Green Growth and Trade in Environmental Goods and Services : A South Asian Perspective

Our investigation into the state of Green Growth in South Asia through a rigorous analysis of carbon dioxide emission, energy supply, energy consumption, power generation, and carbon intensity of growth does not find any evidence that South Asia is making the switch to an environmental friendly growth. The unsustainable modes of production and consumption still fuel the growth in South Asia and carbon emissions are perpetually rising. This environmentally hazardous growth model could be transmuted, inter alia, through extensive trade in Environmental Goods and Services (EGS). By mitigating environmental pollution, enhancing energy efficiency, augmenting the use of renewable energy, and promoting environmental industries and creating green jobs, substantial trade of EGS can reduce environmental degradation as well as promote growth. Thus, the paper complements the preceding analysis on the state of Green Growth by an in-depth analysis of this potential enabler of green growth, with a strong focus on South Asia. Our assessment suggests that trade in Environmental Goods is not at a level to promote the transition to a green economy in South Asia. Although the trade of Environmental Goods exhibits an increasing trend, it is almost exclusively the result of rising imports. Furthermore, assessment of Revealed Comparative Advantage (RCA) suggests a poor state of environmental industries in South Asia, except for India. Moreover, significant barriers to trade of EGS exist indicating that the current level of EGS trade is nowhere near the potential. Against this backdrop of carbon-heavy growth and largely untapped potential in the trade of Environmental Goods and Services, the paper argues for a comprehensive WTO Agreement on Environmental Goods, one that also simplifies the trade of Environmental Services, and pays special attention to the needs of Member States well below the environmental technology frontier, like the ones in South Asia.