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Turkey Green Growth Policy Paper: Towards a Greener Economy


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5. Green Growth Policies: Overview and Implications for Turkey


This Chapter reviews the current green growth policy set in Turkey, highlighting gaps relative to the objective EU directives and OECD principles. The Chapter also reviews the catalogue of EU policy instruments and highlights other policy tools available from emerging international experiences, as well as the relevance of these policy options to the seven strategic sectors covered by the Policy Note.

5.1 Green Policies in Turkey


The current arsenal of Turkish environmental policy instruments is mostly limited to energy taxes, environmental impact assessments, and pollution penalties. In addition, fees are charged for municipal services to cover wastewater and solid waste management, and a nominal charge is applied to irrigation water. Still, it is a clearly recognized fact that these instruments will not suffice under a more active environmental policy design, and will need to be expanded to include other forms of policy measures such as additional pollution taxes, emission trading and permits, and abatement investments towards reduced energy intensities. However, given the current lack of an adequate quantitative modeling paradigm for environmental policy analysis in Turkey, the effectiveness of such policy interventions and their economic impacts as well as the trade-offs they involve are not well-known. There is a strong need therefore for the design and utilization of analytical models for environmental policy analysis.

This study aims to make a first step at addressing the need for better policy modeling techniques by presenting a stylized model of the Turkish economy and demonstrating how investments in abatement technologies and green growth can largely offset the significant negative output effects of a simple set of pollution taxes. However, more specific policy simulations would require a more finely- tuned model structure, incorporating better technological knowledge of cost abatement in the main strategic sectors and of the endogenous private sector reaction to pollution taxes.

5.2 A common agenda for green policies



Green growth will require a mix of measures that can increase growth, while economic activity shifts into modes of production and consumption with lower environmental impact (OECD 2011). Turkey has already integrated many efficiency and pollution-reducing measures into production and consumption activities, largely driven by existing policy signals from national legislation, EU Accession requirements or by market demand for cleaner and greener products. But bringing this wide array of policies together under one common agenda would be a new step forward. Using some common principles the green policy mix should: (i) integrate the natural resource base into the same dynamics and decisions that drive growth; (ii) develop ways of creating economic payoffs which more fully reflect the value of the natural resource base of the economy (pricing); and (iii) focus on mutually reinforcing aspects of economic and environmental policy (OECD 2011).39 While these overarching goals point to the direction and future of Turkey’s growth, it is important to first understand the menu of policy options and then map them along the lines of existing green growth constraints. Hence, complementing this Policy Paper with a diagnostic assessment remains an important item for the Ministry of Development and the World Bank’s contribution to the Ministry’s future work.

5.3 A policy menu




Figure 5.1 Examples of the range of environmental policy instruments



Source: Lindhqvist 2000
While industry (supply) and consumers (demand) have a lead role in ultimately getting the economy to greener growth, the government has an equally important role in terms of creating an enabling culture that will encourage better environmental performance and widespread adoption of practices that can lead to greener growth.

There is a wide range of instruments and these can be used in combination to stimulate resource efficiency and better environmental performance that could ultimately lead to a better environmental quality. These instruments can be categorized into three groups (Figure 5.1):

  • Regulatory instruments that mandate specific behavior

  • Market-based instruments that act as incentives for particular activities

  • Information-based instruments that seek to change behavior through the provision of information

Further categorization of these policy instruments can be made based on the nature of the interaction between government and industry, and the level of obligation of the policy instrument. With such an approach a distinction will be necessary among the following:

  • Specified compliance, where government imposes obligatory standards on the regulated party

  • Negotiated compliance, where the regulators and the regulated interact in setting the obligatory standards

  • Co-regulation, where there is a high level of interaction among the parties, but the agreed standards are not mandatory

  • Self-regulation, where industry acts unilaterally in setting standards that are not legally enforceable

Different policy instruments are usually not used in isolation from each other: regulatory instruments typically operate in conjunction with the threat of an economic penalty, economic instruments need an appropriate legal framework, and the provision of information is a necessary element in the implementation of most types of policy instruments. For example, the IPPC Directive is a typical regulatory instrument, but its implementation can benefit from parallel approaches like negotiated compliance, market-based instruments, and informational tools.
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