A Green Economy: An Overview

Due to the global recognition of the seriousness of climate change and its ramifications, both development organizations and governments around the world have attempted to mitigate its effects. Government initiatives like the Green Fund are significant steps towards a comprehensively green South Africa and global environmental sustainability. Despite the fact that economic powerhouse nations of the world such as the United States have disproportionately contributed to pollution and thus climate change, it is ironically the emerging economies that will have to deal with the brunt of its effects. Therefore, it is crucial that middle income nations like South Africa forge a path for lower income nations in innovating the current discourse on economic and environmental sustainability.

In June 2012, the United Nations emphasized an economic schema termed ‘green economy’ during their Conference on Sustainable Development in Rio de Janeiro, Brazil.1 It was defined as an economy “that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities.” A green economy should also focus on a low carbon footprint, comprehensive resource efficiency, and social inclusivity.2 Such an economy aims to reduce carbon emissions and pollution, enhance energy and resource use efficiency, and prevent biodiversity degradation and the loss of ecosystems.

Resource Scarcity as an Impetus for Sustainability

Despite the ubiquity of dependence on natural resources as fuel sources in nations across the economic spectrum, the finite nature of petroleum is inescapable.3 The basic principles of market economics indicate that the increasing demand for oil will inevitably ‘peak’ and result in the eventual decline of demand and production. This initial suggestion by Campbell and Laharèrre in 1998 catalyzed academic debate that has yet to cease. However, in recent years, the dialogue has shifted not to whether peak oil will happen, but when.4

Partly fomented by the global financial crisis of 2008, the discourse on sustainability now takes peak oil into consideration, and organizations like the United Nations with its Sustainability Goals take resource depletion into account as well. Wakeford and Swilling suggest two potential strategies to diminish the effects peak oil will have on South Africa. The first strategy is to develop indigenous fuel sources such as coal and biofuels. The second strategy, which they found to be most compatible with the South African economy, is to implement policies that would facilitate the reduction in demand for fuels via a move towards electric mass transport systems.5 To put this into perspective, oil comprises approximately 15 percent of South Africa’s total primary energy supply, although refined petroleum makes up about 32 percent of its total final energy consumption according to the IEA in 2014.6

Instead of investing billions of ZAR in a total infrastructural overhaul to find substitute resources for imported oil, a quicker and cheaper option is to implement measures such as mass transit powered by renewable electricity that would reduce the demand for fuel overall.7 Additionally, Wakeford and Swilling suggest informational campaigns promoting eco-driving techniques such as using gears correctly, avoiding braking and accelerating unnecessarily, and keeping tires inflated. Though such measures seem trivial at a glance, the adequate maintenance of vehicles alone can reduce fuel consumption by 5 percent.8

Environmental Policy in South Africa: The Green Fund

The South African government has been very proactive in tackling climate change, particularly through its implementation of environmental funds. Environmental funds help the government facilitate the financing of environmental action plans and agenda through a single allocated monetary resource.9 The 1992 United Nations Conference on Environment and Development was pivotal in establishing the importance and necessity of environmental funds to change national infrastructures.10 Allocating a portion of the national budget via a Green Fund helps to establish national green economic policies that coincide with the overall macroeconomic and sectoral policy aims of the South African government.11 Exploratory research and planning is underway, such as strategies to implement biofuels, electric transportation, and a comprehensive ‘green economy’ transition.12

In February 2012, the South African Minister of Finance allocated ZAR 800 million for the Green Fund to be implemented over three years. One of the aims of the Green Fund is to adapt any present market barriers that impede a South African move towards a green economy. Transitioning the entire South African economy is no small feat, but the Green Fund has emphasized the promotion of green projects, reinforcement of sustainable development via “green interventions”, and using research to build a case for the green economy. These measures serve to attract increased government and international funding to further the green economic development plan.13. The Green Fund’s main mode of mechanism operation is through investment in green initiatives and projects, such as The Green Cities and Towns Window which comprises 60 percent% of the Fund’s 75 percent% allocated towards projects.14 Low Carbon Economy initiatives comprise 15 percent% of the budget, while Natural Resource Management takes up about 22 percent% of the budget. ThoughAlthough it is thoroughly established that a “global green economy transformation will require substantial financial resources”, the role of the public sector and the South African government’s efforts are indispensable tools in financing green economies, not only in South Africa but around the world.

The Informal Economy: Obstruction or Opportunity?

The International Labour Organization defines a dual economy as “economic activities by workers and economic units that are – in law or in practice – not covered or insufficiently covered by formal arrangements.”15.” Informal economic activities are not against the law but merely outside of the law. Dual economy nations around the world are seen as being economically and institutionally deficient. Despite South Africa’s being classificationied as an upper middle income nation according toby the World Bank,16, its dual economy status remains a key development challenge.17. Traditional development ideology generally considers mixed economies like South Africa to be defects that needrequiring correctioning. However, recent research has questioned this orthodoxy and suggests that instead of trying to fully eliminate the informal economy, nations and international developmental organizations should look to integrate the informal economy within a green economy to create a more cohesive and inclusive macroeconomy.18.

Smit and Musango alternatively suggest an inclusive green economy as a more cohesive means of implementing a green economy in South Africa. South Africa could very well become a successful example of an inclusive green economy, leading the way for other mixed economies to implement environmentally sustainable practices and policies without having to completely overhaul their economic and national infrastructures.19. With the effects of climate change becoming inescapableunavoidable for many developing nations, an inclusive green economy is an innovative and very practicablepractical answer to the imminent problem of wasteful and harmful policies in the developing world.

Ignoring the informal economy has thus far led to an isolated and arguably elitist conceptualization of what a green economy must embody.20. Interestingly enough, the research done by Smit and Musango’s research demonstrates that, there are in fact, green economic activities are taking place in the informal economy.21. Their eExtensive interviews conducted illustrate that all those surveyedsurvey participants confirmed green economic activity within the second economy. These activities are mostly initiated by various community organizations and NGO’s. Furthermore, one interview participant even believed many informal economic activities to be greener than the official green activities carried out in more formal settings.22.

Conclusion

Innumerable factors have shaped the current discourse on environmental sustainability. South Africa is not immune to the effects of peak oil and much can still be done to mitigate the damage the economy may sustain. Instead of focusing on alternative natural resources as fuels, an overall restructuring of the transportation system in South Africa may yield the most promising results. AltThough the Green Fund is a significant initiative from of the South African government, a greater focus on creating an “inclusive green economy” can may arguably help shape produce one of the most creative, economically and socially egalitarian green economies internationallyworldwide.

Reference List

Academic Journals

N. Mohamed et al, ‘The Green Fund of South Africa: Origins, establishment and first lessons’, Development Southern Africa, 2014 Vol. 31, No. 5, 658–674, http://dx.doi.org/10.1080/0376835X.2014.935295

C. Musvoto et al, ‘Imperatives for an agricultural green economy in South Africa’ South African Journal of Science. 2015;111(1/2), Art. #2014-0026, 8 pages. http://dx.doi.org/10.17159/ sajs.2015/20140026

S. Smith and J. Musango, ‘Exploring the connections between green economy and informal economy in South Africa’ South African Journal of Science Vol. 111 (11/12), Art. #2014-0435, 10 pages. http://dx.doi.org/10.17159/ sajs.2015/20140435

J.Wakeford and M.Swilling, ‘Peak Oil as a stimulus for a green economy transition in South Africa: Alternative liquid fuel and transport options’ International Journal of African Renaissance Studies Vol. 9 (2) 2014 pp. 133–153

Websites

The World Bank Group Country Data, [website], 2016 http://data.worldbank.org/country/south-africa, (Accessed 1 July 2016)

The World Bank Group Country Overview, [website], 2016 http://www.worldbank.org/en/country/southafrica/overview, (Accessed 1 July 2016)

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1 C. Musvoto et al, “Imperatives for an agricultural green economy in South Africa” South African Journal of Science. 2015;111(1/2), Art. #2014-0026, 8 pages. http://dx.doi.org/10.17159/ sajs.2015/20140026

2 Ibid.

3 J.Wakeford and M.Swilling, ‘Peak Oil as a stimulus for a green economy transition in South Africa: Alternative liquid fuel and transport options’ International Journal of African Renaissance Studies Vol. 9 (2) 2014 pp. 133–153

4 J. Wakeford and M. Swilling, Peak Oil as a stimulus for a green economy transition in South AfricaIbid.

5 Iibid.

6 Iibid.

7 Iibid.

8 Iibid

9 N. Mohamed et al, The Green Fund of South Africa: Origins, establishment and first lessons, Development Southern Africa, 2014 Vol. 31, No. 5, 658–674, http://dx.doi.org/10.1080/0376835X.2014.935295

10 Ibid.

11 Iibid.

12 Iibid.

13 Iibid.

14 Iibid.

15 S. Smith and J. Musango, ‘Exploring the connections between green economy and informal economy in South Africa’ ‘ South African Journal of Science Vol. 111 (11/12), Art. #2014-0435, 10 pages. http://dx.doi.org/10.17159/ sajs.2015/20140435

16 The World Bank, ‘South Africa – Data’ http://data.worldbank.org/country/south-africa

17 The World Bank, ‘South Africa – Overview’ http://www.worldbank.org/en/country/southafrica/overview

18 S. Smit and J. Musango , ‘Exploring the connections between green economy and informal economy in South Africa’

19 Iibid.

20 Iibid.

21 Iibid.

22 Iibid.

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Mehvish Ally
About Author: Mehvish Ally
Mehvish Ally is an American LLB Candidate who is currently studying and living abroad in Bangladesh. She is also freelance writer and a United Nations Online Volunteer. In addition to her native English she is fluent in Bengali, conversational in Spanish and can read and write in Arabic.