The Cost of Building a Green Economy? Two Percent of the World's GDP

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Investing two percent of the world's GDP could transition the planet from a "brown," unsustainable economy to one that is both low-carbon and resource efficient, according to a UN report released this week.

The Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication report claims that investing $1.3 trillion each year is the magic number to create new cleantech industries, boost jobs, cut down on CO2 emissions, and increase energy efficiency savings. But is this possible? And if it is, what will it mean in practical terms?

"With 2.5 billion people living on less than $2 a day and with more than two billion people being added to the global population by 2050, it is clear that we must continue to develop and grow our economies," said Achim Steiner, UN Under-Secretary General and UNEP Executive Director, in a statement. "But this development cannot come at the expense of the very life support systems on land, in the oceans or in our atmosphere that sustain our economies, and thus, the lives of each and everyone of us."

In the UN's green economy scenario, a global investment of 2% GDP in agriculture, buildings, energy, fisheries, forests, manufacturing, tourism, transport, water and waste management will stabilize global energy requirements at current levels by 2050 (40% less than the business as usual scenario), cut CO2 emissions by a third, increase global crop yield by 10%, and cut water demand by a fifth.

Under this scenario, humanity treads lightly enough on the Earth to maintain some semblance of sustainability. But convincing world powers to invest so much money in a green economy won't be easy. President Obama and Chinese president Hu Jintao, however, are issuing statements of support for the plan. This isn't surprising--the U.S. has spent $211 billion over the last five years in green sectors, and China has spent $468 billion.

Still, that isn't enough. But as an increasingly wacky climate combines with rising oil prices in the coming years, wealthy countries may finally realize that the greenest investments also look like the wisest.

Follow Fast Company on Twitter. Ariel Schwartz can be reached by email.

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