1.1 Context and Background
As a follow-up to the UN summits in Stockholm in 1972, Rio de Janeiro in 1992, and Johannesburg in 2002, the international community prepared to come together to take stock of the achievements of the past 20 years, and renew its commitment to a sustainable development agenda.1 This happened at a time when new challenges and opportunities have emerged, including the recent and on-going food, fuel, and financial crises, and the growing global concern about the impact of climate change and the destruction of ecosystems and biodiversity. The focus of the UN June 2012 Rio+20 Conference was on two themes: 1) a green economy in the context of sustainable development and poverty eradication; and 2) the institutional framework for sustainable development.
As its contribution to the Rio+20 Conference, Turkey has prepared a “vision paper” on green growth, with a particular focus on: 1) showcasing its efforts to achieve rapid economic growth while integrating environmental sustainability requirements in key sector policies and programs, and 2) as part of the preparation of its 10th National Development Plan and beyond, identifying potential additional policy and institutional measures to further green its economy without eroding its growth potential in the short-term.
By all accounts Turkey’s impressive economic performance of the past decade2 has been accompanied by important social and environmental progress. In a large measure this is due to the fact that Turkey has put a range of regulatory and institutional reforms in place, as well as prioritized investment programs in energy, infrastructure, pollution mitigation, and natural resource management. In addition, convergence efforts with the EU environmental acquis have provided an impetus and drive to strengthen environmental management. However, increasing environmental pressure associated with urbanization, growth in energy use, industry, transport, tourism, and agriculture, as well as the emerging issues associated with climate change, remains a long-term challenge.3
The Ministry of Development (MoD) initiated a program which included several background studies to help the Government showcase its efforts of mainstreaming the environment since the first Environment Summit in Rio in 1992, and focus attention on future measures needed for a Green Economy. To help achieve the objectives of this program, the MoD asked the World Bank to prepare a Green Growth Policy Paper (GGPP) as part of the analytical activities and stakeholder consultations that aimed to inform Turkey’s vision for greening its economy. The GGPP helped inform Turkey’s green growth agenda by identifying opportunities to better integrate environmental sustainability considerations and related social and economic issues into the mainstream economic growth and competitiveness agenda.
Green growth is a relatively new concept. According to the World Bank’s forthcoming flagship report,4 at the heart of green growth is the underlying assumption that we are not using environmental assets efficiently. Therein lies the potential for green growth—growth that is efficient, clean and resilient. Green growth policies aim to foster sustainable development by reconciling the need for environmental sustainability with that for economic growth and social improvement5. The OECD report (2011), also highlights five additional sources of economic growth from environmental policies: improved productivity in the use of resources, opportunities for innovation, creation of new markets and job opportunities, boosting investor confidence, and stability in macroeconomic conditions (e.g., reduced resource price volatility).
While there is no consensus on how to operationalize green growth, most approaches would include four main elements: mitigation (of greenhouse gas emissions); adaptation (to a changing climate); other environmental protection (clean air and water, natural beauty and biodiversity); and innovation and green jobs (the hypothesis is that a shift to green growth will spur technological innovation and promote trade competitiveness in new industries) (Box 3.1). The relative priority put on each of these elements will vary across countries. It is also now generally accepted that Green growth policies operate through several channels including: (i) prices and fiscal systems; (ii) institutions, investments and behavior; and (iii) innovation and technologies. While the analysis and recommendations provided in this report are grounded in the general framework provided by the four elements of green growth, a comprehensive treatment is beyond the scope of the report; its focus is mainly on environmental protection, including GHG emissions, and the sustainable management of land and water resources in relation to agriculture.
Extensive discussions with MoD led to the identification of four main questions that encapsulate the issues and the type of insight sought by decision makers in Turkey, and that guide the analysis undertaken in this report:
How green is Turkey?
How will compliance with key environmental regulations to meet EU directives--which is one important part of greening the Turkish economy--impact economic growth and employment (both aggregately and for key sectors)?
Can Turkey sustain the current high growth path by greening its production in key growth and/or export leading sectors, identified by MoD as: agriculture, automotive, construction, electronics, iron and steel, machine industry, and white goods?
What policy instruments can be used to maximize greening at least cost (or maximum benefit) to the Turkish economy?
For the purposes of timely contributing to the Rio+20 Conference, and given time and resource constraints, the MoD argued for including in the analysis key sectors which are important for economic growth (both now and in the future) and where there may be significant potential for contributing to the ‘greening’ agenda. Using the four criteria below led to the selection of seven sectors to include in the analysis: agriculture, plus six industrial sectors (automotive, construction, electronics, iron and steel, machine industry, and white goods):
Sector highlighted as key drivers of future growth in Turkey’s 9th National Development Plan (NDP) (2007-2013);
Sector viewed as having a large potential for ‘greening’;
Sector has a strategy from which to draw information for analytical purposes; and
Sector is the subject to compliance with key applicable EU Environmental Acquis Directives since these are a major driving force for sector reform and transformation, and entail potentially significant public and private sector investments in both the short and longer term.
The scope of the GGPP was also limited so as to avoid replicating results from recent studies. In 2010, the MoD commissioned a comprehensive study to assess the impacts of climate change, energy efficiency and greenhouse gas emissions on the economy6, which was viewed by the Government as sufficiently covering the climate change aspects of Green Growth. While the Government requested that the GGPP should cover issues related to cleaner (or greener) production and consumption, because a key aspect of greening relates to reducing pollution and improving resource use efficiency, issues of Greenhouse Gas emissions were included the analysis.
While the study was designed as a pilot both in terms of scope and methodology, it does attempt to provide answers to the four questions of interest to Turkish decision makers described above. Within this framework, the overall objective is to help shed light on growth trade-offs faced by Turkey as it implements a ‘green agenda’ linked to its own objectives, as well as compliance with EU Directives and OECD principles. This study uses analytical work involving desk review and economic modeling, including: (a) using available data to provide a general benchmarking of Turkey against other comparator countries; (b) a review of the policy and institutional frameworks in Turkey, and a more focused assessment of green growth constraints and opportunities in agriculture and the six identified industrial sectors, using both desk review/research and sector focus group meetings; and (c) a pilot, economy-wide analysis of a selected number of green growth policy scenarios using a computable General equilibrium (CGE) approach.
The purpose of the analytical desk review was to understand where Turkey stands compared to other countries, and what we know about green policies across key strategic sectors of the Turkish economy. This was done using a review and assessment of the policies and institutions for environment and natural resource management already in place, viewed through a green growth lens. The desk review also highlighted further policy priorities to realize the potential benefits of green growth.
The main contribution of the pilot economic analysis is two-fold: (i) to test the feasibility of using a CGE approach to provide useful information on the (growth, employment, and fiscal) impact of a specific mix of green policies, despite several limitations in the pilot effort; and (ii) to lay the groundwork for future more comprehensive studies to help build the data and analytical capacity to support the Government’s strategy for managing climate risk and implementing green growth policies, in the 10th NDP and beyond.