Ecological Economics 77 (2012) 11–15

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Ecological Economics
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Commentary

A Commentary on UNEP's Green Economy Scenarios

Peter A. Victor a,⁎, TIm Jackson b
a
York University, HNES Building, 4700 Keele Street, Toronto, Ontario, Canada M3J 1P3
b
Guildford, Surrey, GU2 7XH, United Kingdom

A R T IC L E IN F O much easier. If the claim in the UNEP report is correct, we can continue
to enjoy an ever-increasing output and consumption of goods and
Article history: services, while improving social equity and reducing impacts on the
Received 10 November 2011 environment. But can we? Is it reasonable to claim that a green econ-
Received in revised form 24 February 2012 omy grows faster than a brown one, or is a more radical overhaul of
Accepted 26 February 2012
economic structure needed if we are to remain within the biophysical
Available online 20 March 2012
limits of the planet and improve social equity?
Keywords: In many respects, the simulation model, which is described in
Green UNEP, 2011a and is the basis for the claim about green growth rates,
Growth is impressive. It consists of multiple components of the global socio-
CO2
economic, environmental and resource systems including: population,
Equity
Simulation
agriculture, forestry, industry, services, transportation, waste, water,
and energy. Furthermore, it includes relationships among these multi-
ple components, allowing for feedback and non-linearities, and uses
empirical data to quantify relationships in the model.2
1. Introduction 1
All models are simplifications of the system they are designed to
represent. We build them to help understand the system in question.
UNEP defines a green economy as an economy ‘that results in im-
A key issue when designing and evaluating a model and the results
proved human well-being and social equity, while significantly re-
derived from it is whether the particular simplifications are appropri-
ducing environmental risks and ecological scarcities' (UNEP, 2011b,
ate, given the purpose the model is intended to serve. As impressive
p.1). In view of the state of the world's economies, the impacts they
as the UNEP model is, it is deficient in one major respect for analysing
are having on environments from local to global, and the widespread
the transition to a green economy: it treats the world as a single unit.
incidence of social and economic injustice, the appeal of a green econ-
All the data in the model are global averages. All the empirical rela-
omy so defined is obvious. What is less obvious is how we might
tionships in the model are global averages. All the results are global
get there. The recent report, Towards a Green Economy. Pathways to
averages. The model does not recognize differences among geograph-
Sustainable Development and Poverty Eradication. A Synthesis for Policy
ic regions or between richer and poorer nations. These differences are
Makers (ibid), describes a set of enabling conditions for the transition
all lost in the global averages.
to a green economy covering regulatory frameworks, government
This lack of differentiation is a particularly severe deficiency in re-
investment and spending strategies, taxation and market-based in-
lation to social equity which, in an economic context, is closely relat-
struments, investment in capacity building, training and education,
ed to income distribution. Average per capita incomes in the richest
and strengthening international governance. The report claims that
nations can be an order of magnitude or more greater than those in
‘a green economy grows faster than a brown economy over time,
the poorest nations but these disparities are invisible in such a highly
while maintaining and restoring natural capital’ (ibid. p.i).
aggregated model. Income distribution simply cannot be addressed in
We live in a world in which the pursuit of economic growth—
a model of global averages.
defined as the rate of increase in real (inflation-adjusted) gross do-
Reliance on global averages is also a problem for other issues such
mestic product (GDP) —is one of the highest priorities of govern-
as forecasts of global greenhouse gas emissions. These emissions are
ments, the private sector, and even elements of civil society,
rising at different rates in different regions so estimates of global
dependent as many of them are on economic growth for financial sup-
emissions based on average global rates of increase differ markedly
port and basic stability. If we can move towards a green economy
from global estimates based on the summation of estimates for
without undermining economic growth, it will make a difficult task

⁎ Corresponding author. Tel.: + 1 416 736 2100x22614; fax: + 1 416 736 5679.
E-mail addresses: pvictor@yorku.ca (P.A. Victor), t.jackson@surrey.ac.uk
(T.I. Jackson).
1
This paper offers expanded detail on an argument first propounded by the authors
in a letter to Nature (Victor and Jackson, 2011).
2
The model itself is not presented in the report in sufficient detail to allow inspec-
tion of its structure, assumptions, data and equations. The authors of UNEP (2011b)
kindly provided more details in Millenium Institute (February, 2011), though not the
full model description.

0921-8009/$ – see front matter © 2012 Elsevier B.V. All rights reserved.
doi:10.1016/j.ecolecon.2012.02.028
12 P.A. Victor, T.I. Jackson / Ecological Economics 77 (2012) 11–15

Table 1
A summary of results from the BAU, BAU2 and G2 Scenarios.

BAU Unit 2011 2015 2020 2030 2050

Additional investment US$bn/year 0 0 0 0 0

Real GDP US$bn/year 69,334 77,694 88,738 110,642 151,322
Annual GDP growth rate %/year na 2.9% 2.7% 2.2% 1.6%
GDP per capita US$/person/year 9,992 10,737 11,698 3,512 17,068
Annual GDP per capita growth rate %/year 1.8% 1.8% 1.7% 1.3% 1.4%
Consumption per capita US$/person/year 7961 8264 9004 10,401 13,138
Population below $2/day % 19.5% 18.3% 16.9% 14.6% 11.4%
Total employment billion people 3.2 3.4 3.6 4.1 4.6
Energy intensity Mtoe/US$bn 0.18 0.17 0.17 0.15 0.13
Fossil fuel CO2 emissions Gt/year 30.6 32.9 35.6 40.8 49.7
Footprint/biocapacity Ratio 1.5 1.6 1.6 1.8 2.1
CO2 intensity kg/US$ 0.44 0.42 0.40 0.37 0.33

BAU2 Unit 2011 2015 2020 2030 2050

Additional investment US$bn/year 0 1,535 1,798 2,334 3,377

Real GDP US$bn/year 69,334 79,306 92,583 119,307 172,049
Annual GDP growth rate %/year na 3.4% 3.1% 2.6% 1.8%
GDP per capita US$/person/year 9,992 10,959 12,205 14,577 19,476
Annual GDP per capita growth rate %/year 1.8% 2.3% 2.1% 1.6% 1.7%
Consumption per capita US$/person/year 7,961 8,435 9,394 11,220 14,991
Population below $2/day % 19.5% 17.9% 16.2% 13.5% 9.8%
Total employment billion people 3.2 3.4 3.7 4.2 4.8
Energy intensity Mtoe/US$bn 0.18 0.17 0.16 0.15 0.13
Fossil fuel CO2 emissions Gt/year 30.6 33.6 37.1 43.8 55.7
Footprint/biocapacity Ratio 1.5 1.6 1.7 1.8 2.2
CO2 intensity kg/US$ 0.44 0.42 0.40 0.37 0.32

G2 Unit 2011 2015 2020 2030 2050

Additional investment US$bn/year 0 1524 1789 2388 3889

Real GDP US$bn/year 69,334 78,690 92,244 122,582 199,141
Annual GDP growth rate %/year na 3.2% 3.2% 2.9% 2.5%
GDP per capita US$/person/year 9,992 10,874 12,156 14,926 22,193
Annual GDP per capita growth rate %/year 1.8% 2.2% 2.2% 2.0% 2.2%
Consumption per capita US$/person/year 7,961 8,370 9,357 11,488 17,082
Population below $2/day % 19.5% 18.1% 16.0% 13.2% 8.4%
Total employment billion people 3.2 3.4 3.7 4.1 4.9
Energy intensity Mtoe/US$bn 0.18 0.17 0.21 0.12 0.07
Fossil fuel CO2 emissions Gt/year 30.6 30.7 30.3 30.0 20.0
Footprint/biocapacity Ratio 1.5 1.5 1.4 1.4 1.2
CO2 intensity kg/US$ 0.44 0.39 0.33 0.24 0.10

Source:
Adapted from UNEP 211b, p.514
Annual GDP growth rate and CO2 intensities are calculated from data in the table.

individual countries or regions. The upshot being that conclusions
about green versus brown growth based on such a highly aggregated
global model are at least premature, and more likely, seriously
misleading.
2. Brown and Green Economy Projections
The UNEP report (2011a) describes five scenarios to show the im-
pact of different levels and patterns of investment:
BAU—a baseline ‘business as usual’ scenario that ‘replicates history
over the period 1970–2009, and assumes no fundamental changes
in policy or external conditions going forward to 2050’ (UNEP,
2011a, p.507). It is calibrated against baseline projections of sever-
al existing sectoral models.
BAU1—investment is increased by 1% of GDP/year compared to
BAU, but current trends in resource use and energy consumption,
etc. are maintained with no additional investments in renewable
energy, different forms of agriculture, and reduced deforestation.
The additional investment is ‘allocated across the economy…
without targeting specific sectors’ (Ibid. p.508).
BAU2—same as BAU1 except that investment is increased by 2% of
GDP per year compared to BAU.
G1—a 1%/year increase in investment that increases resource effi-
ciency and reduces carbon intensity, allocated about equally across
the various sectors.
G2—a 2%/year increase in investment emphasizing green invest-
ment in which ‘a higher share of GDP is allocated to energy (both de-
mand and supply measures) and the remainder is shared across the
remaining sectors (e.g. agriculture, forestry, fishery, waste, transport
infrastructure)’ (ibid, p.508).
The report makes it clear that G2 is the ‘green investment scenario’
(unless otherwise stated) and so in what follows we shall focus on
this green scenario, comparing it with BAU2 and BAU.
Table 1 shows that real GDP and real GDP per capita grow faster in
the BAU2 and G2 scenarios than in the BAU scenario. This is not sur-
prising since in both of these scenarios it is assumed that investment
rises by 2% of GDP per year, without any consideration of how the in-
crease is funded, thereby providing a demand stimulus and an in-
crease in production capacity as compared with the BAU scenario.
Comparing the BAU2 and G2 scenarios, the economic output in
2020 is larger in the BAU2 scenario than in the G2 scenario, but be-
yond 2020, owing to the higher rate of economic growth, economic
output in the G2 scenario begins to exceed that of the BAU2 scenario.
This is the basis of the claim that a green economy grows faster than a
brown economy.
 P.A. Victor, T.I. Jackson / Ecological Economics 77 (2012) 11–15
The main reason identified by the UNEP report for this result is
that ‘in the longer term, the decline of natural resources (e.g. fish
stocks, forestland and fossil fuels) has a negative impact on GDP
(i.e. through reduced production capacity, higher energy prices and
growing emissions)…’ (UNEP, 2011a p.515). Other adverse environ-
mental impacts from BAU2 are mentioned but they do not seem to
have been included in the simulations: “additional consequences
may include large-scale migration driven by resource shortages (e.g.
water), faster global warming and considerable biodiversity losses”
(ibid. p.515).
The reduced resource and environmental impacts of the G2 sce-
nario as compared with BAU and BAU2 are, of course, extremely im-
portant and we certainly do not want to disparage efforts intended
to help achieve them. However, we have several reasons for question-
ing the conclusion that a green economy will grow faster than a
brown one.
2.1. How Green is Green?
While a significant reduction in greenhouse gas emissions climate
change is only one dimension of a green economy, it is perhaps the
most important. It is certainly the one that continues to attract the
most attention. How does the G2 scenario fare in relation to green-
house gas emissions? As can be seen in Table 1, the G2 scenario offers
virtually no reduction in greenhouse gas emissions from fossil fuel
use between 2011 and 2030. After 2030 these greenhouse gas emis-
sions decline by only 35% relative to 2011 emissions.
The IPCC's 4th Assessment Report argues that in order to achieve a
450 parts per million (ppm) stabilization target and prevent ‘danger-
ous’ anthropogenic climate change, carbon emissions would need to
peak by 2015 and then decline rapidly, so that global carbon emis-
sions in 2050 are in the range 15–50% of carbon emissions in 2000.
That is a reduction of between 50% and 85% over 2000 emissions By
contrast, the UNEP target amounts to a reduction of less than 17%
over carbon emissions in the year 2000. More recent scientific evi-
dence suggests that the 450 ppm stabilization target is insufficient
to remain within a 2 degree global warming and this has led to calls
for a 350 ppm stabilization target instead. This would certainly re-
quire a reduction in global emissions at the higher end of the 50–
85% range. In summary, the emissions reductions achieved in the
UNEP scenarios are woefully inadequate when compared against
those required.
2.2. Investment
In both the G2 and BAU2 scenarios it is assumed that global invest-
ment is increased by 2% of global GDP per year compared with the
BAU scenario. Only the pattern (and not the amount) of the additional
investment is said in the report to be different. “…the same amounts
of investments are simulated…” (UNEP, 2011a, p.507). Yet, an in-
crease in investment of 2%/year would only correspond to the same
amounts of investment in the two scenarios if global GDP was also
the same in both scenarios. But this is not so. According to Table 1,
global GDP is larger in the G2 scenario in 2030 and beyond, hence
the additional investment is too: US$3,889bn in 2050 in scenario G2
compared to US$3,377bn in scenario BAU2. By interpolating the
values for additional investment in each scenario for the years
shown in Table 1 the additional investment in the G2 scenario is
about 10% higher between 2011 and 2050 than in the BAU2 scenario. 3
This strikes us as an unfair comparison of the two scenarios, since in-
vestment is one of the main drivers of economic growth. The
3
The authors of the UNEP report continue to resist the inescapable conclusion that
additional investment is higher in the G2 scenario than in the BAU2 scenario. A. Bassi
and D. Eaton, Correspondence, Nature, Vol. 475, 28 July 2011, p.454.
13
comparison would have been more balanced if the absolute levels of
additional investment were the same, not the percentages.
Another problem concerning the treatment of investment in the
model is a neglect of the way in which the additional investment is
financed. Additional investment must be paid for, most likely through
a combination of private and public debt and there are likely to be
further consequences for growth, trade and distribution. These conse-
quences are not accounted for in the UNEP model, which is acknowl-
edged in the Technical Background Material (Bassi, 2011).
An alternative approach would have been to avoid the financing
issue by examining the consequences of a re-allocation of investment
rather than an increase in investment. In such circumstances no in-
crease in funding would be required. The Technical Background Mate-
rial (ibid) explores this possibility, and even provides a comparison of
additional and reallocated investment. It concludes that “when using
the same assumptions, results of the simulations do not significantly
differ from each other for most variables” (ibid p.3). But this conclu-
sion overlooks the potential significance of the financing issue
which only comes into play in the additional investment scenario.
By neglecting this issue any comparison of scenarios involving addi-
tional investment and a re-allocation of investment remains moot.
2.3. Growth and Distribution
We now come to the most important reason for questioning the
conclusions of the UNEP report regarding growth rates in green and
brown economies. A model that portrays the global economy as a sin-
gle, undifferentiated system is essentially blind to regional, national
and class differences. In Table 1, totals for additional investment,
real GDP, employment and fossil fuel CO2 emissions are for the entire
globe and growth rates are averages for the world, as are consump-
tion per capita, energy intensity, and footprint/biocapacity. The enor-
mous variation in each of these variables at sub-global levels does not
come into play. When these variations are taking into account, there
are significant implications both for the changes required to reduced
CO2 emissions and for intra-generational equity, as we now show.
We first distinguish between two groups of countries using the
World Bank's classification and data: high income countries and low
and middle income countries. 4 Interpolation of the values for the G2
scenario in Table 1 for average world GDP/capita and world GDP
gives annual values to 2050. These values were used to calculate
world population for each year implicit in the G2 scenario. UN
(2008) provides population projections for each of the two groups
of countries. Proportions obtained from this source were used to esti-
mate the populations of high and low and middle income countries
consistent with the G2 world population projection. Values for aver-
age GDP/capita in the two groups consistent with the G2 global sce-
nario were obtained using the following equations.
Let W refer to world, H to high income countries, LM to low and
middle income countries, and t to year. Then:
W W W
GDP t ¼ GDP t per capita  Popn t ð1Þ
W H H LM LM
GDP t ¼ GDP t per capita  Popn t þ GDP t per capita  Popn t
ð2Þ
4
Unless otherwise stated, the data in this section of the paper come from the World
Development Indicators, World Bank http://data.worldbank.org/data-catalog/world-
development-indicators (September 2011 version). 2007 is the latest year for which
a full set of data required by the Kaya equation is available. Unless otherwise stated,
monetary values are in constant 2000 US dollars to correspond as closely as possible
to the UNEP report which also uses constant US dollars but with a 2010 base year.
The different base year has a minimal impact on the calculated rates of change though
a different deflator could be more significant.
14 P.A. Victor, T.I. Jackson / Ecological Economics 77 (2012) 11–15
Define Rt = GDP Ht per capita / GDP LMt per capita
By substitution:
 
H W H LM
GDP t per capita ¼ GDP t= Popn t þ Popn t =Rt
And
 
LM W H H LM
GDP t per capita ¼ GDP t − GDP t  Popn t =Popn t
The UNEP reports are silent on changes in the distribution of
income between the groups of countries in the G2 scenario (i.e. Rt).
Its value was 17.2 in 2007 (based on constant US dollars), the most
recent year for which data on GDP/capita and CO2 emissions were
available from the World Bank database. (Implications for global
CO2 emissions of changes in this value are explored below.) Eqs. (3)
and (4) were used in combination with the population projections
for each group of countries to estimate their annual GDP to 2050.
Values for CO2 emissions and GDP for each group of countries in
2007 were obtained from the World Bank database. These were
used to calculate average CO2 intensities which were adjusted to ac-
count for the use of constant 2000US$ in the World Bank GDP data
and constant 2010US$ in the G2 scenario. In 2007, the average CO2 in-
tensity of low and middle income countries was four times greater
than in high income countries. These adjusted CO2 intensities were
multiplied by the GDP values for each group of countries to estimate
their respective CO2 emissions. A single rate of reduction in these CO2
intensities of 4.0%/year was found to yield a reduction in global CO2
emissions closely matching the G2 scenario.
Table 2 shows the results of four scenarios. The differences among
them are due to different assumptions about the rates at which the
CO2 intensities and the gap between in GDP/capita in the two groups
of countries decline. Global population and global economic growth
remain as in the G2 scenario.
Scenario 1 matches the reduction in global CO2 emissions in the
G2 scenario. It is based on the assumption that the ratio of GDP/capita
between the two groups of countries remains unchanged to 2050
with the result that the absolute gap between them rises from
$41,000 in 2011 to $110,000 in 2050. This assumption is unrealistic
given the expectation that middle income countries in particular
will exhibit more rapid rates of growth than high income countries.
To show the significance for global CO2 emissions of a more equal
distribution of income, scenario 2 maintains the same rate of reduc-
tion in CO2 intensities as in scenario 1 but assumes that the gap in
GDP/capita is entirely eliminated by 2050. Under these conditions
global CO2 emissions will rise by 33% compared to 2011 for the simple
reason that more of the global economic growth to 2050 is concen-
trated in countries that have higher CO2 intensities.
Scenario 3 shows that CO2 intensities would have to decline at an
average rate of 5.7%/year in both groups of countries to achieve
Table 2
A summary of results from the BAU, BAU2 and G2 scenarios.
G2 scenario resulting
in 35% reduction in
GHG of 2050
1 2
%/ change in ratio of GDP/capita 0.0%
%/ change in CO2 intensity high − 4.0%
% change in CO2 intensity low and middle) − 4.0%
Av % change in global CO2 intensity − 3.7%
Absolute GDP/capita duff 2011 $41,000
Absolute GDP/capita duff 2050 $110,000
Ratio of GDP per cap HIC:(LIC+MIC) by 2050 17
% change in global CO2 emissions by 2050 -35%
Source: Authors' calculations for this paper.
simultaneously the 35% reduction in global CO2 emissions of the G2
scenario and close the gap in average GDP/capita. To put this in per-
spective, CO2 intensities in 2050 would have to be 50% lower in sce-
ð3Þ nario 3 than in scenario 1 if GDP/capita is to be equalized. The
connection between achieving a global environmental objective and
enhancing social equity is well illustrated by the differences between
these two scenarios.
As noted earlier, a reduction in global CO2 emissions of only 35%
ð4Þ
by 2050 is insufficient to avoid serious increases in the risk of cata-
strophic climate change. Scenario 4 shows that an average annual
rate of reduction in CO2 intensities of 8.6% is required to reduce global
CO2 emissions by 80% if, over the same period, the gap in average
GDP/capita is to close as well: $22,000 in both groups of countries,
implying average annual growth rates of 3.4% in low and middle in-
come countries and − 1.9% in high income countries. These reduc-
tions in CO2 emissions are equivalent to CO2 intensities in 2050 of
only 15% of their value in scenario 1, the one most similar to the G2
scenario. This comparison of scenarios further underlines the need
to consider what it will take to achieve simultaneously, ambitious
environmental and equity objectives demanded by a truly green
economy.
There are many other scenarios that can and should be considered
besides those discussed here. Achieving convergence of global in-
comes over a longer period of time would help lessen the rate at
which CO2 intensities have to decline to reduce global CO2 emissions.
A slower rate of economic growth, especially in the high-income
countries, where the case for increasing economic output is weakest,
would also reduce the rate of reduction in CO2 intensities required to
meet any specified level of reduction in global CO2 emissions. But this
is the crux of the matter and it runs contrary to the conclusion that
green growth is pro-growth.
3. Conclusion
The UNEP report purports to show that a green economy grows
faster than a brown one. We have challenged this conclusion on
three main grounds.
First, the CO2 reduction achieved in the key G2 scenario is sadly in-
adequate as a response the risk of catastrophic climate change. Sec-
ond, the treatment of investment in the UNEP model unduly favors
the green G2 scenario because it allows more investment than the
brown BAU2 scenario with which it is compared. Also, both scenarios
are silent on the crucial question of how the additional investment is
to be financed. Third, there are implicit assumptions in the G2 scenar-
io about the distribution of global economic output between richer
and poorer countries. A truly green economy is one in which social
equity and environmental objectives are met. Different assumptions
about the gap between rich and poor can have very different implica-
tions for the reduction in CO2 intensities. Equity and environmental
targets are inextricably linked. Economic growth, social equity and
Narrowing of the income gap Narrowing of income gap plus Narrowing of income gap plus
with the same intensity intensity improvement to result intensity improvement to result
improvement as G2 scenario in 35% reduction in GHG in 80% reduction in GHG
3 4
− 7.0% − 7.0% − 7.0%
− 4.0% − 5.7% − 8.6%
− 4.0% − 5.7% − 8.6%
− 1.9% − 3.7% − 6.6%
$41,000 $41,000 $41,000
$0 $0 $0
1 1 1
33% -35% -80%
 P.A. Victor, T.I. Jackson / Ecological Economics 77 (2012) 11–15
environment cannot be analyzed adequately in a global model with-
out some regional differentiation.
In summary, it is unlikely that reductions in CO2 emissions (not to
mention other global environmental pressures) and significant clo-
sure of the gap between rich and poor (as required by a truly green
economy) are simultaneously possible without some curtailment of
ambitions for economic growth.
Acknowledgements
The authors gratefully acknowledge research assistance provided
by Eric Miller and helpful comments received from two anonymous
reviewers.
15
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