mentioned several ways for augmenting contribution of natural
assets to growth:
• Develop marine economy
• Economic region / economic zone development
• Actively responding to climate change, preventing natural disasters, enhancing natural
resource management and environmental protection
• Have associated strategies – National Climate Change Strategy and Vietnam Green
Growth Strategy, Vietnam’s Nationally Determined Contribution (NDC), and the Plan for
Implementation of the Paris Agreement
Greening Growth 5
Vietnam’s Environmental Performance Lags its Regional Peers
Ranking Environmental Performance Index (2018)
Countries
1 2 1
3
3
21 5
23 5
Regional EPI Ranking
Global EPI Ranking
41 7
8 7
61 49
9
11 60
81 12 11
75
82 13
101
16 EPI ranking 15
17
121
17
121 120 EPI region ranking
141 133 132 19
Greening Growth 6
Low Productivity of Water Constrains
Potential Growth in Key Sectors
Water Productivity Water Uses for Vietnam
6% 3%
90 Agriculture
80
11% Aquaculture
Industry
80%
Municipal
39
33
18 17
12
7 8
4 4 3 5
1 2
Greening Growth 7
Air Pollution has Lowered Per Capita GNI by More Than 3%
Avg Annual Change in Losses from Ambient PM2.5 (1995-2015) versus income level in 2015
Greening Growth 8
Poor Waste Management is Affecting
Human Health and Economic Sectors
• Currently 150 million tons of plastics in the world’s
oceans
• 90% of marine plastic coming from just-in-land 10
rivers. Mekong River (incl. Vietnam) is one of the 10
rivers and estimated to release 23,000 t/yr of
plastic.
• Vietnam is estimated to be 4th largest
global generator of marine plastic waste
• Impact on:
• Human Capital - food safety - 73% percent of
deep-sea fish contained plastics in their
stomach.
• Urban infrastructure: blockage of drainage
systems/sewer system
Greening Growth 9
Low Environmental Sustainability
Could Impact Tourism Competitiveness
Environmental sustainability rankings of Vietnam
(WEF Tourism Competitiveness Index, 2017)
Southeast Asia average
(ex. Vietnam)
Baseline water stress
Vietnam
Coastal shelf fishing pressure
Environmental treaty ratification
Enforcement of environmental…
Forest cover change
Wasterwater treatment
Threatened species
Stringency of environmental…
Particulate matter
Global rank (out of 136 countries) 0 20 40 60 80 100 120 140
Vietnam can, with key actions, avoid situations faced by other SEA countries:
• Philippines: 6 month closure Boracay – cost was US0.4B-USD1.6B
• Thailand: 4 month closure of Ko Phi Phi Leh Island (for an island that usually receives USD
12.6M/yr the impact of closure was significant
Greening Growth 10
Planning and Investment without Attention to
Natural Conditions is Leading to Risks
• 20 million Vietnamese live in the low-lying Mekong Delta
• Need urbanization plans/infrastructure plans that account for natural
conditions and use of natural resources
• Unsustainable exploitation of groundwater is causing land subsidence
(sinking) and has impact on infrastructure
Land Subsidence in Can Tho city
Level of
subsidence
cm/yr
Greening Growth 11
VND 30 trillion/per year of Losses due to Floods and Typhoons
Losses greater than VND130 trillion for extreme years
All Perils Flood Typhoon Earthquake
10 5.5%
5.0%
8 4.4%
3.9%
6 3.3%
% GDP
Billion USD
2.8%
4 2.2%
1.7%
2 1.1%
2/3rd of the damages are from residential assets
0.6%
- 0.0%
500 250 100 50 25 10
Return Period, years
Note: Drought losses are not included.
Greening Growth 12
Advance Greening of Growth by both directly using natural assets
and indirectly augmenting other forms of capital
V. Greening
Growth
Greening Growth 13
Advance Greening of Growth by both directly using natural assets
and indirectly augmenting other forms of capital
Opportunities Risks
Competitive and Innovations that can augment Rising costs from impacts of businesses
innovative firms productive natural assets (incl. SOEs) on natural assets. For example:
• V. Greening
contribution to economic growth, Growth
- Declining productivity
(including in lagging areas). For
- Increased pollution (incl. air, water
example innovations in:
and soil)
- Timber & furniture
- Waste generation
manufacturing
- Use of water for agriculture,
aquaculture and fisheries
- Nature-based tourism
Greening Growth 14
Advance Greening of Growth by both directly using natural assets
and indirectly augmenting other forms of capital
• V. Greening
Growth
Greening Growth
Advance Greening of Growth by both directly using natural assets
and indirectly augmenting other forms of capital
Opportunities Risks
Physical capital “Natural infrastructure�? Infrastructure choices that overlook natural
(Infra-structure) (complementing hard infrastructure) conditions can have negative impact on
provides free public services. For natural, physical and human capitals. For
example: example: • V. Greening
- water management, - Irrigation (erosion, groundwater use) Growth
- reduced erosion in coastal areas - Transport (CO2 emission, erosion)
and areas with steep slopes - Energy (e.g., pollution/CO2 emission,
- reduced impact of flooding unsustainable exploitation of natural
- carbon sequestration assets)
- Urbanization (e.g., groundwater use,
Greening Growth pollution, waste)
Advance Greening of Growth by both directly using natural assets
and indirectly augmenting other forms of capital
• V. Greening
Growth
Greening Growth
Advance Greening of Growth by both directly using natural assets
and indirectly augmenting other forms of capital
Opportunities Risks
Human capital Increasing evidence of the Environmental footprint of individual
(people) productivity enhancing role of a actions (low environmental awareness):
• V. Greening
clean environment (beyond more For example, marine plastics, solid Growth
obvious public health benefits) waste; etc.
Greening Growth
Policies for Greening Growth
Align green objectives with Use Sharper Policy Instruments Build Stronger Constituencies
other sector priorities
• Encourage greater
• Improve measurement and • Use pricing to induce resource awareness of green issues
data – Including Natural efficiency and lower pollution and of natural assets’
Capital Accounts (e.g., user fees, tariffs, etc.) contribution to growth.
• Conduct policy audits (e.g., • Remove harmful subsidies and • Strengthen channels for
for energy sector) other distortions, participation (e.g., through
• Ensure that considerations • Ensure tariffs reflect both citizen groups, NGOs,
of natural provisioning cost and the cost of • Establish legal options/
resource/environment are externalities environmental courts
included in the discussions • Complement pricing with strong
(e.g., industrial parks and regulations and enforcement,
circular economy) • Set ambitious targets
• Innovate for higher • Allow for more flexible and
productivity market-based approaches to
• Incentives for decision meet targets – e.g., trading
makers at all levels of • Tax the “bads�? not the goods .
government (e.g., • Integrated env. objectives in
“scorecards�?, ecological spatial planning and
fiscal transfers). development
• Efficient management of
trade-offs
Greening Growth 19
Illustrative Examples of
Applying Policies for Greening Growth
Greening Growth 20
Using Natural Capital Accounts for Better Policies
• Extend the System of National Accounts with the Australia: Irrigated Agriculture Production
System of Environmental and Economic accounting –
Natural Capital Accounts (NCA) for fisheries, forest,
land, water,
• Benefits countries have derived from setting up NCA:
- Australia: Water accounts inform suitable policy to
tackle drought
- Costa Rica: Energy accounts provided evidence for Botswana: Link between Mineral Revenue and
choosing efficiency strategies that have the largest Human and Physical Capital
impact on people, the economy, and the environment
(i.e., largest gains from reducing energy intensity)
- Botswana - Macroeconomic indicators include mineral
revenues and public finance. Botswana has been good
at investing its mineral revenues into physical and
human capital assets, especially during years of fiscal
surplus
Greening Growth 21
Aligning green priorities and sector objectives:
Using a Circular Economy Framing
• Infusing concept on green growth in
sectors through a circular economy
framework (eco-industrial park, co-
incineration, water, etc.)
• Depending on the country, the focus
of the circular economy can vary:
- Germany (industrial economy) – focus
on material flows and material
availability;
• Netherlands – innovation in material;
public procurement rules about
circular products and services
- China - Circular Economy (since 2000).
PBL Netherlands Environmental Assessment Agency, 2018
Circular Economy Policy Portfolio
(2017), looks at eco-design (both as a
concept and as a policy) and extended
producer responsibility
Greening Growth 22
Benefit of IoT for Alternate Wet and Dry
Innovating to enhance productivity Rice Production
Modernize production – use IoT and modern
technologies to enhance agriculture, aquaculture,
natural asset productivity
• Use of IoT to enhance water productivity in rice
systems (already in VN)
• Improve food safety using blockchain:
• Traceability
• Uses big data
• Help producers
(e.g., Blockchain for tuna in Indonesia;
Walmart)
• Improve forest management using optical
sensors, remote sensing, wireless networks, etc.
to optimize data management and minimize
management costs
Blockchain for Tuna
Greening Growth 23
Use Sharper Policy Instruments to
Change the Trajectory of Coal in Power Generation
• For Vietnam to meet its climate change/NDC targets it needs to reduce the
installation of new coal fired power generation currently planned at up to 50 GW
by 2030. This can only be achieve if the following four strategic areas are
implemented in parallel:
• I: Promoting renewables (particularly solar and wind):
• II: Scaling up energy efficiency (particularly industrial sectors which account
for almost 60 % of electricity consumption);
• III: Promoting natural gas and LNG; and
• IV: Promoting regional power trade (particularly with Laos and China).
• In addition, the current average electricity tariff of US cents 8.1/kWh only covers
operating costs and debt service and not capital costs and further increases are
required for fully cost recover.
Greening Growth 24
Use Sharper Policy Instruments to
Improve Waste Management
• In Vietnam 30% of 660 waste disposal sites are
classified as engineered sanitary landfills LOW TARIFFS IN WASTE
MANAGEMENT IN VIETNAM
• In Vietnam 22% of the collected waste goes to
Real cost Avg. Tariff
treatment facilities not landfills
24
• Improvement of the legal and regulatory
framework is needed for accountability.
• Solid Waste Management targets, norms and
11
minimum standards need to be clearly
7.6
defined and stakeholders held accountable.
4
2
• Non-compliance enforced with a transparent
0
fine system COLLECTION TRANSPORT LANDFILLING
• A transparent financing mechanism with cost-
recovery targets from user fees
Greening Growth 25
Integration of Environmental Objectives in Master Planning
• Environmental and natural resource factors and climate impacts (temperature, rainfall, sea-level rise) are not
confined by administrative or sectoral boundaries (e.g., water pollution, coastal erosion)
• Internalize positive and negative externalities of policies and proposed investments during master planning
process. Must include climate change projections/assumptions.
• Promote regional approach and regional coordination for effective spatial master planning and implementation
of the plan.
Greening Growth 26
Build Strong Constituencies
Coastal cleanup in Vietnam
• Public participation (by individuals, by grass-roots
initiatives, or by well-organized NGOs) should involve a
constructive role that complements (and does not
substitute) official efforts.
• Strong constituencies – are built by providing:
• Access to information
• Opportunity for consultation and to voice concerns (in a
safe space)
• Opportunity for constructive engagement Mangrove planting in Vietnam
• Linking rights with responsibilities
•Encourage coalitions of private stakeholders interested in
greening growth
• Create positive partnerships between public groups,
private coalitions, and local administrations
Greening Growth 27
Thank you