Parallel Session C - Presentation by José Pineda

1. GREEN GROWTH & SUSTAINABLE DEVELOPMENT FORUM
INNOVATION MEASUREMENTAND LEARNING
Measuring Green Economy Progress (GEP):
The role of green innovation
Paris
December 15, 2015
José Pineda
Adjunct Professor
Sauder School of Business, UBC
Senior Consultant, UNEP-ETB

2. Presentation Outline
1. Context: Inclusive Green Economy
• The role of green innovation
2. Measuring progress towards a Green Economy
• Purpose, definition and methodology
• Methodology: thresholds & targets
• Indicators: selection criteria
3. Green Economy Progress index: results
• Aggregate analysis
• By regions, development groups
4. Key messages
• Knowledge gaps and future work

3. 1. Inclusive Green Economy
• On the aggregate supply side, an inclusive green economy promotes
the creation or enablement of a new generation of capital: natural
capital, clean physical capital, human capital with modern and green
skills, social capital that ensures equity and inclusiveness.
• New capital serve as inputs to produce environmentally friendly goods
and services (EFGS), to be absorbed by aggregate demand.
• Consumption: EFGS will be “used” by the private and public sector.
• Investment: some EFGS will be used as intermediary inputs to further
production or substitute environmentally harmful inputs.
• Trade: trade of EFGS induces innovation, productivity gains and
creates jobs, while lowering negative impact of trade on the
environment.
• Green innovation (improvements to products, processes,
organizational/management and marketing structures) is critical to do the
transition towards an IGE

4. 2. Measuring progress towards a Green Economy:
Purpose
1. Measuring progress on green economy
‐ Assess progress and what is needed to move forward
‐ Refine GE strategies for maximum effectiveness
2. Measuring progress in achieving national priorities
‐ Accommodates to countries’ level of development
‐ GEP complemented with country-specific indicators
3. Measuring progress towards the SDGs
‐ SDG 8 and Green Economy are closely linked.
‐ GEP different but complementary tool to monitor SDGs
progress (indicators and methodology)

5. 2. Methodology: Narrative
• Progress: movement in the “right” direction
• Notice: we have “goods” and “bads”
• More green innovation, green trade and resource efficiency
• Less social inequalities
• Less environmental pollution
• Weighting: changes relative to certain objective
(target) given initial conditions
• Change is relative to a target (ambition), which is
adjusted to each relevant comparison group
• Progress achieved within boundaries (threshold)
• Weight changes with initial condition relative to threshold
• Re-weighting to guarantee cross country/cross indicator
comparisons

6. 2. Methodology: “goods”
• “Good”: 𝑔𝑒𝑝 for indicator 𝑖 is given by:
𝑔𝑒𝑝𝑖 =
𝑡
𝑦𝑖𝑜
∙
𝑑𝑦𝑖
𝑧
• 𝑧: target, t: threshold, 𝑦𝑖0: indicator 𝑖 in 2000 (initial
condition), and 𝑑𝑦𝑖: change between 2000 and 2010
• “Good”: target 𝑧 > 0 (𝑑𝑦 to be at least of size 𝑧)
and 𝑦𝑖0 above t
• Hence, with 𝑑𝑦𝑖 positive, weight on
𝑑𝑦 𝑖
𝑧
will be:
• Larger the smaller 𝑦𝑖0 (worst initial conditions)
• Larger the larger 𝑡 (more stringent threshold)

7. 2. Methodology: “bads”
• “Bad”: target 𝑧 < 0
𝑔𝑒𝑝𝑖 =
𝑦𝑖𝑜
𝑡
∙
𝑑𝑦𝑖
𝑧
• “Bad”: target 𝑧 < 0 (𝑑𝑦 to decrease at least of
size 𝑧) and 𝑦𝑖0 below t
• Hence, with
𝑑𝑦 𝑖
𝑧
positive (both decreasing), its
weight will be :
• Larger the larger 𝑦𝑖𝑜 (worst initial conditions)
• Larger the smaller 𝑡 (more stringent threshold)

8. 2. targets and thresholds
• Targets: Ambitious but feasible (according to
countries characteristics)
• Proportion of country’s initial condition.
• Varies by HDI group (top 10% best performers by group)
• Thresholds: mix data and research driven
• Goods (bads): value of 25th (75th) percentile of distribution
in 2000
• Environment: air pollution (WHO), material footprint per
capita (Stefan Bringezu, 2015), protected areas (Aichi
Biodiversity Targets)

9. 2. Methodology of the Green Economy
Progress (GEP) index
Composite index that includes 11 indicators: green trade,
green innovation, renewable energy sources, energy use,
Palma ratio, access to basic services, air pollution, material
footprint, protected areas
• Coupled with a dashboard of indicators (long-term sustainability)
Selection criteria for indicators:
• Integration:
• Simultaneously capturing outcomes in several dimensions
• Availability:
• Universal and comprehensive country and time coverage. Time
period: 2000-2014
• Transparency and comparability:
• Publically accessible through international organizations

10. 3. Results: 54 (of 89) countries have a positive GEP
• Protected areas, access to basic services, energy use and pollution are the
indicators were most progress occurred
• Material footprint is the indicator were most regress occurred (63 out of 86)
• Regress is also shown in green innovation (24 out of 45)

11. Few developing countries with progress on green innovation
• (5 out of 21) Mexico, Colombia, Peru , China and Bulgaria
Note: 1) Middle Eastern States; 2) East Asia and the Pacific; 3) Europe and Central Asia; 4) Latin America and the Caribbean; 5)
South Asia; 6) Sub-Saharan Africa; and 7) All countries with HDI very high (HDI>0.8) that do not belong to any of these regions.
-.5
0
.5
1
1.5
1 2 3 4 5 6 7
Regions: 1:AS 2:EAP 3:ECA 4:LAC 5:SA 6:SSA 7:DEV
gep for green patents, by regions

12. 4. Key Messages
• GEP useful framework for monitoring progress
• Takes into account countries’ characteristics, targets and thresholds
• There has been progress on green economy since 2000
• Of 89 countries, 54 (61%) have a positive GEP
• Not enough progress GE opportunities (innovation and trade)
• Important measurement gaps:
• Limited data availability on green innovation. Poor coverage of developing
countries (Sub-saharan Africa and South Asia)
• Measurement beyond patents is even more limited
• Continuing work on the GEP index:
• Pulishing the methodology and the set of indicators
• Country specific applications

13. GREEN GROWTH & SUSTAINABLE DEVELOPMENT FORUM
INNOVATION MEASUREMENTAND LEARNING
Measuring Green Economy Progress (GEP):
The role of green innovation
Paris
December 15, 2015
José Pineda
Adjunct Professor
Sauder School of Business, UBC
Senior Consultant, UNEP-ETB