Understanding Green Economy along with Advantages and Disadvantages
Green economy is an answer to the current economic system which is considered to still have a negative impact on nature.
One of the negative impacts on nature is air pollution resulting from dependence on the use of fossil energy.
In order to reduce this impact, of course a transition from fossil energy to renewable energy is needed. However, this is not easy,
One of the biggest obstacles hindering this transition is the huge costs.
According to a study from Paul Ekins from University College London and Dimitri Zenghelisd from the London School of Economics and Political Science entitled The costs and benefits of environmental sustainability, this obstacle will be experienced by countries that still depend on fossil energy, as is the case in Russia. Nigeria, Kazakhstan, Indonesia or Poland.
Therefore, understanding the meaning of green economy can be an alternative way to overcome environmental impacts. It is also a step to prioritize environmental aspects in all economic activities.
Understanding Green Economy
The definition of a green economy according to the Master Class is an economic system that equates the priority of balancing nature with increasing economic value.
For example, implementing low carbon emission standards is as important as making a profit for the investors involved.
In other words, with a green economy, there is always an opportunity to gain profits in terms of economic activities and environmental sustainability.
In line with this, the UN Environment Program also states that a green economy is an economic activity that is based on low carbon, resource efficiency, and benefits all parties involved.
Why is the Green Economy Important?
It is important to implement a green economy to prevent climate change from getting worse in the future. Geothermal temperatures in 2022 alone will exceed the average temperature of 0.89 Celsius compared to the Earth’s average temperature according to NASA for the 1951-1980 period.
Apart from that, according to UN News, the 2010-2019 period recorded the highest level of carbon emissions which could trigger natural disasters that are difficult to predict.
With the implementation of a green economy, environmental aspects will of course become a special concern in all economic activities.
This is something that cannot be found in current economic activities which prioritize economic growth and maximizing profits, a sign of paying attention to other factors.
Apart from that, implementing an environmentally friendly green economy can also stimulate economic growth, encourage job creation, and inspire environmental initiatives at the same time.
Example of a Green Economy
- Organic farming industry
The organic farming industry can be categorized as a green economy because its working system does not use chemical products in the fertilization process. Apart from that, according to fao.org, the organic farming industry can also absorb carbon into the soil.
Many countries have implemented this, such as Australia (35.69 million hectares), Argentina (4.4 million hectares) and France (2.78 million hectares).
- Green building construction
The construction of green buildings certainly reflects a green economy. Through green buildings, we can be active in buildings where the air quality around the building will improve due to designs that minimize the waste of carbon emissions.
Examples of green buildings that are already standing are the Rosewood Tower in Brazil, the Eco-Luxury Hotel in France, the M6B2 Biodiversity Tower in France, and the Bosco Verticale in Milan.
Benefits of a Green Economy
By implementing a green economy, of course it will produce many benefits both for those carrying out the activity and also for the environment. So what are these benefits? Here’s the review!
- Encourage more sustainable development
Green economy encourages maximizing the use of resources and choosing materials that can be recycled.
These two things are done so that the benefits of this development can be felt by various generations and as a form of responsibility towards the earth.
- Helping fight climate change
If the implementation of the green economy is successfully implemented in a country or region, then of course there will be cooperation between the government and the private sector in terms of protecting the environment.
The government and private sector can work together to reduce carbon emissions from all industrial and transportation activities to avoid the effects of climate change.
- Improving the ecosystem
If a country or region successfully adopts a green economy, of course the ecosystem in that region will also improve.
This is the result of preserving nature which is one of the important points of a green economy in all its activities. With sustainable nature, all living things within the ecosystem can also live well.
Disadvantages of Green Economy
Apart from the advantages, the green economy also has several disadvantages. This loss was explained by several economic experts such as Satu Kahkonen who is the Director of the World Bank in Indonesia and Timor-Leste and Prof. Arief Anshory Yusuf, S.E, M.Sc., Ph.D, who is a Professor at the Faculty of Economics and Business, Padjadjaran University.
What are the shortcomings, here is the review!
- Transition costs are expensive
The World Bank’s Head of Representative for Indonesia and Timor-Leste, Satu Kahkonen, said that the cost of transitioning to a green economy as a whole is very expensive and Indonesia needs help with funding.
“Without external funding the transition (green economy) will take a long time,” said Kahkonen in the “Sweden-Indonesia Sustainability Partnership Week” forum he said at (SISP Week) which was held from Jakarta and Stockholm on Monday (22/11/2021) quoted from Kompas.
- It’s hard to get investors
Apart from the expensive transition costs, the woman who has served as Head of the World Bank Representative for Indonesia and Timor-Leste since 2020 also expressed the difficulty of getting the private sector to collaborate with this project.
He said that the reason behind this was a difficult process and very expensive initial costs. In order to overcome this, the government is expected to pay more attention to regulatory barriers to encourage investor entry and technology transfer, such as price and subsidy policies, non-tariff barriers, as well as plans for carbon pricing instruments.
- Less profit
According to Prof. Arief Anshory Yusuf, S.E, M.Sc., Ph.D, who is a Professor at the Faculty of Economics and Business, Padjadjaran University, estimates that the benefits that will be obtained in a green economy will be less than in the current capitalist economic system.
On the other hand, he also said that a green economy would have higher economic advantages than the current economic system. This takes into account the possibility of natural disasters and environmental damage which have a greater impact on the current economic system.
