Measuring the transformation of the economy: green growth indicators - Policy Perspectives 2016 by OECD

Measuring the transformation of the economy: green growth indicators policy perspectives 2016 2016

In 2009, Ministers from the 34 OECD countries signed a Green Growth Declaration, committing to â&#x20AC;&#x153;strengthen their efforts to pursue green growth strategies as part of their responses to the crisis and beyond, acknowledging that green and growth can go hand-in-hand.â&#x20AC;? To date, 44 countries have adhered to the Declaration.

policy Perspectives

Measuring the transformation of the economy: green growth indicators Building on this Declaration, the OECD launched in May 2011 its Green Growth Strategy which provides recommendations and measurement tools to support countriesâ&#x20AC;&#x2122; efforts to achieve economic growth and development. The strategy proposes a flexible policy framework that can be tailored to different country circumstances and stages of development.

OECD definition of green growth The OECD defines green growth as a model that aims at fostering economic growth and development while avoiding unsustainable pressure on the quality and quantity of natural assets, thus ensuring that these assets continue to provide the resources and environmental services on which our well-being relies.

Greening growth is necessary in order to overcome risks related to the business-as-usual scenario, which erodes natural capital at a pace that threatens development. The green growth concept does not replace the sustainable development one: it is meant to be one of the practical mechanisms for realising the goals of sustainable development (OECD, 2012).

OECD: Measuring the transformation of the economy - green growth Indicators

The OECD green growth measurement framework and indicators Measuring progress towards green growth, analysing the sources of green growth and identifying relevant indicators for decision-makers and the wider public is essential for assessing green growth policies. The OECD has supported global efforts to promote and monitor green growth, and facilitates the exchange of experience and good practice on developing indicators and applying a coherent and consistent green growth measurement framework. In this context, the OECD developed a conceptual measurement framework

(Figure 1) that combines the main features of green growth with the basic principles of accounting and the pressure-state-response (PSR) model1 used in environmental reporting and assessment. Indicators in this framework can also be used to monitor progress towards the United Nations Sustainable Development Goals (SDGs), for instance for Goal 6: Ensure availability and sustainable management of water and sanitation for all and Goal 12 Ensure sustainable consumption and production patterns.

Figure 1: OECD conceptual measurement framework for green growth E CO NO MIC AC T I V I T I ES : P R O D U C T I O N , CONSU M PT ION, T R ADE inputs

outputs

PRODUCTION

CONSUMPTION

POLICIES measures, opportunities

4 labour

taxes subsidies

income + Recycling re-use, remanufacturing, substitution

capital

INVESTMENTS goods & services

resources

energy and raw materials

residuals

pollution and waste

regulations

investment innovation

amenities, health

water, land, biomass, air

education, training, jobs, trade

sink functions

2 resource functions

NATURAL ASSET BASE

service functions

Note: The OECD conceptual measurement framework for green growth starts with the consumption, production and trade facets of the economy, then dwells upon the natural asset base on which the economy relies, and on the policy responses and economic opportunities generated.

Source: OECD (2014), http://doi.org/4f6. The PSR model is based on the concept of causality: human activities exert pressures on the environment and change its quality and quantity of natural resources (state). Society responds to these changes through environmental, general economic and sectoral responses.

Over the last decade, statistical systems in the Eastern Europe, Caucasus and Central Asia (ECCCA) region have seen significant improvements. These include, for example, a widening coverage of data collection, gradual adoption of international statistical standards and the development of new statistical products, including online databases. However, the lack of solid evidence on the economic consequences of natural capital depletion and environmental degradation is often a barrier in promoting greener production and consumption. To improve the situation, several countries in the EECCA region are initiating the production of data on the environment and economy nexus in accordance with the System of Environmental and Economic Accounting (SEEA) framework,2 and are working towards the implementation of a Shared Environmental Information System (SEIS) developed by the European

Environment Agency (EEA). Environmental ministries, in partnership with ministries of economy and the statistical office, can catalyse a further shift in development planning by adopting new analytical tools to factor the costs of natural capital depletion into their decision-making.

policy Perspectives

OECD: Measuring the transformation of the economy - green growth Indicators

In the countries of the European Union (EU) Eastern Partnership (EaP) (Armenia, Azerbaijan, Belarus, Georgia, Republic of Moldova and Ukraine), the OECD teamed up with the European Union to implement the EaP GREEN project,3 which helps these economies to move towards a green economy. In this context, a Guide on Measuring the Green Transformation of the Economy, has been developed to help governments in the EaP countries in establishing national frameworks for monitoring and analysing the transition towards green growth and to support them in developing national Green Growth Indicators (GGIs), building on the SEEA and SEIS.

System of Environmental and Economic Accounting (SEEA) The SEEA is a world-wide statistical standard adopted at the UN in 2012 to facilitate the combination of environmental and economic data. It provides a consistent, coherent and comprehensive framework for integrating economic and environmental statistics with internationally agreed standard concepts, definitions, classifications, accounting rules and tables. International organisations, including the OECD, recommend that most data used for green growth measurement should, where possible, be produced in accordance with the SEEA framework (OECD, 2011 and 2014). A number of the indicators from the OECD green growth measurement framework can be derived from the SEEA central framework. For instance, indicators for environmental efficiency and resource efficiency can be derived from the physical flow accounts. By applying the SEEA framework, monetary and physical data can easily be combined in a consistent format, for example for calculating intensity and productivity ratios. And macro-level indicators can be broken down by economic sector and by industry, to show structural changes over time, to analyse environmental pressures exerted by different industries, and to distinguish government responses from those of the business sector or private households (OECD, 2014).

Shared Environmental Information System (SEIS) and green growth The European Environmental Agency (EEA), in co-operation with several partners that include UNECE, UNEP and OECD, is working towards the implementation of a Shared Environmental Information System (SEIS) to improve the collection, exchange and use of environmental data and information across the pan-European region (including all EECCA countries). With the support of technologies such as the internet, the approach would link all existing data and information flows relevant at the country and international levels to enhance the availability of integrated, relevant, high quality, timely and easily accessible environmental information. One of the principles of SEIS states that information should be collected once, and shared for multiple purposes (OECD et al. 2015). While many indicators describing the environmental and resource productivity of the economy, the natural asset base, and the environmental quality of life are similar, policy responses, the socio-economic context and demand-based indicators are not covered under SEIS. The development of green growth indicators aims to fill this gap.

The SEEA framework has been developed under the auspices of the UN with the participation of the OECD and other international organisations. http://unstats.un.org/unsd/envaccounting/seea.asp.

The EaP GREEN, Greening Economies in the Eastern Neighbourhood, is funded primarily by the European Commission (EC) and implemented by the OECD in partnership with UNEP, UNIDO and UNECE.

OECD: Measuring the transformation of the economy - green growth Indicators

To ensure effective policy design supporting green growth, sound information on physical characteristics of the natural capital and its interactions with other forms of capital is needed. Experiences from the OECD’s work on Green Growth Indicators can help countries to implement a measurement framework to ensure that the necessary data are collected.

balanced coverage of the key features both the “green” and “growth” dimensions, with particular attention to indicators capturing the interface between the two. Indicators should be analytically sound and benefit from a consensus about their validity.

Besides being measurable, indicators have to be policy-relevant, meaning that they should provide a

The OECD set of Green Growth Indicators Building on the OECD work on the implementation of the SEEA, the OECD elaborated a set of GGIs in line with the main components of the measurement framework. The indicators were selected from a broad range of

data and indicators that are already part of the work of OECD and partner organisations and supplemented with a few proposals for new indicators (Figure 2).

Figure 2: OECD Green Growth Indicators: foundations and overall indicator architecture

UN SDGs Measuring the progress of societies – GDP and beyond

OECD indicators and statistical databases

• Member countries • Education • IGOs • UNEP • UNECE • EU • World Bank • Economic performance

• Environmental performance • Material ﬂows and resource productivity • Science & Technology • Innovation • Entrepreneur-ship

• National accounts • Energy • Agriculture • Productivity • Employment

Source: OECD (2014).

• Trade

• Transport

Monitoring progress towards Green Growth

Environmental and resources productivity

Natural asset base and environmental quality

Environmental quality of life

Economic opportunities and policies Socio-economic context

Measuring Well Being

• Better Life Index • How's Life? • Income inequality

SEEA

...that indicators are useful to reduce the number of measurements and parameters that would normally be required to give an exact presentation of a situation. This simplifies the communication of the measurement results.

policy Highlights

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policy Perspectives

OECD: Measuring the transformation of the economy - green growth Indicators

Indicators used in policy-making establish baseline definitions, targets and benchmarks that allow national and international comparison. They are also used to monitor and report on performance, which contributes to raising awareness.

The OECD framework for monitoring progress towards green growth explores four inter-related groups of indicators describing:

the characteristics of growth that can be used to interpret GGIs in the light of national socio-economic circumstances.

•

The environmental and resource productivity of the economy.

Under these four headings, 25 to 30 indicators were identified on the basis of OECD work and experience.

•

The sustainability of economic and environmental assets.

•

The environmental dimension of quality of life.

A small sub-set of indicators, known as headline indicators, has been identified to facilitate communication with policy makers, the media and citizens.

•

The economic opportunities and policy responses.

The four groups are complemented by indicators that describe the socio-economic context and

Environmental and resource productivity

Economic opportunities and policy responses

The proposed indicator set is neither exhaustive nor final, and has been kept flexible so that countries can adapt it to different national contexts.

The natural asset base

The environmental dimension of quality of life

Indicators that describe the socioeconomic context and the characteristics of growth complete the picture.

OECD: Measuring the transformation of the economy - green growth Indicators

The environmental and resource productivity of the economy GGIs build on the interaction between economic growth and the environment, central to this is the environmental and resource efficiency of production and consumption. Progress toward green growth can be monitored by relating the use - across time, place and sectors - of environmental services in production to the output generated. Environmental services are functional attributes of natural ecosystems (land, water

and air) and natural resources and materials (energy, pollutants and other residuals). Productivity is commonly defined as a ratio between the volume of output and the volume of inputs. In other words, it measures how efficiently production inputs, such as labour and financial capital, are being used in an economy to produce a given level of output.

The OECD GGIs under this heading focus on: Environmentally adjusted multi-factor productivity,4 which accounts for the role of environmental services in productivity growth. Economic growth can be increased either by raising the labour and capital inputs used in production, or by improving the overall efficiency in how these inputs are used together, i.e. higher multifactor productivity (MFP) growth. Growth in MFP is measured as the residual growth, i.e., that part of GDP growth that cannot be explained by growth in labour or capital input (OECD, 2013c).

Carbon and energy productivity, which characterises, among other things, the environmental and economic efficiency with which energy resources are used in production and consumption (Figure 3). Resource productivity, which characterises the environmental and economic efficiency with which natural resources and materials are used in production and consumption. Higher resource productivity will minimise the amount of resources that the economy requires and reduce waste generation. Important resources and materials include mineral resources (metallic minerals, industrial minerals, construction minerals); biotic resources (food, feed, wood); water; and nutrients.

Figure 3: Carbon productivity in EECCA countries GDP PPP (billion 2005 US dollars) per unit of CO2 emissions from fuel combustion

4 OECD 2013 3

1990 2013

OECD 1990 2

Armenia

Azerbaijan

Belarus

Georgia

Kazakhstan Kyrgyzstan

Moldova

Russian Federation

Tajikistan Turkmenistan Ukraine

Uzbekistan

Note: Carbon productivity is calculated with real GDP generated per unit of CO2 emitted (USD/kg) from combustion of coal, oil, natural gas and other fuels. The estimates of CO2 emissions are obtained from the IEAâ&#x20AC;&#x2122;s database of CO2 emissions from fuel combustion. GDP is expressed at constant 2005 USD using PPP. Greener growth implies generating more GDP with emitting less carbon emissions or other pollutants.

Source: OECD (2015) Energy Statistics. Using CO2 from Fuel Combustion and GDP PPP (billion 2005 US dollars). 4

This indicator is not yet fully measurable.

The environmental and resource productivity of the economy‡ CO2 productivity Production-based CO2 productivity (S) GDP per unit of energy-related CO2 emitted

Carbon & energy productivity

Demand-based CO2 productivity (S/M) Real income per unit of energy-related CO2 emitted

Energy productivity Energy productivity GDP per unit of TPES (S) Energy intensity by sector (manufacturing, transport, households, services) (S/M)

Data sources and notes National GHG inventories submitted to the United Nations Framework Convention on Climate Change (UNFCCC), covering emissions from stationary sources. CO2 emissions from fossil fuel combustion (all EaP countries) in the International Energy Agency (IEA) energy databases.

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OECD: Measuring the transformation of the economy - green growth Indicators

Energy supply and consumption, available from the IEA (all EaP countries). Energy supply and use, electric power transmission and distribution losses, available from the World Bank (all EaP countries).

Share of renewable energy sources in TPES or in electricity production (S)

Material productivity (non-energy) Demand-based material productivity (M/L) (comprehensive measure; original units in physical terms) Real income per unit of materials consumed, materials mix.

Resource productivity

Production-based (domestic) material productivity GDP per unit of materials consumed, materials mix - Biotic materials: food, other biomass - Abiotic materials: metallic minerals, industrial minerals. Waste generation intensity and recovery ratios (M/L) by sector, per unit of GDP or value added, per capita.

Nutrient flows and balances (L) • Nutrient balances in agriculture per agricultural land area and change in agricultural output (*) (S/M)

Water productivity Value added per unit of water consumed, by sector (M)

Multifactor productivity

The OECD “database on material flows”, (for OECD countries). Database on material flows (all EaP countries), available from the Sustainable Europe Research Institute (SERI) and the Vienna University of Economics and Business.

Multifactor productivity reflecting environmental services (M/L) (comprehensive measure; original units monetary terms)

Waste generation from economic sectors, in national state-of-the-environment reports and statistical yearbooks (in EaP countries). National waste generation, collected by the United Nations Statistics Division (UNSD) and UNEP. Hak et al. (2013) examined resource efficiency issues in the EECCA region using a material flows database with mainly FAO and IEA statistics. Use of mineral and organic fertilisers, agricultural outputs collected by agriculture or environment ministries, statistical agencies. Consumption of nitrogen and phosphate fertilisers, published in FAOSTAT (Agri-Environmental Indicators) and World Bank databases. Water use, collected by national environmental authorities (measurement methods vary among EaP countries). Total freshwater use by sector, available in the Questionnaire on Environment Statistics (UNSD, UNEP, 2013).

This indicator is not yet fully measurable.

The data sources are based on OECD (forthcoming) Measuring The Green Transformation Of The Economy: Green Growth Indicators Guide, EaP GREEN. Based on OECD (2014), S = Short term, M= Medium term, L = Long term. * proxy indicator when the main indicators are not available.

‡

OECD: Measuring the transformation of the economy - green growth Indicators

The natural asset base Natural resources are a major foundation of economic activity and human welfare. Their stocks are part of the natural capital and they provide raw materials, energy carriers, water, air, land and soil. Natural resources differ in their physical characteristics, abundance and value to countries or regions. Their efficient management and sustainable use are key to economic growth and environmental quality.

Progress can be monitored by looking at stocks of natural resources and other environmental assets along with flows of environmental services. This can be done by using indicators that reflect the extent to which the asset base is being maintained, in terms of quantity, quality or value. The main issues of importance to green growth under this heading include:

In the context of green growth, net benefits from resource use have to be optimised by:

â&#x20AC;˘

Availability and quality of renewable natural resource stocks, including freshwater, forests and fish (Figure 4),

â&#x20AC;˘

Availability and accessibility of non-renewable natural resource stocks, particularly mineral resources such as metals, industrial minerals and fossil energy carriers,

â&#x20AC;˘

Biological diversity and ecosystems, including species and habitat diversity and the productivity of land and soil resources.

1. Ensuring adequate supplies of renewable and nonrenewable resources to support economic activities and economic growth. 2. Managing environmental impacts associated with extracting and processing natural resources to minimise adverse effects on environmental quality and human health. 3. Preventing natural resource degradation and depletion. 4. Maintaining non-commercial environmental services.

Figure 4: Renewable freshwater resources

Per capita, in cubic meters, 2013 20000

30054

18000 16000 14000 12000 10000 8000 6000 4000 2000 0 ARM

AZE

Source: The World Bank (2015).

BLR

GEO

KAZ

KGZ

MDA

RUS

TJK

TKM

UKR

UZB

The natural assest base

Natural resource stocks

Index or natural resources

stocks

Still being tested; aims to measure the availability of natural resources starting with sub-soil assets.

Comprehensive measure expressed in monetary terms (M).

Fresh water resources Available renewable freshwater resources (groundwater, surface water) and related abstraction rates or water stress (S/M).

Renewable

Data sources and notes

Data collected at hydrological stations (calculated based on long-term measurements of levels, flow rates and inflows/outflows on rivers and lakes as well as groundwater, countrywide precipitation).

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OECD: Measuring the transformation of the economy - green growth Indicators

Precipitation, Internal flow, Inflow of surface and ground waters, total renewable freshwater published in the UNSD Environmental Statistics database (Inland Water Resources); definitions and methods vary by country and over time. More work needed to improve the completeness and historical consistency of data on water abstraction, and renewable water resources estimation methods. Freshwater resources (including renewable internal freshwater resources per capita, withdrawals by different sectors), also available from World Bank.

Forest resources Area and volume of forests, stock changes over time (S/M).

Forests and wooded land area available with varying degrees of completeness (all EaP countries).

Fish resources Proportion of fish stocks within save biological limits (global) (S).

Size of major fish populations exist, but scattered across national and international sources.

Forest resources and their use intensity to be derived from forest accounts and FAO/UNECE Global Forest Resource Assessments (FRA). Forest area as a share of land area or square km also available from World Bank.

The state of some fish stocks (global level) available from FAO State of World Fisheries and Aquaculture (for a large number of stocks, still not possible to determine the status). Assessments of internationally managed stocks available from regional fisheries management organisations and the International Council for the Exploration of the Sea.

Nonrenewable stocks

Mineral resources: available (global) stocks for selected minerals: metallic minerals, industrial mineral, fossil fuels, critical raw materials; and related extration rates (M).

Land resources: land cover conversions and cover charges from natural state to artificial state (M)

Biodiversity and ecosystems

• Land use: state and changes (*) (S)

Soil resources: degree of topsoil losses on agricultural land, on other land (M) • Agricultural land area affected by water erosion, by class of erosion(*) (S/M)

Wildlife resources (to be further refined) • Trends in farmland or forest bird populations or in breeding bird populations (*) (S/M) • Species threat status, in % species assessed or known (*) (S) • Trends in species abundance (*) (S/M)

This indicator is still being determined.

Time series data on land use (including agricultural land, arable land, forest areas) published by FAOSTAT, World Bank, UNSD Environmental Indicators. (Many countries use own land types classifications and methodologies for land cadastre, not compliant with international standards.) Further work needed to harmonise classifications and definitions, and exploit satellite images to monitor changes in land cover.

Extent and pace of biodiversity degradation by species, monitored by International Union for the Conservation of Nature (IUCN); country level data on threatened species available in its “Red List of Threatened Species”. Threatened bird, mammals and plants species for year 2015, available from World Bank. County data on endangered species, as submitted to the Convention on Biological Diversity (CBD). The definitions as per IUCN standards applied to varying degrees by countries. Historical data generally not comparable or not available.

OECD: Measuring the transformation of the economy - green growth Indicators

The environmental quality of life life. Not only do people benefit from environmental services, such as access to clean water and nature, but their choices are also influenced by environmental amenities.

Environmental outcomes are important determinants of human health and well-being. They demonstrate that production and income growth may not always be accompanied by a rise in well-being. Degraded environmental quality can result from and cause unsustainable development patterns. It can have substantial economic and social consequences, from health costs and lower labour productivity to reduced agricultural output, impaired ecosystem functions and a generally lower quality of life.

The main aspects of importance to green growth include:

Environmental conditions affect human health through exposure to air and water pollution, hazardous substances and noise, as well as through indirect effects from climate change, variations in water cycles, biodiversity loss and natural disasters that affect the health of ecosystems and damage people’s property and

•

Human exposure to pollution and environmental risks, the associated effects on human health and quality of life, and the related health costs and impacts on human capital (Figure 5).

•

Public access to environmental services and amenities, or the level and type of access various groups have to environmental services such as clean water, sanitation, green spaces and public transport.

Figure 5: Air pollution in EECCA countries Population exposure to PM2.5 (micrograms/m3)

μg/m³ 50 45 40 35 30 25 20 15 10

1995

2000

2013

Source: OECD (2016), “Green Growth Indicators”, OECD Environment Statistics (database). DOI: http://dx.doi.org/10.1787/data-00665-en.

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The environmental dimension of quality of life

Environmental induced problems & related costs (L) (e.g. years of healthy life lost from degraded environmental conditions) Environmental health and risks

• Population exposure to air pollution (*) (S/M).

Data sources and notes

Internationally comparable measures of population exposure to air pollution can be derived from satellite-based measurements for PM2.5 (but less precise than ground-based measurements). Urban-population-weighted PM10 concentrations (country aggregates, annual means), available from the World Bank (all EaP countries); (monitoring techniques, sampling frequencies and location of monitoring stations vary by country and over time).

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OECD: Measuring the transformation of the economy - green growth Indicators

National ground-based measurements of PM2.5, PM10 and O3, available as per standards of the UNECE environmental indicators (all EaP countries). Country profiles of environmentally induced health problems (all EaP countries) as per the Global Burden of Disease (GBD) study, available from the Institute for Health Metrics and Evaluation (IHME). Air pollution including by PM2.5 (all EaP countries, up to 2013), also available from World Bank.

Exposure to natural or industrial risks and related economic losses (L)

Access to sewage treatment and drinking water (S) Environmental services and amenities

• Population connected to sewage treatment (at least secondary, in relation to optimal connection rate) • Population with sustainable access to safe drinking water

Share of population connected to sewage treatment plants, available (all EaP countries) in the UNSD database (not always up-to-date, information on level of treatment partial). Estimates of share of population using different sources of drinking water and share of the population with access to improved sanitation facilities, available from the WHO/United Nations Children’s Fund (UNICEF) Joint Monitoring Programme (JMP) for Water Supply and Sanitation.

OECD: Measuring the transformation of the economy - green growth Indicators

Economic opportunities and policy responses Governments play a key role in fostering green growth by: •

Creating conditions that stimulate greener production and consumption through policy instruments.

•

Encouraging co-operation and sharing of good practices among enterprises.

•

Developing and promoting use of new technology and innovation.

•

Increasing policy coherence.

The main challenge is to harness environmental protection as a source of growth, international competitiveness, trade and jobs. The main issues of importance to green growth under this heading are: •

Technology and innovation, as important drivers of growth and productivity. Innovation can spur new markets, contribute to job creation, and facilitate the diffusion of knowledge. Technology and innovation are important for managing natural resources and raw materials and minimising the pollution burden.

•

Production of environmental goods and services, as important aspect of the economic opportunities that arise in a greener economy.

•

International financial flows facilitate investment in green infrastructure and uptake and dissemination of technology and knowledge, foster cross-country exchange of knowledge and contribute to meeting development and environmental objectives.

•

Prices, taxes and transfers provide important signals to producers and consumers. They serve as tools to internalise externalities and influence market participants to adopt more environmentfriendly behaviour patterns.

Ideally, these indicators should be complemented by indicators on regulation, training and skill development. However, data availability and comparability of regulatory measures across countries hamper the construction of such indicators.

Economic opportunities and policy responses R&D expenditure of importance to green growth (S/M) - Renewable energy sources (% of energy-related R&D) (S) - Environmental technology (% of total R&D, by type) (S)

Technology and

- All purpose business R&D (% of total R&D) (S)

Data sources and notes

Government R&D expenditure data, available (all EaP countries) in databases of the United Nations Educational, Scientific and Cultural Organization (UNESCO) (although country and time coverage, sampling and estimation methods may vary); also complied in the World Bank database.

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OECD: Measuring the transformation of the economy - green growth Indicators

Energy-related data on government support, published by the IEA.

innovation Patents of importance to green growth (S/M) (% of country applications under the Patent Cooperation Treaty) - Environment-related and all-purpose patents - Structure of environment-related patents

Patent applications data, available in the statistics database of the World Intellectual Property Organization (WIPO). Fragmented data availability for environment-related innovation in some countries. Little information available on non-technological innovation (e.g. in business models, work patterns, city planning or transport arrangements). The number of environment-related inventions is expressed as a percentage of all domestic inventions (in all technologies). This indicator uses patent data across a wide range of environmentrelated technological domains (ENVTECH).

Environmental-related innovation in all sectors (M)

Production of environmental goods and services (EGS) (*) (M)

Environmental goods and services

International financial flows

- Gross value added in the EGS sectof (% of GDP) - Employment in the EGS sector (% of total employment)

International financial flows of importance to green growth (L) % of total flows and % of GNI - Official development assistance (S) - Carbon market financing (S) - Foreign direct investment (M/L)

Prices and

Environmentally related taxation (S) - Level of environmentally related tax revenue (% of GDP , % of tax revenues, in relation to labour-related taxes)

transfers

- Structure of environmentally related taxes (by type of tax base) Energy pricing (S) (share of taxes in end-use prices)

For selected countries and sectors, share of employment in the environmental products sector, including activities in recycling, collection, purification and distribution of water, sewage and refuse disposal, and sanitation. â&#x20AC;&#x153;International financial flowsâ&#x20AC;? indicators to be reformulated to be relevant to national contexts. Official Development Assistance allocated to environmental protection activities can be expressed as a percentage of total sector-allocable ODA or gross national income.

Environmentally related taxes include taxes on energy products (for transport and stationary purposes), motor vehicles and transport, waste management, ozone-depleting substances and other environmentally related taxes. Cover road fuel prices and taxes for diesel and unleaded petrol; prices for end-use energy, light fuel oil, electricity and natural gas for industry and households.

Water pricing and cost recovery (tbd) (S/M) To be complemented with indicators on: Environmentally related subsidies (M/L) Environmentally related expenditure: level and structure (L)

Regulations and management

Indicators to be developed

approaches

Training and skill

Indicators to be developed

development

OECD: Measuring the transformation of the economy - green growth Indicators

The socio-economic context Indicators on the socio-economic context provide important background information, particularly with regard to economic growth, productivity and competitiveness (Figure 6). They also provide information on demography, health, education and income inequality along with key features of the labour market that can sustain job creation and facilitate labour markets adjustments.

Such information is useful to track the effects of green growth policies on growth, to establish links to social concerns such as equity and inclusion, and to interpret GGIs in the light of national socio-economic circumstances.

Figure 6: GDP by sector in EECCA countries KAZ GEO

KGZ

5% 27%

36%

17%

24%

59%

MDA 56%

36%

67%

BLR

15%

17%

42%

68% 49%

RUS 4%

AZE

Agriculture Services

60%

Industry

36% 58% 58%

TJK

22%

ARM

21%

29%

TKM UZB

UKR

50% 19% 34%

25%

12%

63%

Note: 2014 except for Tajikistan (2013) and Turkmenistan (2012). Source: World Bank (2015) World Bank Indicators, data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG.

51%

15%

48% 37%

47%

27%

The socio-economic context and characteristics of growth

Economic growth and structure - GDP growth and structure: market and government production and the associated economic activity (S). - Net disposable income (or net national income): average material well-being of individuals and households (S/M).

Economic growth productivity and competitiveness

Data sources and notes

Available, based on international statistical standards such as the System of National Accounts (SNA) from national statistical agencies, and international sources e.g. World Bank (GDP, adjusted net national income, consumer price index).

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OECD: Measuring the transformation of the economy - green growth Indicators

Productivity and trade - Labour productivity: GDP per hour worked (S). - Multi-factor productivity: increase in economic output that cannot be explained by increases in economic inputs, which raises domestic income (M). - Trade weighted unit labour costs: average cost of labour per unit of output produced (M). - Relative importance of trade: total trade flows, including exports and imports of goods and services, over GDP (S). Inflation and commodity prices - Consumer price index: average changes in the prices of consumer goods and services purchased by households (S). - Commodity prices: prices of primary commodities food (crude oil, minerals, ores and metals) traded on the world market (S).

Labour

Labour markets - Labour force participation: share of economically active working-age population (S).

Available from national economic, labour and social statistics (comparable data on labour market conditions may be difficult to obtain for long time series).

- Unemployment rate: share of people unemployed relative to the number of persons in the labour force (S).

Number of years of healthy life expectancy (to be calculated and more regularly updated, to establish closer links with environment-related health issues).

market, education and income

Socio-demographic patterns - Population growth, structure and density (number of inhabitants per square kilometre of total area) (S).

Labour market indicators and socio-economic indicators, collected by the World Bank.

- Life expectancy (average number of years a new-born could expect to live) and healthy life years (number of years spent free of activity limitation) (S/M). - Income inequality represented by the GINI coefficient (S/M). - Educational attainment: level of and access to education (S).

OECD: Measuring the transformation of the economy - green growth Indicators

Green growth indicators in practice Steps towards green growth measurement Countries interested to apply the OECD green growth measurement framework may start with a national pilot testing of the GGI set. The process of the national reflection on the measurement framework should have clear timeframes, including milestones and should be participatory. Although the following steps are suggested, the process and scope of work can be adjusted depending on the national context. The pilot testing can result in the production of an expert analytical paper and a data-based publication.

Identifying awareness and demand

As a first step, it is important to evaluate to what degree decision-makers are aware of the impact of inefficient environmental and natural resources management on fiscal revenues and the level playing field for businesses. Similarly, it is important to see if there is demand for information on green growth issues and where it comes from. Awareness and demand can lead to strong support among decision-makers for the exercise. A pilot application of the OECD set of GGI can also help to catalyse awareness and demand where they are nascent, and facilitate the development of green growth policies.

Setting a schedule

A prerequisite for a timely implementation is good inter-agency communication and a clear agreement on milestones and division of responsibilities. According to internal and external capacities available for the exercise, a timeline for the pilot testing should be defined at an early stage of the project.

Identifying stakeholders

It is highly desirable for the Ministry of Economy to assume leadership in the process, since its ultimate goal is to better inform economic decisions. At the same time, the main environmental authority should also have a strong voice in the process. Statistical agencies should be involved as their expertise can be of benefit for statistical coherence. The involved ministries may wish to establish an inter-ministerial supervisory group for a regular exchange. Development partners could usefully contribute through knowledge transfer. Stakeholders from academia, non-governmental organisations (NGO), and from the private sector may wish to contribute to the process.

Expert analysis

The experts, including government professionals and/or independent experts from NGO or academia, can work on the preparation of two products: an expert paper and a data-based publication. The expert paper will assess the feasibility of a regular measurement of progress towards green growth and can be completed by a data-based publication. Countries can follow the steps listed below to develop their expert paper: 1. Identifying indicators within the national measurement framework The work on the expert paper should start by clarifying the extent to which the OECD set of green growth indicators is relevant in their country according to the currently collected data and a thorough assessment of national policy priorities. Since the OECD framework is not exhaustive and may not fully reflect country priorities, the expert paper can include a list of other green growth indicators that are relevant for the national use. 2. Identifying data sources and providers For each indicator that is selected for the framework, a detailed analysis of the data sources should be performed to ensure consistency in the scope, the methodology and the time-series covered of the available data.

4. Identifying headline indicators

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OECD: Measuring the transformation of the economy - green growth Indicators

Headline indicators should be identified nationally to facilitate communication of results of the green growth assessment with policy makers, the media and citizens. They have to cover key national priorities, capture the nexus between the environment and the economy and reflect the multiple dimensions of green growth. They should be measurable and comparable across countries to enable international benchmarking. For communication purposes, the OECD suggests six headline indicators: carbon and material productivity, environmentally adjusted multifactor productivity, a natural resource index, changes in land use and cover, and population exposure to air pollution. As national policy priorities and data availability differ, however, it is likely that a nationally adjusted set of headline indicators better represents the specific situation in the EECCA region. 5. Analysing steps towards a regular measurement practice In order to ensure that the pilot testing of green growth indicators is transposed into a regular measurement practice, a thorough analysis of the institutional framework is required. Such analysis should take stock of the institutional procedures for data collection and analysis and suggest steps to adjust the procedures for data collection by statistical agencies and other bodies to enable the regular collection of data underpinning the GGIs.

3. Structuring the measurement framework The national set of GGIs have to follow the same logic and structure as the OECD set of GGIs but the importance given to the various components may differ. The available set and methodologies are tailored, in particular, for a cross-cutting use. Sectoral GGIs may need to be identified, starting with priority sectors.

OECD: Measuring the transformation of the economy - green growth Indicators

Stakeholder consultations

Electronic and face-to-face consultations need to be organised to facilitate the exchange between the stakeholders involved in the project. Regular exchange within the inter-ministerial supervisory group should be held throughout the process.

Moreover, wider consultations should be organised, at different stages of the project, with the involved experts and stakeholders from NGOs, academia and private sector.

Finalisation of the expert paper and the data-based publication

The expert paper should address the needs and feasibility for a regular green growth measurement in terms of the development and application of the national measurement framework on green growth and share lessons learned from the pilot project. A second core product of the process should be a publication resulting from the pilot application of the OECD set of GGIs. Leadership in its preparation could be taken by an institution within the government or outside it. With respect to experiences in processing and disseminating, the national statistical agency may be a natural choice.

The report should present the indicators selected for the national framework and show trends. It is recommended that a number of issues such as the definition, policy relevance, data sources and references are covered for each selected indicator. An analysis of the available data that may include trends, assessments of policy targets and international comparisons which can be supported by visuals such as graphs, charts, and dashboards.

Towards measuring the green transformation of the economy in Kyrgyzstan In Kyrgyzstan the national programme to measure progress towards green growth was launched in preparation of the Rio+20 Summit in 2012. After the Summit, a scoping meeting on the pilot testing of Green Growth Indicators was convened by the Kyrgyz Ministry of Economy. Its participants included officials from the host Ministry, the State Agency on Environmental Protection and Forestry Management, the National Statistical Committee, UNDP and the Central Asia’s Regional Environmental Centre. The group decided that the national measurement framework. Like in other countries in the region, environmental and developmental challenges are closely interlinked. The following sectors have been identified as a priority for the green growth measurement framework in the Kyrgyz Republic: (i) water; (ii) energy; and (iii) agriculture. Since 2013, the statistical annual publication “The Environment in the Kyrgyz Republic” of the National Statistical Committee, contains a section on green growth indicators existing in the system of the state statistics and includes data on more than 40 GGIs. In February 2015, the government of Kyrgyzstan approved a set of 65 indicators, based on the OECD framework, to monitor and evaluate the country’s progress towards a green transformation of the economy.

Dissemination

A communication strategy needs to be developed to make the expert paper and the data-based publication of GGIs known by relevant stakeholders. This can include a shared (one-stop-shop) website with easy accessible online documents and wide dissemination campaign through national media. The use of headline indicators can here be helpful.

Based on the suggestions made in the expert paper, an inter-agency group should coordinate and implement follow-up action. This could include, for example, the identification of focal points for green growth measurement in the relevant ministries.

Use of OECD set of GGIs The practical application of the OECD set of GGIs started in OECD member states prior to its official launch with the Netherlands releasing the first report of this kind in 2011. Several other countries have applied and adjusted the OECD green growth measurement framework and indicators nationally, including Korea (2012), Germany (2012), Denmark (2012), the Czech Republic (2013), Slovenia (2014) and the Slovak Republic (2014). A pilot study of green growth indicators in Latin American and the Caribbean countries was also undertaken.

Countries followed different approaches in the use and presentation of green growth indicators. While some countries used the OECD proposed thematic grouping of indicators, some adjusted the structure such as the Netherlands or Denmark. Most countries have put their own trends in perspective with established targets and international comparison to provide additional information.

policy Perspectives

OECD: Measuring the transformation of the economy - green growth Indicators

Comparative analysis of GGI application in six countries Additional Indicators

Comparison with targets

International comparison

Dashboard use

NDL

CZE

GER

DNK

SVN

SVK

Publication year

2011/ 2012/ 2015

2011/ 2013

2012

DNK

5 indicators in 2012

2014

CZE

27 indicators in 2013

NLD

36 indicators in 2015

SVK

32 indicators in 2014

GER

27 indicators in 2012 Source: Compiled by OECD, based on national reports.

SVN

14 indicators in 2014

OECD: Measuring the transformation of the economy - green growth Indicators

The experience in Latin America raised various challenges but also highlighted the way the countries can address them (Table 2; CAF-OECD-UNIDO, 2012). First, clear communication is important. This can be achieved in many different ways: producing userfriendly and visually appealing reports (e.g. Paraguay), adopting more concise, standardised reporting (e.g. Colombia, Mexico, Paraguay), complementing the indicator-based report with a summary for policy makers (e.g. Costa Rica), and highlighting concrete policy steps and their inter-linkages to facilitate application of the indicators in national policy agendas (e.g. Ecuador).

added more indicators on a particular natural resource because of its national importance (e.g. Mexico, Colombia and Paraguay). Third, the application of the OECD framework that cuts across different themes and policy issues contributes to a better cooperation among government institutions and helps improve the countries’ environmental information systems and their connection with economic information systems. Finally, exchange of experience and good practices between the participants helps them address data challenges and measurability issues.

Second, the indicators need to be adapted to the national context. This is why some countries have

Challenges faced and ways to overcome them

Challenges Selecting indicators · Reflect adequately national circumstances and policy issues. · Reflect adequately the linkages between economic growth and environmental issues. · Assess each indicator with respect to its relevance, soundness, and measurability. Compiling data and measuring · Identify data sources across different institutions and government levels, and remaining gaps. · Compile the data and organise data flows. · Harmonise the data across national sources and addressing data quality issues, including discontinuity over time. Interpretation and communication · Place the indicators in the country’s socio-economic context. · Interprete the results in view of underlying economic, social and political factors.

Institutional co-ordination and capacity building · Cope with limited (human, financial) resources; · Co-ordinate between national institutions at different levels. · Provide appropriate training and capacity building.

Ways to address the challenges · Adapt the indicators to the national context by developing new indicators on aspects of particular importance to the country. · Ensure that the indicator set encompasses both indicators that are internationally comparable and indicators that are country specific.

· · · ·

Document the data using harmonised formats. Ensure compliance with statistical standards. Organise data flows in a way that enables regular updates. Combine graphics and tables with diagrams and explanatory text to compensate for missing data.

· Provide background information on specific national circumstances. · Be clear about the limitations of the indicators and their interpretation. · Release the indicators through user-friendly reports and public websites. · Adapt the ways of reporting to the various audiences. · Use standardised reporting templates for all indicators. · Establish a network of data providers and indicator users. · Maximise the use of existing data. · Exchange knowledge and learn from peers on: - indicator selection and calculation methods. - data management and quality assurance. · Interpretation of indicators and ways to use and communicate them.

Source: CAF-OECD-UNIDO, 2012.

policy Perspectives

OECD : Measuring the transformation of the economy - green growh Indicators

OECD: Measuring the transformation of the economy - green growth Indicators

Further reading CAF-OECD-UNIDO (2012), Monitoring Green Growth in the Latin America and the Caribbean (LAC) Region: Progress and Challenges, www.oecd.org/greengrowth/Booklet_English_LAT%202015.pdf. Czech Statistical Office (2011), Green Growth in the Czech Republic - Selected Indicators, www.czso.cz/csu/czso/green-growth-in-the-czech-republic-2010-a591berarf. Czech Statistical Office (2013): Green Growth in the Czech Republic – Selected Indicators, www.czso.cz/csu/czso/green-growth-in-the-czech-republic-selected-indicators-2013whvt3a3q88. Danish Energy Agency; Ministry of Climate, Energy and Building; Danish Business Authority; Ministry of Business and Growth; Danish Environmental Protection Agency (EPA) and Ministry of Environment (2012), Green production in Denmark – and its significance for the Danish economy, www.ens.dk/sites/ens.dk/files/policy/green-production-denmark-contributes-significantlydanish-economy/Green%20production%20in%20Denmark%20-%20web%20111212.pdf. Federal Statistical Office of Germany (Destatis) (2012), Sustainable Development in Germany – Indicator Report, www.bundesregierung.de/Content/EN/StatischeSeiten/ Schwerpunkte/Nachhaltigkeit/Anlagen/2012-05-24-indikatorenbericht-2012-englisch.pdf?__ blob=publicationFile&v=2. Federal Statistical Office of Germany (Destatis) (2013), Test of the OECD Set of Green Growth indicators in Germany, www.destatis.de/EN/Publications/Specialized/ EnvironmentalEconomicAccounting/TestOECDGreenGrowth5850016129004.pdf?__ blob=publicationFile. Hak T., Kovanda J, West J, Schandl H and Krausmann F (2013) Resource Efficiency: economics and outlook for Easter Europe, the Caucasus and Central Asia, www.grid.unep.ch/products/3_ Reports/REEO_for_EECCA.pdf. OECD (2011a), Towards Green Growth, OECD Green Growth Studies, OECD Publishing, Paris, DOI: http://dx.doi.org/10.1787/9789264111318-en. OECD (2011b), Towards Green Growth: Monitoring Progress: OECD Indicators, OECD Green Growth Studies, OECD Publishing, DOI: http://dx.doi.org/10.1787/9789264111356-en. OECD (2012), Green Growth and Environmental Governance in Eastern Europe, Caucasus, and Central Asia, OECD Green Growth Papers, No. 2012/02, OECD Publishing, Paris, DOI: http://dx.doi.org/10.1787/5k97gk42q86g-en. OECD, UNECE, UNEP and EEA (2015), The Shared Environmental Information System And Green Growth. Mapping of UNECE environmental and OECD green growth indicators and their dataflows, Background paper for the Regional Workshop on the Shared Environmental Information System and Green Growth for countries of Eastern Europe, the Caucasus and Central Asia, Paris, France 10 - 11 March 2015, www.oecd.org/environment/outreach/Paper-OECD-UNECE-indicatorsmapping-dataflows-March2015.pdf. Statistical Office of the Republic of Slovenia (2014), Green Growth indicators for Slovenia, www.oecd.org/greengrowth/Green%20growth%20indicators%20in%20Slovenia%202014.pdf. Slovak Environment Agency (2014), Selected Green Growth Indicators in the Slovak Republic, www.oecd.org/greengrowth/Green%20Growth%20Indicators%20in%20the%20Slovak%20 Republic.pdf.

OECD (2014), Green Growth Indicators 2014, OECD Green Growth Studies, OECD Publishing, DOI: www.oecd.org/env/indicators-modellingoutlooks/green-growth-indicators-20139789264202030-en.htm.

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OECD : The evolving landscape of climate finance for eecca countries

Russian version DOI: http://dx.doi.org/10.1787/9789264256767-ru.

Statistics Korea (2012), Korea’s Green Growth based on OECD Green Growth Indicators, www.oecd.org/greengrowth/Korea’s%20GG%20report%20with%20 OECD%20indicators.pdf. Statistics Korea (2013), Korean Green Growth Indicators 2013, http://kostat.go.kr/portal/eng/pressReleases/15/index. board?bmode=download&bSeq=&aSeq=346871&ord=1. Statistics Netherlands (2011), Green Growth in the Netherlands, www.cbs.nl/NR/rdonlyres/65FA4466-853C-4223-8B697C7872E37DC3/0/2011p44pub.pdf. Statistics Netherlands (2013), Green growth in the Netherlands, www.cbs.nl/NR/rdonlyres/2C613080-F668-439C-B12C98BF361B5ADF/0/2013p44pub.pdf. Statistics Netherlands (2015), Green growth in the Netherlands, http://download.cbs.nl/pdf/green-growth-in-the-netherlands-2015.pdf. UNSD, UNEP (2013), Questionnaire 2013 on Environment Statistics, http://unstats.un.org/unsd/environment/questionnaire2013.html.

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This Policy Perspectives on Green Growth Indicators has been developed by the OECD under the â&#x20AC;&#x153;Greening Economies in the Eastern Neighbourhoodâ&#x20AC;? (EaP GREEN) project, funded by the European Commission and implemented by the OECD in partnership with the UNEP, UNIDO and UNECE.

The OECD implements the EaP GREEN project within the framework of the EAP Task Force which has, for over twenty years, been helping countries in Eastern Europe, Caucasus and Central Asia (EECCA) to integrate environmental considerations into the processes of economic, social and political reform. This policy brief has been produced with the financial assistance of the government of the Netherlands.

For more information www.green-economies-eap.org EAP.Contact@oecd.org