On Thursday (7/7), the Microeconomics Dashboard of the Faculty of Economics and Business Universitas Gadjah Mada (FEB UGM) held a program titled Meet The Expert #2. Meet The Expert #2 examines the Green Economy polemic. This event invites Prof. Arief Anshory Yusuf, S.E, M.Sc., Ph.D, Professor of the Faculty of Economics and Business, University of Padjadjaran. Meet the Expert #2 moderated by Shima Dewi Mutiara Trisna, S.E., M.Sc. Meet The Expert #2 discusses the big question of whether this Green Economy is feasible for developing countries like Indonesia, as well as the opportunities and challenges that Indonesia will face if implementing a Green Economy.
Arief Anshory Yusuf started the event by explaining the concept of the Green Economy, namely as a green economic system, which is in accordance with economic principles, aiming to allocate resources optimally. Arief Anshory Yusuf explained that an economy based on market price algorithms often fails to assess environmental resources, such as clean air. Then, Arief Anshory Yusuf explained Wagner's Law which states that in general the richer a country is, marked by the higher the Gross Domestic Product (GDP), the more developed the country is, the healthier, smarter, and more sophisticated its collective politics will be. However, this contradicts the Easterlin Paradox which states that besides the increase in Japan's GDP in the period 1958 to 1990, surveys of Japanese people's life satisfaction tend to stagnate during the same period.
Arief also underlined the failure of the price algorithm to read economic and human losses in the 2015 Southeast Asia Haze Pollution incident which caused premature deaths of more than 100,000 people. This of course should be considered as an economic loss and injustice. Hence, summarizing the above cases as a whole, the market price system that adheres to a free unregulated system raises several problems including: neglecting justice, unable to perfect itself, unable to create its own market, and not working well in asymmetric information. Thus, there is an urgency in implementing a green economy which views that not all values are sourced from market prices. Because the reality is that often the most valuable resources in the world, such as clean air, cannot be valued at market prices
.The green economy discourse actually does not offer a revolution to the capitalist economic system, said Arief. The green economy aims to 'give color' to the capitalist economy that is applied by the majority of countries in the world, so that they put attention to the sustainability of the environment and natural resources. Based on a case analysis, the green economy initially requires a large investment cost. In addition, the green economy is projected to generate less profit than the conventional economy. However, in the long term and considering the possibility of natural disasters and environmental damage, the green economy has a high margin of economic advantage compared to the conventional economy. In Indonesia, the green economy system also gets constitutional support because the green economy is written explicitly in the UUD 1945 article 33 verse 4.
At the end of the session, Arief explained that there are at least four challenges which must be faced in implementing a green economy. The first challenge is the conventional economic paradigm. Some other challenges are political economy, domestic policy space, and commitment. However, there are strategies that can overcome all four. The conventional paradigm can be overcome by the presence of the state when the economy is not functioning properly. Political economy challenges can be faced by planning, monitoring, and controlling the achievement of targets, as well as increasing public participation. Domestic policy space can be overcome by implementing an accurate and relevant fiscal policy. Finally, commitment can be instilled by progressively increasing budget allocations for environmental protection. The presentation on the challenges of the green economy became the conclusion of the webinar presentation session. Meet the Expert #2 was closed with a question and answer session.
Reportage: Hayfaza Nayottama
FAQs
The first challenge is the conventional economic paradigm. Some other challenges are political economy, domestic policy space, and commitment. However, there are strategies that can overcome all four. The conventional paradigm can be overcome by the presence of the state when the economy is not functioning properly.
What are some obstacles in transitioning toward a green economy? ›
Political barriers include the lack of clear strategic political direction, regulatory framework, and transparency. Market barriers include macro-level economic risks such as inflation, micro-level risks such as technology and offtake, and the absence of viable markets.
What are the key points of green economy? ›
It seeks to rebalance the consumer-driven model towards one that is more sustainable in terms of natural resource usage. Low-carbon development: the green economy is based on the use of renewable energy sources - like solar, wind, hydroelectric and hydrogen - that generate little or no amounts of CO₂ emissions.
What is the positive impact of green economy? ›
reduce energy consumption; reduce greenhouse gas emissions and the amount of waste generated during the entire life cycle of a product; reduce the consumption of natural resources by increasing the efficiency of their use; ensure the conservation of biodiversity.
What are the disadvantages of a green economy? ›
Disadvantages. You might wonder how transitioning to a green economy can threaten certain jobs. A quick answer to this is that it creates danger in the jobs related to fossil fuels and non-renewable sectors.
What are the pros and cons of green GDP? ›
Pros: Green GDP embraces broader accounting of economic development that considers the effects of pollution and resource depletion. Cons: Local governments that don't want their economic growth statistics affected by environmental factors have been resistant to adopting this as a GDP alternative.
What are the barriers to the green economy? ›
Even when there is a strong economic, environmental and social case for investing in greening trade, a number of important obstacles remain. These relate mostly to limitations in financial and human resources, weak regulatory frameworks, lack of enforcement mechanisms, and poor economic infrastructure.
Which problems does green economy address? ›
In a green economy, growth in employment and income are driven by public and private investment into such economic activities, infrastructure and assets that allow reduced carbon emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of biodiversity and ecosystem services.
What are the three fundamental challenges to a sustainable economy? ›
Sustainability is an essential part of facing current and future global challenges, not only those related to the environment.
What are the 5 principles of a green economy? ›
It is based around five principles: Well-being: A green economy must create genuine, sustained, shared wellbeing, going beyond mere monetary wealth to prioritise human development, health, happiness, education, and community.
While many community dynamics are at work, three are particularly important to building healthy and prosperous communities over the long term: economy, ecology, and equity—the three E's. Economy is the management and use of resources to meet household and community needs.
What are the three pillars of green economy? ›
Sustainability is often broken into three intertwined pillars or categories: social sustainability, economic sustainability, and environmental sustainability.
How to implement a green economy? ›
Growing a Green Economy
- Green Economic Development. Traditional economic development focuses on increasing production of goods and services. ...
- Resource Efficiency and Green Purchasing. ...
- Local Production and Utilization. ...
- Waste Stream Management. ...
- Green Infrastructure.
Takes care of the environment
This can tackle global warming, loss of biodiversity, deforestation, and desertification. This means that we can still use natural resources in the future and that future generations have a chance to live in a sustainable and habitable environment.
Is a green economy feasible? ›
Absolute decoupling – i.e. increasing gross domestic product (GDP) with decreasing environmental damage – has hardly ever been observed empirically, and if so, then only in clearly limited periods of time. This is why some researchers doubt whether "green growth" is even possible in the long term.
What are the key challenges of green hydrogen economy? ›
According to the Hydrogen Council [23], meeting the projected global demand for GH and its expanding applications are hindered by high production costs, lack of market, and investment risks due to regulatory uncertainties, and the need for extensive production technologies and infrastructure [24].
What are the challenges of green business? ›
Green businesses often require higher upfront costs, longer payback periods, and more uncertain returns than conventional ones. They also face higher risks of policy changes, market fluctuations, and technological obsolescence.
What are the challenges of green products? ›
One of the main challenges in the adoption of eco-friendly products is the higher cost associated with their production. Sustainable materials and ethical labor practices often come at a premium, which can make green products more expensive for consumers.
