Today we live in a world where greenhouse gas emissions keep growing, air and water pollution is worsening in many developing countries and we continue to lose critical habitats like forests, mangroves and coral reefs.
The last decade has seen the idea of a "green economy" float out environmental economics and into the mainstream of policy discourse. It is no longer a concept promoted only by governments, but is increasingly evident in the private-sector agenda. It promotes a new economic paradigm - one in which material wealth is not earned at the cost of growing environmental degradation, ecological destruction, and social disparities. There is mounting evidence that a transition to a green economy has sound economic and social justification. For governments, this would include levelling the playing field for greener products by phasing out subsidies, reforming policies and providing new incentives, strengthening market infrastructure and market-based mechanisms, redirecting public investment, and greening public procurement. For the private sector, this would involve understanding and seizing the true opportunity represented by green economy transitions across a number of key sectors and responding to policy reforms and price signals through higher levels of financing and investment.
Environmental degradation, pollution, or overexploitations of natural resources hamper economic progress. Lack of action to address health-impairing air and water pollution, for example, is costing some countries the equivalent of 4.0 per cent of gross domestic product (GDP) or more a year. Policy failures account for many perverse incentives in the efficient use of natural resources, and without strong institutions and governance frameworks in place, taking action to reduce environmental risks has a low chance of success.
If the desirability of moving to a green business paradigm is clear to most people, the means of doing so is still work in progress for many. Over the last quarter of a century, the wealth of world economy has quadrupled, benefitting hundreds of millions of people. Sixty per cent of the world's major ecosystem goods and services that underpin livelihoods have been degraded or used unsustainably. This is because the economic growth in recent decades has been accomplished mainly through drawing down natural resources without allowing stocks to regenerate and through allowing widespread ecosystem degradation and loss.
Natural capital is a key factor in sustaining rural productivity, and the degradation of the natural capital base is having predictable negative consequences for agriculture and rural development. Studies have shown that poverty is often highest where land is degraded and also among communities living in areas adjacent to protected areas. The depletion of soil productivity and watershed services has impacts on local growth prospects. When dry zone forests are converted to alternative uses, the human-elephant conflict emerges, taking an ever more severe toll on the poorest sections of society.
None of this is either inevitable or a necessary consequence of a development strategy that relies on infrastructure growth. There are strategies that would enable Bangladesh to simultaneously harness highly inclusive rural growth through mechanisms that promote environmental stewardship. For instance, there is strong evidence that nature-based tourism can act as an engine of sustainable rural growth and provide better rural jobs and higher incomes than are currently available. Likewise, global experience illustrates that protection of key environmental services (such as soils and watersheds) can be a highly cost-effective way of securing a robust and resilient rural development. In short, prevention of environmental damage is typically more efficient and cost-effective than restoring the damaged assets.
In the urban areas, industrialisation has been vital in fuelling growth and providing employment, but it has been accompanied by the familiar suite of environmental problems. With rising prosperity, the volume of waste has risen dramatically and the number of motor vehicles has almost tripled in the last two decades. As a result, problems of congestion, air quality, and solid waste management have emerged as the new challenges of middle-income status. These environmental problems typically bring costs that impair growth prospects and diminish the economy's productivity. There is considerable evidence that inaction is a costly option and hence a key priority for Bangladesh is to find efficient solutions to address the consequences of pollution and solid waste.
Therefore, if Bangladesh's economic growth is to be sustainable, a transition to a green economy seems inevitable. While the government will have to create enabling conditions for a green economy and lead by example, the corporate sector has a responsibility to ensure this transition takes place by introducing fundamental changes in how business is conducted. A study by the World Economic Forum (WEF) identifies 16 emerging-market firms that are turning eco-consciousness into a source of competitive advantage. These companies turn limitations into opportunities. Limitations such as resources, labour, and infrastructure motivate these companies into thinking "out of the box" and turning these opportunities into profit. India's Shree Cement, a company plagued with water shortages, developed the world's most water-efficient method for making cement, in part by using air cooling rather than water cooling. Broad Group, a Chinese maker of air conditioners, taps waste heat from buildings to power its machines. Zangzidao Fishery Group, a Chinese aquaculture company, recycles uneaten fish feed to fertilize crops. Sekem, an Egyptian food producer, set itself the task of reclaiming desert land through organic farming. Similarly, the Bangladesh corporate sector should look beyond the conventional business model and be innovative. We should not wait for the government to lead the way - but the private sector as they are the engine of growth. They should take the initiative to be the engine of "green growth."
Innovative entrepreneurs are to change themselves to do more, so that they become pioneers in the corporate transition to a green economy. Their initiatives for growth and business expansion should take environmental externalities into account. The depletion of natural capital must be compensated. Energy efficiency and renewable energy options should be explored prior to settling for conventional energy sources. Reforest marginal lands to compensate for carbon footprint in necessary. There are perceptions that the corporate sector exploits natural capital for short-term profit. This is the opportunity to show that private sector is shouldering a fair share in Bangladesh's transition to a green economy.
S.K. Sur Chowdhury is the Banking Reforms Advisor of Bangladesh Bank (BB) and former Deputy
Governor of the BB.
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