Economic valuation and analysis – A building block towards inclusive green economy

Making the economic case of the importance of sustainable management of the environment and natural resources for pro-poor economic growth, and achievement of the Sustainable Development Goals is an important component of the Poverty-Environment mainstreaming approach.

Economic-based analysis and argumentation for environmental investment can be the most effective in convincing decision-makers on the importance of environmental sustainability for achieving development goals. It requires one to understand and be able communicate on the environment and associated systems in economic terms, and how the environment sector can be explained as a productive sector that can be managed to generate pro-poor and inclusive economic growth.

In response to country demand, PEI had piloted a number of economic valuation studies at country level that aimed to inform and influence economic development policy and planning. These studies touch on key aspects of the PEI publication “Making the Economic Case: A Primer on the Economic Arguments for Mainstreaming Poverty-Environment Linkages into Development Planning” including:

• Treating the environment base as an economic asset where environmental resources and ecosystem services are seen as productive natural capital having economic values, and where trade-offs exist between investing in sustaining this natural capital and converting it to other uses or allowing for degradation.
• Emphasizing the economic returns from environmental investment and the economic costs of environmental degradation. This can be expressed through a number of variables including among others employment, returns on investment related to rehabilitation of ecosystems, human health affected by pollution and degradation, effects from climate change, improved or lost agricultural productivity and food security, etc.
• Understanding human and economic well-being outcomes and linking environmental goods and services with national economic and social indicators used to measure progress towards poverty reduction, equality and inclusive economic growth.