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E ISSN 2587 - 4691
∘ Madona Gelashvili ∘
GREEN ECONOMY AND POVERTY ALLEVIATION CHALLENGES

Annotation. The green economy is closely linked to the concept of sustainable development. Global challenges such as climate change and the current global economic crisis, revealed a new way of perceiving the need for economic development, which will be beneficial for everyone. According to this opinion sustainable development, or balanced progress in economic, social and environmental fields at the same time, - is becoming increasingly important. New opportunities for economic growth, which was created by these new environments, made the base of the green economy concept.

Green Economics is at the stage of active formation in the European states and against this background, on our opinion, consideration of these issues is much more essential in relation to changes of the level of poverty. Proceeding from this a target of the topic to be considered appears: Green Economics and a level of poverty of the population.

Generally, in attitudes of different international organizations, welfare is interpreted as providing of social, mental and material benefits to the population that is focal for preservation of one’s life, and a phenomenon of poverty characterizes a kind of vital deficiency necessary for human beings. Proceeding from this, there is no doubt that indicators of poverty may be applied as one of the key indexes of the level of welfare which may be impacted by the Green Economics.

Keywords:  green economics, sustainable development, poverty,  human resources (capital), green investments. 

Introduction

The UN set up a key target of sustainable development for the year of 2030 that is elimination of poverty and hunger. However, under the data of the past 2022 the situation has not been changed. Approximately, 800 mln habitants  (that may be calculated by a denominator for each 10th individual), live in desperate poverty. Unfortunately, in highly developed states, according to the annual data, million tons of food is dumped due to its spoiling (averagely, 95-100 kg of dumped food per capita) that damages the earth as well as its population.

In our article we would like to review a term of poverty and mechanisms of its determination, as well as determinations and indicators of the Green Economics.  We will analyze the issues of formation of the Green Economics in the European states, will try to set up a list of the key indicators enabling us to analyze interrelation between the “Green Economics” and poverty.

In frames of the stated research a connection between categories of poverty and factors of green economics was discussed. Poverty is a universal problem disturbing many countries but, surely, in different forms. Measurement of the level of poverty is the issue which disquiets not only the governments but also international organization involved in researching of the stated issue, such as UN, Word Bank, OECD. There are different research attitudes, methods and methodologies of measurement to determine a level of poverty. Besides, there are indicators defining poverty which consider not only a level of incomes, but other key demands as well.

Till now the term “Green Economics” has not obtained a globally recognized definition. Some organizations use the terms of “green development”, “sustainable development”. Despite of this the principles are similar and distinctive everywhere, - to provide and to reach sustainability in three fields: economic, social and environmental. Green Economics is created to eliminate (or to minimize) a harmful impact on the environment, and simultaneously to enhance sustainable economic development and to increase of a level of welfare of the society.

We have analyzed an existing opinion on a probable interconnection between the “green economics” and a level of property. For example, releasing of harmful substances in atmosphere and contaminating of air may create serious risks for health of the population, and increasing of “green” investments will rise labor productivity and create new working places. In the quantitative part we analyzed a model with fixed effects based on the existing data which reflects an interrelation between a risk of a level of poverty and a whole row of factors of “Green Economics”. The stated model shows that rising of the renewable energy and labor productivity decreases a risk of the level of poverty. 

Green Economics and its measuring

We still have no a generally adopted definition of the term “Green Economics”. According to the attitude of the United Nations Environmental Program or UNEP (United Nations Environmental Protection – UNEP), increasing of the rate of incomes and employment in terms of Green Economics is secured by the state and private investments which are targeted at decreasing of emissions of carbon and other hazardous substances and pollution of environment, rising of energy efficiency and efficacy of the fields reserving resources (UNEP, 2011).

The Organization for Economic Cooperation and Development (OECD) applies a quite different term – “green” rise, which stimulates the economic growth and development. Natural resources are applied by implementing of new technologies and thus it is possible to decrease or to eliminate a negative impact on the environment. If not, we will not be able to prevent abrupt decreasing of water resources as well as deficiency of other resources that, finally, will be resulted in contamination of air and climate changes. All this will cause abrupt decreasing of economic growth (OECD, 2011).

Official documents of many states determining the green economics are accented on development of social and economic fields of life:

  • Ø For developed states - on competition and preservation of working places;
  • Ø For developing states – sustainable development and fighting with poverty;
  • Ø For BRICS states – efficient use of resources. (Yakovlev I.A and others, 2017).

Accordingly, Green Economics is a model of economic development which is based on sustainability of economics – sustainable development of economics.

As for the concept of sustainable development, it consists of three considerations: economic, social and environmental. This term entered in use in 1987 and in the year of 1992, in frames of the Rio De-Janeiro Conference the stated term obtained the following definition: sustainable development is a kind of development which must provide satisfaction of demands of the present and future generations of human beings. On top of all, it was noted that all people are liable to live in a kind of environment which is comfortable for their health and welfare. From the viewpoint of sustainable development, a government’s role was separated clearly, mainly that it is obliged to preserve and to apply the environment and natural resources for interests of present and future generations. There is also another interpretation of  sustainable development. For instance, “sustainable development of society considers a kind of development against the background of which a scientifically grounded threshold of quantity of population may be determined; based on such threshold all focal conditions will be created for satisfaction of vital capacity and spiritual demands of human beings in the manner enabling to preserve conditions of natural regeneration of living environment”. Proceeding from both above-mentioned definitions we can conclude that sustainable development should be based on the principles of management (regulation) of intercorrelation between nature and society. It is a very complicated process combining an objective assessment of a level of mutual dependency and mutual conditionality of science (per se and not only of one field), economics (which serves to specific aims all over the world, for instance, in developing states it is overcoming of poverty) and nature (different countries are characterized with different resources, potential and significant restrictions, for example air, water, soil, minerals and others). All this, first of all, needs a correct determination of the strategy of social-economic development of the state. We mean not only drafting and implementing of its own strategy only based on views of separate states, but an action agreed with different states against of background of following of necessary parameters. For instance, scientists expressed a consideration that the countries of the world should reach an agreement on similar protection of following terms; quantity of consuming resources (according to kinds), a volume of manufacturing of products, normative values of environment pollution, quantity of population.

According to the Declaration adopted at the Rio Conference, all states and all nations collaborate with each other to resolve a key task of elimination of poverty, that is a focal term for sustainable development with a purpose of decreasing of difference between levels of life and more efficient satisfying of demands of the majority of global population. Reaching of a such high-minded aim requires general efforts. In addition to the above-mentioned, it logically poses an issue that for reaching of sustainable development and high degree of life of the whole humanity the states are obliged to limit and to liquidate unviable models of production and consumption and to stimulate a relevant demographic politics. Sustainable development considers settlement of economic, social, technological, demographic, and spiritual problems. From this point of view, social-economic system has a particular significance. It should be able to adapt with a constantly variable environment and thus to satisfy demands of people in the manner enabling to regenerate the resources necessary for future generations. Such systems should be based on contemporary principles of management (forecasting, planning, targeted programs and others) and not on the elemental market mechanisms. Spontaneous actions of the market mechanisms formed in the post-social space and inefficient regulation of economic processes had speeded up systematic crisis of economics and this caused deepening of ecological processes. A unique situation had been created: on the one hand, expanding economic crisis which resulted in abrupt falling of the level of life and, on the second hand, a necessity of transferring on the principles of sustainable development, which requires activation of the government’s role to enable it to fulfill a function of guarantying of environmental and ecological security and that it is the most essential for humanity taking care over it must be its key task.

Thus, sustainable development means:

ü Enhancing of care to be taken over a human being;

ü Collaboration of all states and all nations to resolve a focal task of elimination of  poverty;

ü More efficient satisfying of demands of the global population and decreasing of inequality according to the level of life;

ü Discussion of the economic development in frames of civil, modern and post-modern development in terms of growing globalization. (Gelashvili M., 2021).

Proceeding from this, actually, the issues of economic growth and its measurement appear in a new manner. Particularly, it is necessary to recognize priorities of economic development in relation to economic growth that, in its turn, is followed by a necessity of resolving of the issues of their measurement and assessment. Measurement expresses a quantitative assessment, and measuring of economic growth expresses quantitative, volumetric and natural characteristic features of the goods and services manufactured in scopes of a definite state that is registered in the economic literature. As for assessment, on top of quantitative measurement it expresses specific features of economic growth, a qualitative side. Thus, measurement and assessment firstly require differentiating of economic growth, a quality of economic growth and economic development from each other; secondly, determination of  general principles, criteria, system of indicators of assessment of the economic growth (Gelashvili M, 2022).

The Nobel Prizewinner Stiglitz and other scientists consider that recently the GDP does not reflect thoroughly a level of welfare of citizens as it is impossible to determine a quality of resources and in fact illusive economic growth has a place as it is reached on account of losing natural resources (Stiglitz J.E et al, 2010).

Currently developing of new indicators of development of Green Economics is at its active stage. For instance, in place of a traditional GDP, the “green” GDP is proposed which considers ecological results of economic growth or the environmental index (EPI) which provides information on the state of sustainable development all over the world, based on the data of management of resources and state of the environment. Another one indicator – index of green economics (GGEI) demonstrates the way of reaching of success by definite countries in the long-termed period of development. Based on this index there are four groups of indicators:

  1. Leadership and Climate Changes.
  2. Efficiency of separate sectors of economics.
  3. Investment in “green” technologies”.
  4. State of environment and natural capital.

As a result of analyzing of different methods of measurement of green economics it is vivid that they are similar and are based on three key groups of indicators: economic, ecological and social. These methodologies and indexes provide an opportunity to measure the green economics that, in its turn, enables us to use a wide spectrum of data.

A report of the International Labor Organization on global trends of employment of the year of 2020 described an actuality of problems of equal availability of jobs and deserving salary and that a global problem, - pandemics of COVID-19 had abruptly worsened a state of vulnerable groups of population. Besides, the pandemics hindered economic growth and due to lack of new places of work economic and social problems had appeared in many countries.

Against this background, one of the ways of overcoming non-employment may be considered “Green Economics”. Green Economics exactly provides rise in quantity of working places, and climate negative changes increase a necessity of social care.

According to IRENA forecast, a sector of renewable energy is able to increase a number of working places in the field of power engineering up to 100 million that is a surplus of 40 million places in comparison with the current period. This may become additional instrument in fighting against poverty and low incomes of population.

“Green economics”, being the most unique model of overcoming poverty and its prospects of development, on this stage, are oriented on two key directions, mainly: 1. Assimilation of new energy and 2. Utilization of residues.

Assimilation of new energy is an essential part of energetics in which an exemplary model of development is represented by Jerusalem with its green buildings and infrastructure. Its largest part is generated from solar energy that is a huge relief for population from the viewpoint of spending of financial flows.

An exemplary model of utilization of residues is represented by Switzerland which imports residues in its own country for the purpose of their processing and receiving of new benefit.

New field of power engineering as well as utilization of residues have a positive impact on environment, human beings and principles of “our mutual future life”1. Besides, “Green Economics” is able to have an impact on the level of poverty by increasing of labor productivity. According to the report issued by the World Bank, overcoming of poverty will become possible as a result of sustainable growth of productivity, and “sustainability” will be provided by implementation of new technologies and making investments into the capital.

Porter expressed an idea that green investment is able to increase competitiveness of a firm (Porter M., 1991). Simultaneously, profit will be increased due to expanded productivity, the company’s image will be improved and expenditures will be minimized. The Companies using “green” technologies will be able to decrease material expenditures by way of re-cycling of resources. On top of all, this will give an opportunity to the business to increase its reputation in the context of spreading of sustainable technologies (Barros M.V and others, 2021).

Apart from that we should take into consideration social expenses spent by the society which are conditioned by existence of a model of “brown” economics and which is expressed in problems with health. Millions of people all over the world live with different diseases which are caused by environment pollution and which may increase mortality or additional expenses on health care, including budget expenses, as well as restrictions on definite kind of works which lead us to decreasing of incomes. 

A category of poverty and methods of its measuring

The United Nations Economic Commission for Europe (UNECE) defines the term “poverty” as “incapability to have or implement a choice or opportunity by a human being”, deficiency of inclusivity that is expressed in scarcity of receiving food and clothes, education and health care for one’s family. Threshold of the poverty is determined according to absolute demands and comparative social standards of an individual.

According to the Organization for Economic Cooperation and Development (OECD), there exists a clearly determined level of life (level of poverty) when a person might not consider himself as poor. A problem of poverty always was and will be a difficultly decisive task. It is noteworthy that in all epochs poverty was characterized by specific forms and manifestations which had been conditioned by history and tradition of a definite state. It is very difficult to find a universal method of settlement of this problem which may be applied on a global basis. A key role of resolving of this problem should be focused on overcoming of poverty defined by programs of related states, however they need international efforts supporting activities to be conducted on a national level as majority of states have deeply diversified attitudes in connection with determination of indicators of poverty. The Organization of the Economic Cooperation and Development Organization (OECD) proposed distinguished indicators to compare levels of poverty in different states.

A Doctor of Historical Sciences Gordon considers that a category of poor people is assigned to the layer of the population with the income not exceeding a definite minimal value; as a result of this their consumption is lower than definite minimal standards (Gordon L.A., 1994). This standard may be grouped into one unit of consumers goods and their cost is calculated in the form of absolute indicators.

Different cost criteria of measuring of poverty are developed for international assessment and comparison:

a)    Minimum standard of living: it is an indicator which had been the first method applied in separate states to describe conditions of life and later to determine a level of poverty by international organizations (such as World Bank, UNDP and others).

b)   A concept of key demands: These demands include two elements: minimal demands of one’s family and general communal (utility) service. This concept is a broaden version of the concept of minimal standard of living.

c)    Relative deprivation (incapability to satisfy desires and needs of other people): definite standards of the poverty level have been developed which may be applied to identify a poor person. This may be expressed in availability of social benefits applied by majority of the population against the background of restriction of separate citizens.

d)   Wealth: By means of accumulated wealth the population is able to overcome economic depression and crisis in a lighter manner. Using this indicator, the category of poor people excludes the category of people whose income from official labor sources of income is low due to using capital and informal incomes.

e)    Deficiency of time: is characteristic for a kind of person who has a work and income enough for satisfaction of his demands, but only as a result of high involvement into the working process. All this abruptly limits his free time, - social life and opportunities to rest.

As it is difficult to measure a poverty level, special indexes are applied to compare poverty according to different criteria.

The European statistic agencies apply a multivariate rate of a risk of social exclusion and poverty (AROPE) to measure a multivariate poverty level. It takes into consideration poverty index according to incomes, different kinds of deprivation and does not participate in the market. The stated index reflects not only a problem of low incomes but much deeper problems resulted by social exclusion against the background of low incomes. Thus, poverty may be determined not only by low incomes of the population, but by other material or social pressure.

Assessment of poverty is a rather complicated task. From the very beginning it should be noted that it includes many conditionalities and is a result of large-scaled consensus. 

Modelling of the attitudes of the Green Economics and Poverty Level

Governments of many states pursue active policy to provide green development and explain it by the fact that all this results in increasing of production expenditures, additional loading of the budget and rising of prices on resources. Thus, it is very essential to determine the extent of reasonability of additional expenses while pursuing of this policy and the extent of rising of efficiency of economics due such policy, particularly decreasing of the poverty level.

In 2010 the European Commission adopted a new development strategy for all EU states – “Europe 2020” which has guaranteed sustainable development of the EU states by the year of 2020. A main target of this strategy includes decreasing of the level of non-employment and accordingly of the poverty level which was conditioned by decreasing of CO2 emissions, increasing of a share of renewable electricity and accordingly energy efficiency.

All the above-mentioned enabled the EU states to set up interrelation and interconnection between factors of the green economics and poverty level. In the process of researching of this issue the most important was to determine the extent of capability of the green development to impact on decreasing of the poverty level of a definite state. For this purpose, a correlative-regressive model was developed and it had to reveal a relation between the poverty level and factors of the green economics. 

Conclusion

Accordingly, under the existing model, one of the indicators of the green economics – a share of electricity received from renewable sources - is the most efficient factor in relation to the poverty risk. This relation may be explained by cheap electricity received from the renewable sources and step-by-step transferring of economics on this kind of consumption of electricity in European states that abruptly decreases a cost of electricity, particularly decreases expenses of the whole population.

On top of all, feedback between the risk of poverty level and labor productivity is observed. Enhancing of the labor productivity decreases a poverty level as the volume of production increased in the same period enables us to rise a salary rate, causing rising of incomes. An impact of the green economics is essential in the stated process as it has a positive influence on enhancing of productivity development. For instance, by implementation of the “green technologies” one decreases application of resources and increases their efficient application. Besides an opportunity for sustainable development of economics appears due to the efficient using of factors of production, decreasing of contamination of the environment. (Rutsky V.N., Osipenko M.V, 2020).

There is a direct relation between the level of the poverty risk and social expenditures spent by the government. In terms of increasing of the state assistance, it makes an effort to allocate this amount on more shares of the population to provide a maximal support of the whole population. All this increases a number of the people which may be added to the category of poor people by the criteria. It is noteworthy, that while rendering of the social assistance different mechanisms and policies may be applied to avoid a risk of rising of the level of poverty.

The stated model demonstrated that the activities of social support in elimination of risks of the level of poverty have not much effect of impact. Thus, it is reasonable to use mechanisms of target assistance of the population, including in kind. These activities should be conducted in complex, according to target, vulnerable groups of population. All this, for instance, are measures on service electricity on issuance of compensation and others.

Proceeding from targets of the sustainable development by the year of 2030 the EU schedules to decrease a number of poor people by 50%. In contemporary conditions rising of gas tariffs cause increased household fees, as a result of which a new type of poverty – energy poverty appeared; it is characterized by the fact that definite segments of the population are not able to pay a fee for expensive electricity supply. The expensive electricity also decreases competitiveness of producers. Generation of electricity from renewable sources significantly supports settlement of these problems as it becomes possible to resolve this both problem – overcoming of energy poverty and rising of business competitiveness –  simultaneously.

Continuous review of these issues is reasonable on the example of developing states where issues of formation of the green economics is comparatively more complicated and it is preferable to investigate the situation more deeply, to research risks of the level of poverty in relation to the “green” challenges, to review factors of the “green economics” and to identify relation with risks of poverty.

We can conclude that the “Green Economics” may have an impact on poverty and to make a contribution in settlement of this problem, for instance by way of creating of new working places in the field of alternative energetics or implementing of new technologies, that, in its turn, provides rising of productivity and salary. In our opinion, new “green” technologies” and, generally development of the sector of “green economics” may cause decreasing of poverty by increasing of a number of working places, staff training, rising of salaries and decreasing of anthropogenic impact on health of the population. Simultaneously, it is reasonable to deepen researching of factors having influence on development of green economics in economic, ecological and social fields and to analyze methodologies and attitudes of different international organizations. 

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