The Inequalities-Environment Nexus: Towards a people-centred green transition

Heavy flooding from monsoon rain and high tides in Samutprakarn, Thailand, 8 November, 2009. Banner image: Shutterstock/ think4photop
The Inequalities-Environment Nexus: Towards a people-centred green transition

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The COVID-19 crisis has heightened the need to address societal and environmental challenges hand-in-hand. As countries are confronting the economic and social consequences of COVID-19, they are also racing against the clock to avoid an environmental emergency. At the 2020 OECD Ministerial Council Meeting, member countries agreed to step up their efforts on a green transition. They also recognised that inequalities and environmental challenges are closely linked, and that people’s well-being needs to be put at the centre of the immediate recovery as well as medium-term efforts to build back better.

The links between inequalities and global environmental issues are more apparent than ever. Our new paper, The Inequalities-Environment Nexus: Towards a people-centred and green transition analyses the impacts of environmental degradation and environmental policies on four key well-being dimensions in the OECD Well-Being Framework: health, income and wealth, work and job quality, and safety. It builds on the OECD Framework for Policy Action on Inclusive Growth; the work on coherent approaches for empowerment, inclusiveness and equality; and the Green Growth Strategy and its Green Growth Indicators Framework to identify policy responses that could sustain and share the benefits of green growth more equitably.

Read The Inequalities-Environment Nexus report and find out more about the OECD Well-Being Framework

   Read The Inequalities-Environment Nexus report    Find out more about the OECD Well-Being Framework

Our research clearly shows that environmental degradation disproportionately affects the most vulnerable groups and households in society. People living in low-income households are especially vulnerable to air pollution and climate change; they are more likely to be in poorer health and have more limited access to good quality healthcare. They also are less likely to be able to afford better housing quality or defensive measures in their homes, such as air filtration. Children from socially disadvantaged backgrounds are more vulnerable than their better-off peers: sometimes they simply live in areas with more pollution, or their parents have fewer resources to reduce their exposure to high air pollution. Environmental pollutants are one of the potential mechanisms for socio-economic disadvantage that affect children’s health and educational outcomes. The health and well-being of the elderly are also threatened by weather events like heatwaves.

We also found that people earning low incomes and workers in industries dependent on ecosystems, such as tourism and agriculture, are likely to shoulder the consequences of climate change and air pollution. Heatwaves and extreme weather events are becoming more frequent, and affect outdoor as well as low-skilled indoor workers on lower salaries. High-skilled workers are also affected as air pollution can lead to a decrease in their productivity. Climate change has the potential to deepen existing urban-rural divides: several sectors crucial to rural economies, including agriculture and fisheries, are projected to become less productive in many regions.

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In addition, we explore what policy makers and key decision makers need to consider when adopting policies for a people-centred green transition, to ensure that costs and benefits are more equally distributed across families and workers. Higher energy costs may put greater burden on low-income households, and requirements to consume less energy through heating and cooling may put the elderly’s health at risk. Similarly, higher taxes on road transport fuels may be a challenge for rural inhabitants, who can lack adequate public transport. Lastly, renters will not benefit from subsidies for improving energy efficiency or creating green areas available to homeowners.

Green policies can also have important consequences for specific jobs, sectors, and regions. With policies to control climate change and air pollution, workers in carbon-intensive heavy industries and fossil fuels activities will risk losing their jobs. Green industries such as renewable energies will create new work opportunities, and job reallocation can have gender implications. Indeed, while some of the most negatively affected industries (e.g. oil and gas, mining and heavy industries) have a male-dominated workforce, renewable energy sectors have higher share of female workers. To further enhance women’s participation in energy sector workforce, female participation in fields of education related to science, technology, engineering, and mathematics (STEM) will need to be increased further. The green transition will challenge regional economies that are heavily reliant on carbon-intensive sectors or fossil fuel extraction in terms of structural adjustment and diversification.

All parts of society should benefit from the green transition. Countries can implement measures to mitigate the impact of pricing environmental externalities on financially vulnerable households; invest in human capital through active labour market policies; target income support measures; and upgrade skills to facilitate the reallocation of workers at risk of losing their jobs. As no “one-size-fits-all” green pathway is possible, measures will have to be geographically targeted to help local economies adjust to the green transition. Social dialogue will be fundamental in this respect. Efficient and responsive governance, which is achieved through different ministries interacting with each other and with civil society actors, is essential to deliver an inclusive green recovery and transition.

In the context of the 2030 Agenda for Sustainable Development, further OECD work is needed to measure whether the people-centred green transition is well targeted, efficient and effective. To monitor the outcomes of policies consistently, we need new and better data and indicators to capture how different demographic groups, workers and territories are affected by environmental degradation. Public and private sector approaches to measurement should also be aligned and look at financial, social, and environmental materiality in parallel.

Read more about The distributional aspects of environmental quality and environmental policies and see the latest OECD data, recommendations and policy advice on the Green Recovery and other pressing Social Challenges

 See the latest OECD data, recommendations and policy advice on the Green Recovery

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Tackling COVID-19 Green Recovery New Societal Contract SDGs

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