Opinion – Why? Economês in good Portuguese: The big push for sustainability

We end the last text on environmental economics for the Por Quê column with two provocations: what will be Brazil’s role in the climate crisis? Would the country pave the way for the so-called “big push” towards sustainability?

The idea of ​​a push towards sustainability would consist of us starting to make a conscious effort to align development and environmental preservation, as a key element to have economic gains.

It is a concept being coined by economists from ECLAC (Economic Commission for Latin America and the Caribbean), and is based on the interpretation of the large investments necessary for the transition to a resilient, low carbon and sustainable economic model as an opportunity to generate a great push (or impulse) for a new cycle of economic growth and greater equality, thus contributing to the construction of a more sustainable development (and that aligns economy, society and environment).

What does this mean in practice?

Brazil’s economy is already significantly “green”. According to studies by economists at the University of São Paulo, in 2020 Brazil had more than 6.5 million jobs linked to economic sectors considered green, such as water, sewage and waste management, forestry and others. This would represent more than 6% of total jobs in Brazil, a percentage that is even high compared to other countries.

However, experts predict that the economic gains from investing even more in these sectors would be many.

Firstly, this would allow Brazil to meet the growing demand of the global productive sectors for ecologically correct services and products, and also to enter in a pioneering way in new markets, such as the carbon credits market.

However, beyond that, data analysis suggests that job creation on the green side is greater than on the non-green side, when comparing shocks on both sides (i.e., the positive change in final demand in each of these areas). The green sector therefore seems to have the best conditions to boost the Brazilian economy, an objective that is even more relevant given the current crisis.

In simpler words, this is because when this sector experiences an increase in its final demand, it “pushes” the development of several other sectors, or, in economics, appears to have a greater “multiplier effect”.

The multiplier effect is a factor that measures how much an endogenous variable (in this case demand, or GDP) changes in response to a change in some exogenous variables (in this model, employment). If this endogenous variable responds more (varies more) to the shock of exogenous variables in one sector compared to another, we say that the multiplier effect in this first sector is greater.

Some forecasts suggest that a green recovery of the economy would still allow Brazil’s economy to grow more in the next decade than usual (that is, if investments continued in non-green sectors). The benefits could include a net increase of more than 2 million jobs by 2030 – four times more jobs than those already in Brazil’s oil and gas industry.

These jobs would result from investing in quality infrastructure, low-carbon technologies, and transitioning to low-carbon agriculture. That is, a green recovery in response to the current financial crisis could result in a stronger economy at home and a competitive advantage abroad.

When we talk specifically about low carbon agriculture, an example is the promotion of green jobs as a strategy to prevent deforestation in the Amazon. Offering rainforest communities a way to make a living that doesn’t involve ranching and soy, logging or any other deforestation-related industry can be very helpful.

It makes a lot of sense that whoever preserves the standing forest is remunerated for doing so, and this could bring benefits not only to local communities but also to the economy – through this multiplier effect. With direct incentives for sustainable production and the integration of Amazon bioproducts into global chains, standing forests could also begin to be worth much more than deforested forests. Today the incentives go in the opposite direction.

Currently, the market does not pay as much for what the forest naturally produces – native rubber, cocoa, nuts, medicinal herbs – compared to beef, soy and wood. Rethinking these incentives could bring clear economic gains to Brazil, aligning development and environmental preservation and setting an example of a great push for sustainable development.

The data presented in this column comes from two recent studies:

Brazil has more than 6.5 million green jobs, reveals the dissertation of a fellow at the Cátedra Escolhas. Available at: https://www.escolhas.org/brasil-tem-mais-de-65-milhoes-de-empregos-verdes-revela-dissertacao-de-bolsista-da-catedra-escolhas/. The master’s dissertation “Green jobs in Brazil: an analysis via the input-output matrix” can be accessed at: https://www.teses.usp.br/teses/disponiveis/11/11132/tde-15072020-172914/pt -br.php.

Brazil’s Post-Covid Green Economic Recovery. NEB technical study, available at: https://www.valuewalk.com/2020/08/brazil-green-economic-recovery/. Also available in summary form at: https://wribrasil.org.br/pt/publicacoes/new-economy-brazil-efficient-resilient-build-back-better.