OECDs Evaluation of Cambodian Green Growth Policy

Lessons for Chilean Energy Policy

Marc Ackermann Conservation Innovation at the Harvard Forest November 13th, 2013

Introduction
Over the past decades, Chile has entered the world stage as a remarkable story of growth in the developing world. As the country closes the gap between itself and the worlds largest economies, new concerns have emerged; the rapid expansion of the Chilean economy inevitably requires a focus on sustainability, especially in the energy sector. Renewable energy in Chile has bright prospects over the coming years, as renewable energy has reached parity with traditional sources. Moving forward, the importance of policy on conservation and energy are essential to the long-term stability of Chile. However, this simplified equation leaves out a key variable: societal well-being. For long term viability, Chilean Energy Policy should incorporate a stance on social impact as a driver in the national policy. This synergistic trio of economic growth, social inclusion, and conservation has been dubbed green growth by the OECD. According to the OECD, Governments that put green growth at the heart of development can achieve sustainable economic growth and social stability, safeguard the environment, and conserve resources for future generations (OECD (2013b), 1). Green growth is an attractive tool to supplement progress in developing nations. From the perspective of another developing nation, Cambodia is an interesting case study on sustainable growth and conservation with an added twist of social inclusion. While green growth is focused on more than just energy initiatives, a large portion of the takeaways are applicable to policy for renewable energy. As a leading nation in inclusive green growth, Cambodia has pushed to consider all relevant stakeholders, especially the underrepresented poor. Cambodia has led by example and implemented nationwide green growth goals focused on social inclusion. On the other end, Chile has experienced rapid economic growth with extreme inequality. Bridging the economic divide with inclusive sustainable energy growth could be vital for Chilean development, especially in the poorer northern region. For this reason and others, Cambodias attention to the impact of sustainable energy on the poor can be a very effective element of Chilean Policy. In order to draw away lessons from Cambodia, there must be a comparison of Chile and Cambodia, especially highlighting the differences and similarities in background. The analysis will follow by evaluating the effectiveness of the green growth theory of change, concluding with key takeaways of the most relevant lessons for Chile from Cambodia.

Comparative Analysis of Cambodia and Chile

The comparative measures show that Chile and Cambodia are quite similar in some aspects and different in others. Given the brief nature, the country comparison will focus only on each countrys economy and political & social structure. From an economic perspective, Cambodia lags well behind Chile in overall level of wealth. While growth in Cambodia is slightly higher, Cambodian GDP per capita is $2,400 in comparison to $18,700 in Chile (CIA). One of the main differences is that the economy in Cambodia is highly agrarian, while the largest sector in Chile is mining and services. With a lower level of national income, Cambodia has a considerable reliance on foreign funds to fuel investments in green growth. Given the higher level of wealth, financing at both a national and private level are an enabling condition for Chilean sustainable energy. There is one caveat to this higher level of affluence. In Chile, income is distributed fairly unevenly, evidenced with high inequality; the Gini Index in Cambodia is 38% versus 52% in Chile (CIA). Being the first Latin American country included in the OECD, Chile has the highest income inequality of the 36 countries in the OECDs Better Life Index (OECD (2013a)). With this high disparity, the social inclusion elements of the green growth policies may have a larger impact on the socio-economic classes in Chile. By focusing on inclusion in Northern Chile, sustainable energy has the potential to reduce inequality and develop the poorer rural region. This highlights a potentially greater importance of social inclusion into a comprehensive energy policy for Chile, solely from an economic perspective. Politically, Chile is much more democratic than Cambodia. Chile is a stable democracy. In comparison, Cambodia is a monarchical democracy that has not had a change of leadership in the last 25 years. Some have even stated that Cambodia has an authoritarian style and communist leanings. At a national level, the stability in Chile is greater and an enabling factor for inclusive green growth. However, from an institutional perspective, Chile does not have sufficient interaction and collaboration on energy policy. The Ministry of Energy and the Ministry of the Environment do not collaborate often in Chile (Interview with Daniela Gutierrez). In the past, Cambodia did not have sufficient policy coordination between entities. To combat this communication barrier, the Royal Government of Cambodia established the Inter-Ministerial Green Growth Working Group (GGWG),

representing 19 ministries, to establish a green growth policy; the group designed the Green Growth Roadmap for Cambodia in 2010 and the National Strategic Plan on Green Growth. This plan incorporates seven accesses that are carefully tailored to the poor and marginalized communities. For both nations, this separation of players has hindered policy making in the green growth arena. However, Cambodia has made considerable progress on integrating policy makers through the GGWG. Moving forward, Chile has an opportunity to follow a similar path to coordinate discussions between policymakers. A viable option is to develop a cross-party, cross-ministry organization that works in unison to strategize and implement sustainable energy policy with an emphasis on inclusion. Overall, the political landscape in Chile has the opportunity to give rise to a green transformation in the energy sector.

Green Growth Theory of Change

The theory of change for the OECD, as described in Cambodian policy, is that inclusive green growth is a tool for developing nations. Green growth does not replace sustainable development, but is a means to achieve it (OECD (2013b), P. 2). The underlying elements incorporated into green growth are economic growth, social stability & inclusion, and conservation of the environment. Maintaining the balance between these three drivers, in practice and in theory, is the impetus behind the OECDs method of change. Cambodia has adopted this methodology as the way forward for its nation. Evidence for this theory lies in many different arenas. For economic development and poverty reduction, sustainable management of natural resources has shown to boost economic performance in Madagascar, Uganda, and Ethiopia, especially among the poor (OECD (2013b), P. 6). Cambodian officials have stated that their primary reasons for implementing a green growth path is the increased socio-economic benefit from economic growth, job creation, and poverty reduction (Mohammed, P. 15). In terms of conservation strategies, natural capital comprises 25% of total per capita wealth in lowincome countries, compared to only 2% in OECD countries (OECD (2013b), P. 4). Thus, the impact of environmental conservation is much greater for poorer developing nations. Additionally, key health risks are mitigated by engaging in green growth (Appendix, Chart 1). Through this unique theory of change, green growth in developing nations has evidence of improvement in the three primary areas - economic performance, social equality, and environmental

conservation - and even on health outcomes. Overall, inclusive green growth has the potential to be an important element of Chilean Policy.

Key Takeaways for Chilean Energy Policy

Cambodian green growth policy has many lessons that could be transferred to Chilean Energy Policy. In Cambodia, the policy measures that fit most closely with Chile include focusing on the poor for social inclusion, establishing a government sponsored council to implement and oversee green growth policy, and ingraining measures of effectiveness into green growth. Implementation of these three initiatives would prove to be synergistic with conservation focused energy policy in Northern Chile. Regarding a focus on the poor, social inclusion has been shown to be an impetus for development in sustainable energy through the OECDs green growth strategy in Cambodia. The importance of rural and poor focus is critical for adoption among the local citizens in Northern Chile. Beyond a qualitative agreement, the economic impact on the poor could yield new jobs and increased opportunity. In the collaborative negotiations, it is necessary to have a holistic group of representatives. All stakeholders must be represented in order to have a comprehensive policy. Connecting many organizations within the government will yield an integrated thinking process, as well as institutional coordination. Having a cross government council can give extra clout to the final policy and increase the likelihood of successful implementation. Additionally, accountability must be built into the adoption of am inclusive green growth strategy in order to maintain effectiveness. According to the OECD, key indicators are broken down into four main groups: the environmental and resource productivity of the economy, the natural asset base, the environmental dimension of the quality of life and the economic opportunities and policy responses (OECD (2013b), P. 21). Constant measurement and evaluation of these statistical categories will be important to ensuring progress in green growth. Following these three methods, Cambodian inclusive green growth has the potential to be a very fruitful framework for Chilean energy policy.

Appendix
Chart 1

Cited Sources
"Central Intelligence Agency." The World Factbook. N.p., n.d. Web. 13 Nov. 2013. Mohammed, E. Y., S. Wang and G. Kawaguchi (2013), "Making Growth Green and Inclusive: The Case of Cambodia", OECD Green Growth Papers, No. 2013/08, OECD Publishing. OECD (2013a). "Hows Life?" OECD Better Life Index. OECD, 2013. Web. 09 Nov. 2013. OECD (2013b). "Putting Green Growth at the Heart of Development - Summary for Policymakers."OECD. N.p., Mar. 2013. Web. 09 Nov. 2013.